The impact of R&D subsidies on firm innovation in different supervision situations: analysis from pharmaceutical companies in China

ABSTRACT

New inventions can increase productivity, accelerate the creation of new profits, and provide lucrative growth potential. Using a fixed effect model, this article examines the influence of government innovation subsidies and tax rebates on the R&D production of pharmaceutical companies from 2010 to 2020. It also assesses the moderators of institutional investors, audit agencies, and public opinion in monitoring. The research finds that government innovation subsidies and tax rebates have a significant impact on pharmaceutical enterprises’ R&D outputs. Second, institutional shareholding and public opinion supervision can increase government innovation subsidies and tax breaks for pharmaceutical R&D. SOEs are more susceptible to innovation subsidies, while non-SOEs benefit from tax rebates. This study assists managers and policymakers develop effective innovation strategies.

KEYWORDS:

• R&D
• subsidies
• outputs
• supervisions

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Additional information

Funding

The research was supported by the National Office for Philosophy and Social Sciences (21CGL035) and by the Anhui Provincial Department of Education (SK2021ZD0045).

Notes on contributors

Yuntian Xia

Yuntian Xia is a lecturer in Hefe Normal University, China. She got her Master degree from University of Leeds with distinction. Her current interest includes, R&D management and corporate performance evaluation and taxation.