‘Guidance' or ‘Misleading'? The government subsidy and the choice of enterprise innovation strategy

Abstract

Government subsidies have a direct impact on firms' innovation strategies. The game relationship between the government, the subsidized firm and its competitors under different subsidy strategies affects firms' innovation behavior and thus innovation performance. This paper uses a dynamic evolutionary game theory approach based on cost-benefit differences to analyse the mechanisms by which government subsidy strategies affect firms' innovation strategies. It is found that the marginal benefits of a firm's innovation strategy will directly affect the game outcome, indicating that the choice of innovation strategy depends on the maximization of individual firm's interests. At the same time, a firm's innovation strategy is influenced by the firm's own innovation ability and competitors' innovation strategy, and there are two game equilibria. Government subsidies have a positive contribution to the innovation strategy choice of subsidized firms, but have a crowding-out effect on non-subsidized competing firms. The strength of the penalty (the efficiency of the implementation of government subsidies), the marginal revenue of the subsidized firms' rational use of government subsidies and the competitors' strategic choices will directly affect the game outcome.

Environmentally specific servant leadership and voluntary pro-environmental behavior in the context of green operations: A serial mediation path

“…Furthermore, future scholars should explore what role can be played by government subsidies in enhancing organizational performance. Government subsidy is an important indicator of organizational performance ( Ding et al, 2022 ). It should be investigated whether government subsidies can play a role in enhancing sustainability innovation for accelerating the green performance of the organization.…”

Dynamic Nonlinear Relationship between Digital Transformation, Green Transformation in Manufacturing Industry and Labor Structure: Evidence from Panel VAR Analysis

“…And this approach can increase the employment of highly skilled labor through the correlation and interaction between the green transformation of manufacturing and the agglomeration of high-end productive service industries. In addition, the government should moderately increase innovation subsidies for small and medium-sized manufacturing enterprises, reduce their innovation costs (Ding et al, 2022a), encourage them to actively carry out green innovation activities, cultivate green innovation capabilities, and then promote the green development of manufacturing industry.…”

Political Promotion and Manufacturing Firm Productivity: Evidence from Chinese Firms

“…Local governments prefer to choose projects with short cycles and quick results, regardless of economic and social costs. As a result, political tournaments successfully unify regional economic growth and officials' political interests and can strengthen officials' subjective initiative to improve regional economic growth (Lv and Bai, 2019;Chen et al, 2020;Ding et al, 2022;Wang,2023).…”