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Innovation subsidies and entrepreneurial activity in an emerging market

Chun-Hsien Wang (Department of Technology Management, College of Management, National Chiayi University, Chiayi City, Taiwan)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 3 January 2023




This study aims to find that entrepreneurial activities can spur entrepreneurial firms' superior performance, but this effect is contingent on the different levels of government innovation subsidies. Extending the institutional perspective explanation and entrepreneurship perspective explanation, this study examines how a firm's entrepreneurial orientation (EO) affects its superior performance when it receives innovation subsidies.


Entrepreneurial firms in China, an emerging economy, are taken as the context for empirical evidence. A large-scale questionnaire survey is used for firm data collection. Ordinary least squares (OLS) regression is employed to test the hypothesized model using a sample of 287 entrepreneurial firms.


The results show a curvilinear, inverse U-shaped moderating effect in the relationship between EO and firm performance. This relationship is strongest at intermediate levels of innovation subsidies but is comparatively weaker when innovation subsidies are low or high.


The study contributes to entrepreneurship research by examining the nonlinear moderating effect of innovation subsidies on entrepreneurial firms' performance. The study also contributes to entrepreneurship theory by elaborating on the innovation subsidy scheme and how it facilitates the development of entrepreneurial activity.



The author is grateful to the Ministry of Science and Technology (MOST) of the Republic of China, Taiwan, for grant MOST 106-2410-H-415–038-MY2. The author also thank the editor and the two anonymous reviewers for their valuable and constructive comments.


Wang, C.-H. (2023), "Innovation subsidies and entrepreneurial activity in an emerging market", International Journal of Emerging Markets, Vol. ahead-of-print No. ahead-of-print.



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