Government support, international trade and firm's R&D investment: Evidence from Chinese high‐tech industries

Abstract

Purpose

Innovation is becoming the key approach for firms to achieve sustainable competitive advantages. The purpose of this paper is to examine whether government public R&D subsidies have a positive impact on firms' private R&D investment (RDI) under globalization; this paper also investigates the impact of international trade on firms' private RDI in China.

Design/methodology/approach

The paper empirically tests the government support and international trade on firms' private RDI. An online survey was conducted as well as collaborated with the Department of Science and Technology of Zhejiang Province in 2006. The sample was obtained from more than 1,000 firms in high‐tech industries in Zhejiang province, and covers the year 2003‐2005. Linear regression was used for the firm‐level estimations.

Findings

The empirical results indicate that public R&D subsidies and disembodied technology imports positively and significantly impact on firms' private RDI, while non‐high‐tech product exports and embodied technology imports do not have positive effects. Moreover, the results show that high‐tech product exports are positively associated with firms' private RDI but not significantly.

Originality/value

The paper's findings extend the existing understanding of the determinants of firms' RDI in less developed countries, such as China. Moreover, unlike most extant studies, the authors investigate different types of exports and imports and their impacts on firms' RDI, respectively.

Citation

Li, Z., Millman, C. and Chi, R. (2011), "Government support, international trade and firm's R&D investment: Evidence from Chinese high‐tech industries", Journal of Science and Technology Policy in China, Vol. 2 No. 2, pp. 146-158. https://doi.org/10.1108/17585521111155200