The Research On The Policy Effect Between Subsidy And Tax Incentive On The R&D Under Different Enterprise Growth Stage

It has long been argued that the firm's expenditure on innovation activities are sub-optimality as a consequence of market failures,the investment on innovation is usually lower than the optimal level of social,at this time only rely on the market "invisible hand"is difficult to realize the pareto optimality and need government take administrative steps to intervene.Generally government tries to solve this problem by using subsidies and tax incentives.The main purpose of these policy interventions is to reduce the effective R&D costs and encourage enterprises to increase investment in research efforts.Current scholars have been made deep research on the subsidies and tax incentives' impact on R&D,as well as the difference between subsidies and tax incentives.But there are no unified conclusions about effect of the government policy.Especially few scholars to discuss the impacts of the government subsidies and tax incentives on R&D investments in research from the perspective of enterprise life cycle.Due to in the different growth stage,enterprise will have different characters of innovations and facing the different barriers,then subsidies and tax incentives will show some different impacts at different stages.Studying these differences to improve the effect of fiscal subsidies and preferential tax policy has important theoretical and application value.Based on this point,I will take deep research on the impact of government subsidies and tax incentives in different stages.This paper describes the theoretical characteristics of entrepreneurial activity at different stages of growth and government subsidies and tax incentives on R&D investment mechanism in different stages of growth.Then use from 2010 to 2015 of the 1307 listed companies of small board and GEM as samples.Also select four indicators such as revenue growth rate,capital expenditure ratio,dividend payout rate and firm age as a division of the growth stage index.All samples will be divided into three phases:growth,mature and decline.Then using the mixed OLS,fixed effect and system GMM model to do empirical test.Through the empirical analysis,we draw some conclusions:first,the enterprise'innovation activities have different performance in different life cycle and R&D investment intensity is decreasing as the age grows;second,subsidies will promote the enterprise increasing R&D and the most impact is the growth stage;third,tax incentives will promote the enterprise increasing R&D and the most impact is in the mature stage,the impact will decrease in the growth and decline;Last but not least,both subsidies and tax incentives make stronger effects on high-tech enterprise than non-high-tech enterprise.Therefore,the government needs to take both subsidies and tax incentives into considerations and should abandon the principle of "one size fits all".In different stage,government should make accurate policy to stimulate the innovation vitality.The main contribution of this paper is to study the impact of subsidies and tax incentives for business R&D from the point of enterprise' life cycle,and make recommendations for different stages to promote enterprise to get a greater extent to increase R&D investment,but due to the lack of data in start-up period,this article only made empirical analysis on growth,mature and decline,this will limit the conclusions of the article's replicability.