Government Subsidies And Firms’ Innovation Persistence

Along with the increasing of R&D funds in the enterprises of our country in the past 10 years, enterprise’s innovation ability has been greatly improved. But there is still a gap between the western developed countries, the key to further improve the independent innovation ability of enterprises in our country lies in the persistence of innovation.Enterprise innovation activities are facing serious financing constraints, government subsidies, however, can increase the resource endowment of enterprise innovationon the one hand, and weaken the problem of information asymmetry in the process of innovation financing on the other hand. Therefore, this paper studies the impact of government subsidies on enterprise innovation persistence from the perspective of financing constraints.This paper first examine weather Chinese industrial enterprises exit the persistence of innovation by Kaplan-Meier hazard function, and the difference of innovation persistence in different financing capacity, the research shows that: the innovation of China’s industrial enterprises is sustainable, and the stronger the enterprise financing ability, the higher the probability of innovation persistence.Secondly, this paper, based on the discrete time survival analyses model, analysis the influence of enterprise’s internal financing, equity financing, bond financing, government subsidies and corporate self characteristic variables on sustainable innovation. Then it studies regulating action of the government subsidies on the process of enterprise sustainable innovation from different financing channels, empirical results show that:(1) The stronger the enterprise financing ability, the higher the probability of innovation persistence;(2) The effect to reduce the risk of enterprise innovation persistence for debt financing and equity financing is greater than the internal financing;(3) Government subsidies can reduce the risk of enterprise innovation persistence significantly; the longer the operation time of the enterprise, the bigger the enterprise scale, the higher the average labor cost, the higher the survival rate of the enterprise’s sustainable innovation; the greater the capital intensity of the enterprise, the higher the risk of innovation;(4) Government subsidies have “stimulus ” effect to internal financing and debt financing, and this effect is not exit in equity financing. In the end, this paper studies the heterogeneity of effects of government subsidies on the sustainable innovation by using the dynamic random effects probit model, and empirical results show that: government subsidies to improve the probability of innovation persistence for private enterprises is greater than the state-owned enterprises; with the increasing distortion of factor market, the effect of government subsidies for the promotion of enterprise sustainable innovation will weaken.