Tax Incentives,Industrial Competition And Investment In Research And Development

The research and development activities can enhance the enterprise's technology innovation capability and core competitiveness,and then promote their sustainable development.However the research and development activities of enterprises with the characteristics of publicity,spillover,high costs and high risks can lead to market failure,so that it is necessary for the Government to inspire enterprises to increase their investment in research and development through the tax incentive.Currently,universal tax incentives policies are implemented according tax law,but actually industrial competition can stimulate enterprises' innovation and R&D even without tax incentives,while for indusries with low-level competition,tax incentives might not necessarily promote enterprises' R&D.This thesis tries to answer the questions that how tax incentives and industial competition affect enterprises' R&D respectively and interactively,which will provide basis for raising accurate tax incentive policies for R&D,and for implementing strategies which can promote public innovation.First,this paper reviewed relevant research literature,and found that there is no consistent research conclusion about the effects of tax incentives on enterprises' R&D investment,and the relationship of industrial competition and enterprises' R&D investment is not linear.There are very little research literatures which examine the interactive effect of tax incentives and industial competition on enterprises' R&D investment,and existing literature has not answered the question that under what condition tax incentives will have the best effects on R&D investment.Literature review verified the necessity of the research.Second,based on the theory of classic economics and the modern management of tax incentives,the author analyzes the relationship between tax incentive,industrial competition,and R&D investment.Lastly,using the cross-section data of A-share listed companies in industrial enterprises from 2011 to 2015,the author not only investigates the relationship between tax incentives and enterprises' R&D investment,and industrial competition and enterprises' R&D investment,but also focuses on exploring and quantizing the regulating effects of industrial competition to the relation of tax incentives and enterprises' R&D investment.The author not only tested the regression model with the whole sample,but also tested the regression model with split samples by industial incentive,the size and ownership of the enterprises,and financing constraints of the enterprises.Research results show that:The tax incentives can significantly encourage enterprises' R&D investment;Industrial competition has a significant impact on enterprises' R&D investment,and the amount of enterprises' R&D investment is the highest under middle-level industrial competition;Industrial competition has an significant regulation effect on the relation of tax incentives and enterprises' R&D investment,and tax incentives has a strongest promotional effect on enterprises' R&D investment under middle-level industial competition.Ownership,size and financing constraints of enterprise also affect the effect of tax incentives,tax incentives have better stimulating effect on R&D investment towards state-owned enterprises than towards non-state-owned enterprises;tax incentives have better stimulating effect on R&D investment towards large-size enterprises than towards small-size enterprises;tax incentives have better stimulating effect on R&D investment towards enterprises with low-level financing constraints than towards enterprises with high-level financing constraints.Conclusion of this research not only privides a useful reference to utilizing tax incentives policies to promote quality and efficiency of chinese economy,to upgrade and transform industrial,but also privides useful reference to implementing strategies which can promote peoples innovation.