The Influence Of Government Regulation On Innovation Performance In Developing Countries

Innovation is the soul of country's economic development,However,many developing countries,including China,are facing the problem of'innovation paradox'.That is,in the knowledge economy stage,high investment in knowledge does not bring about corresponding high growth in the economy.The origin of 'innovation paradox'lies in the market failure in the process of knowledge creation,so the role of government regulation is especially important,but the role is also controversial,many scholars generally believe that the government has "double-edged sword"role.The essence of innovation activities is knowledge creation.This article is based on the process of knowledge creation—knowledge exchange and knowledge combination,and puts forward that the process of knowledge creation will be constrained by resources,power,and ability conditions.The government regulation can change these constraints and moderate the relationship between knowledge production and innovation performance.Using the data of 18132 private companies in 17 developing countries in the World Bank Enterprise Survey Database(WBES),we conduct an empirical research and draws the following three conclusions:(1)Low-quality government regulations will weaken the positive relationship between knowledge production and innovation performance.(2)For SMEs,government regulations will weaken the positive relationship between knowledge production and innovation performance.(3)For foreign firms,government regulations will strengthen the positive relationship between knowledge production and innovation performance.Therefore,in order to solve the innovation paradox,the government should establish a sound and unified market mechanism;reinforce the use and protection of intellectual property rights;correctly display the important functions of the government in innovation and optimize government regulations;and implement differentiated policies targeting at SMEs and private firms.