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Government Subsidies and Corporate Innovation

Wenjing Zhou
pp.479-489 DOI: 10.62051/p99has63 November 27, 2025
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Abstract: Government subsidies play a crucial role in addressing market failures in corporate innovation. Using 2007-2021 data of Chinese A-share listed companies, excluding non-innovation subsidies, this study applies a two-way fixed effects model to analyze government subsidies’ impact on enterprises, and uses R&D investment as a mediator to explore its role in the government subsidies-corporate innovation relationship. The research findings are as follows: First, government innovation subsidies can significantly increase enterprises’ innovation output. Second, government innovation subsidies have a significant incentive effect on the substantive innovation output of private enterprises and enterprises in the growth and maturity stages. Third, R&D investment exerts a partial mediating effect in the relationship between government subsidies and corporate innovation.
Keywords: Government subsidies; corporate innovation; R&D investment; mediating effect.
APA Citation: Wenjing Zhou (2025). Government Subsidies and Corporate Innovation. Transactions on Economics, Business and Management Research, 15(1), 479-489. https://doi.org/10.62051/p99has63

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