R&D investment target setting and enterprise innovation strategy: Substantive or symbolic?

Setting research and development (R&D) investment targets is a significant approach for governments to implement innovation-driven strategies. Based on data from Chinese A-share listed firms from 2004 to 2022, this study uses a staggered ‌difference-in-differences model to explore the impact of R&D investment target setting on enterprise innovation strategies. The results demonstrate that R&D investment target setting can promote enterprise innovation, with a stronger effect on symbolic innovation than substantive innovation. Heterogeneity analysis reveals that R&D investment target setting can enhance innovation in mature- and decline-stage enterprises but not growth-stage enterprises. In addition, labor- and capital-intensive enterprises tend toward symbolic innovation, whereas technology-intensive enterprises avoid substantive innovation. Mechanism analysis reveals that R&D investment target-setting drives enterprise innovation by empowering human capital, expanding financing scale, and promoting strategic alliances. Furthermore, economic growth targets are found to strengthen the innovation effect of R&D investment target setting, but only substantive innovation contributes to enterprise growth. These findings are crucial for optimizing government target management and enterprise innovation activities to construct an innovation-driven country.