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Government subsidies, R&D expenditures and overcapacity: empirical analysis in photovoltaic companies

Jing Chen (School of Economics and Management, Huaiyin Normal University, Huai’an, China)
Tianchi Wang (School of Economics, Shanghai University, Shanghai, China)

Chinese Management Studies

ISSN: 1750-614X

Article publication date: 29 March 2022

Issue publication date: 20 January 2023




This study aims to investigate the relationship between government subsidies, R&D expenditures and overcapacity, and to explore the heterogeneity effects in different time periods and different types of companies. It can provide theoretical and practical guidance for the development of the photovoltaic industry.


This paper constructs a mediation model to explore the impact of government subsidies on overcapacity and on R&D expenditures, and to propose an indirect way to disentangle the impact of government subsidies on the creation of overcapacity from the positive aspect of increased R&D expenditures. A total of 94 listed enterprises in the Chinese photovoltaic industry were selected as the sample over the period 2012–2019.


There was significant overcapacity in the photovoltaic industry. Government subsidies had a positive effect in promoting overcapacity and R&D expenditures. The influence of government subsidies on excess capacity increased and on R&D expenditures decreased over time. Compared with large enterprises, government subsidies the small enterprises received had a greater positive impact on the overcapacity and a smaller positive impact on R&D expenditure. R&D expenditures restrained the influence of government subsidies on overcapacity, but the suppression effect was limited and decreased over time. The indirect effect in small enterprises was greater than that of large enterprises.


This paper studied government subsidies, R&D expenditure and overcapacity in the same framework and used bias-corrected bootstrapping to explore the path of “government subsidies–R&D expenditures–overcapacity”. The heterogeneous effects in different periods and different types of firms are discussed.



The authors would like to thank Prof. Dr Qianqian Li of Imperial College London for her help in polishing sentences. We thank the editor Prof. Cherrie Zhu for the work on this paper. The authors are grateful to the Associate Editor Prof. Long Zhang and the anonymous reviewers whose comments and suggestions have helped to improve this paper significantly.

Author contributions: All authors have made a significant contribution to this research. Jing Chen conceived the research idea and designed the general framework of the research. Jing Chen collected the sample data. Tianchi Wang used software for analysis. Jing Chen wrote the paper. Jing Chen and Tianchi Wang revised the paper. Tianchi Wang checked the grammatical errors. All authors have read and agreed to the published version of the manuscript.

Funding: This research was funded by the Jiangsu Industry–University–Research Cooperation Project, grant number BY2019165.

Conflicts of interest: The authors declare no conflict of interest.


Chen, J. and Wang, T. (2023), "Government subsidies, R&D expenditures and overcapacity: empirical analysis in photovoltaic companies", Chinese Management Studies, Vol. 17 No. 2, pp. 343-364.



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