Influence mechanism of R&D subsidy, non-R&D subsidy and their combination on enterprise innovation

This paper tries to disentangle between the influence of R&D subsidy and non-R&D subsidy, and explores the mechanism of different subsidies and their combination on R&D input and output of listed companies in China. It is found that both R&D subsidy and non-R&D subsidy can effectively motivate listed companies to increase R&D investment, and moderate non-R&D subsidy in subsidy combination can strengthen the ‘incentive effect’ of R&D subsidy on enterprise innovation. R&D subsidies can improve the innovation output of listed companies through direct and indirect ‘double paths’, but non-R&D subsidies have a certain ‘masking effect’ on the innovation output. Relevant government should control the non-R&D subsidy at the ‘medium and low level’ as far as possible to realise the ‘strengthening effect’ of moderate non-R&D subsidy on R&D subsidy in promoting enterprise innovation. The control of subsidy classification should be strengthened to avoid the adverse effects caused by non-R&D subsidies being ‘diverted for other purposes’.