Research On The Relationship Between Government Subsidies And The Sustainability Of Corporate Innovation

Business innovation is a multi-stage process, each stage will require substantial capital investment in order to bring innovative concepts into real products or services,which indicates that if enterprises must keep the sustainability of the investment on innovation activities.However, on the one hand, the great uncertainty of innovation output leads to asymmetric information problems, so that innovation is facing severe external financing constraints; On the other hand,the benefits of Innovation activities mainly rely on "knowledge",the "knowledge" is not clearly measured and difficult to store, which makes innovation activities have high adjustment cost, so once Once innovation breaks down enterprises must bear much costs. So, how do enterprises keep innovation without interruption in the context of financing constraints?According to national innovation policy,the government provides subsidies to support for enterprise innovation activities, enterprises need to pay a very low cost for government subsidies, however,can government subsidies into enterprise's internal capital be used as Innovative replenishment fund.Therefore,according to Tobin's Q investment model,this paper performs an empirical test on panel data of A share of all manufacturing between 2007-2014, and investigates whether government subsidies has a smoothing effect on innovation investment, and further makes analysis of the context effect of ownership intensity and monetary policy separately, and Co-moderating roles of ownership intensity and monetary policy.The result shows that: the enterprises who develop innovative sustainable investment activities suffer serious external financing constraints, government subsidies can ease external financing constraints to smooth innovation investment and promote the Persistence of Firm Innovation; however, ownership intensity can weaken the positive relationship between government subsidies and the persistence of firm innovation; during monetary policy contraction phase, the smooth effect between government subsidies and innovation investment,and ownership intensity can weaken the smoothing effect of government subsidies on innovation investment fluctuation.The paper not only proves that government subsidies can satisfy the demands of innovation financing, but also provides certain reference for constructing a creative country at the present stage in China.