R&D Deduction Policy and Corporate Industry Chain Linkage: Evidence From China

This study examines whether and how the research and development (R&D) tax deduction policies affect corporate industrial chain linkages. Using data from Chinese A-share listed companies covering 2007 to 2022, empirical research was conducted using the difference-in-differences (DID) method. The results indicate that the R&D tax deduction policy positively impacts corporate industrial chain linkages. Mechanism tests show that the policy promotes corporate industrial chain linkages by reducing internal production and external transaction costs. Heterogeneity analysis reveals that the policy’s effect on enhancing industrial chain linkages is more pronounced for large-scale, state-owned, mature, and manufacturing enterprises. This study further finds that the business environment significantly moderates the relationship between R&D tax deduction policies and corporate industrial chain linkages.