Government grants,private R&D funding and innovation efficiency in transition economy |
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Authors: | Jin Hong Liangbing Wang Yi Xu Dingtao Zhao |
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Institution: | Management School, University of Science and Technology of China, Hefei, Anhui, People's Republic of China |
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Abstract: | Although the development of the high-tech industry is part of the national agenda of many countries, particularly transition economies, few studies have analysed innovation efficiency in countries with environments unfavourable to high-tech industry development. This study explores the relationships of government grants, private R&D funding and innovation efficiencies of the high-tech industry in China. We use a stochastic frontier analysis model to study the roles of government and market mechanisms in high-tech industry innovation from 1995 to 2008. Findings show that government grants do not crowd out private funding, but stimulate private R&D expenditure. Private R&D funding has positively influenced innovation in the Chinese high-tech industry, and efficiency potentials are widely under-exploited. Additionally, government grants are observed to negatively impact innovation by large firms in the Chinese high-tech industry. Furthermore, we reveal that human capital can promote the innovation performance of high-tech firms, excepting those of medium scale. The findings provide insightful perspectives on China's high-tech industry. |
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Keywords: | government grants private R& D funding high-tech industry innovation efficiency SFA |
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