The Effects Of Government Funding On Enterprises' R&D Investment And Innovation Performance

Technical innovation is the source of competitive advantage of a country.Because of the external view of the research and development activities,it will lead to market failures if relying solely on business investment.So we need government departments to give redress and remedy by financial subsidies.The governments of all countries have realized that the competitiveness of their enterprises plays an important part in the national competition and applied national sources to the companies for their technical progress.Government funding has become a big element affecting companies' own research and development investment and innovation performances.With the rapid development of China's economy,the requirement to enterprise's innovation ability is much more higher,especially in the background of building an innovative country.The government attaches great importance to enterprise's r&d activity,and the funding efforts for enterprise r&d is also growing.How to judge the government act of funding enterprise technological innovation and its performance,this topic not only has theoretical value,but also has practical significance.First of all,this paper analyzes and reviews the existing research at home and abroad.This article makes theoretical analysis of the necessity of government subsidies.Due to the existence of market failure,the government should take appropriate intervention and offer good support for corporate R&D activities.At the same time,the article describes the mechanism of government fund separately affect enterprise R&D investment and innovation performance,so as to have a better understanding of its mechanism of action.Secondly,this article analyzes the effect of government funding on the technical innovation of enterprises.On the basis of using the sample of Hubei industrial firms from 1999 to 2007 and Heckman two-step method,the results show an effect of state preference,scale preference and export preference.That is to say,other things being equal,state-owned enterprises,large scale enterprises,and enterprises with export possibilities have a better chance to get government's subsidies and support.By testing the data in multiple regression model,it can be concluded that government funding has a significant positive effect on research and development investment.In general,the more fund the government offers,the higher R&D investment tendency the enterprise has,and relatively the more technological innovation activities there will be.Further more,this paper analyses the influence of government funding to the enterprise innovation performance.As a result of government funding,studies shows that not only the enterprise r&d investment has a significant promotion,the innovation output also has an dramatically increase,finally improve the innovation performance.At the same time,in order to analyze whether the government funding has different effects to the different types of ownership(property)enterprises' innovation performance,the samples have been carried out grouping regression in accordance with the ownership of enterprises.The research results shows that whether state-owned enterprises or non-state-owned enterprises,government funding has a positive influence on enterprise's innovation performance,but the non-state-owned enterprises' innovation output efficiency is higher than state-owned enterprises.The reason may be that most of the state-owned enterprises' capital is abundant,comprehensive strength is stronger,lead to its demand for government funding is not strong,the utilization effect is relatively poor.And the management mechanism of state-owned enterprises exist many defects.Vague property right relations and serious principal-agent problems weakened their motivation to participate in research and development,reduce its efficiency of using government r&d funding.At last,taking the enterprises in Donghu High-tech development Zone in Wuhan as an example,the basic conditions and financial funding policies aimed to motivate the companies'research and development activities by the central and local governments in this area are presented.The effects and disadvantages of government funding based on that is hoped to have certain guidance for governments to make related policies.