Do government subsidies crowd out technological capabilities?
Purpose: Extant research on the crowding-out effects of government subsidies on the positive role of firm innovation resources or activity remains limited. This paper aims to investigate the crowding-out effects of subsidies on the utilization of technological capabilities and also the contingency mechanisms of market-oriented economy based on the resource-based view (RBV), given the co-existence of the subsidies and technological capabilities for firm innovation in transitional economy. Design/methodology/approach: This paper used panel data of 115 Chinese high-tech firms from 2002 to 2010. Fixed-effects model was used to test several hypotheses. Findings: This paper empirically demonstrates that the subsidies crowd out the utilization of firms’ technological capabilities for invention outcomes in the near-term. Furthermore, this paper finds that the crowding-out effects are weaker when firms have high export intensity or are located in provinces with high market-oriented systems. Research limitations/implications: The findings of this paper apply to Chinese firms. Future research could test their generalizability to different samples and other transitional economies. Practical implications: This paper highlights the crowding-out effects of the subsidies, revealing that high-tech firms should balance the direct effects and crowding-out effects of the subsidies. Originality/value: This paper highlights the neglected interactions between the subsidies and technological capabilities based on RBV and provides a more nuanced understanding of the crowding-out effects of the subsidies in transitional economy.
Year of publication: |
2020
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Authors: | Chen, Shuangying ; Fu, Feng ; Xiang, Tingting ; Zeng, Junli |
Published in: |
Chinese Management Studies. - Emerald, ISSN 1750-614X, ZDB-ID 2280185-6. - Vol. 14.2020, 4 (18.04.), p. 895-913
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Publisher: |
Emerald |
Saved in:
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