| With the deepening of economic globalization, the enterprises of various countries have to face the New Economy taking knowledge and information as characteristics.To gradually narrow the gap with the developed countries in the international competition, we have to strengthen the core capacity of research and development (R&D) within the most industry to further improve the economic structure and industrial structure. In order to form the core capacity of R&D, enhance competitive advantage and achieve sustainable development, enterprises have been steadily increasing R&D investments. Nowadays, information technology industry is one of the fastest growing enterprise, the shortest technology refresh cycle and the fiercest market competition field. IT industry has become the strategic industry in the country, which gathers high-growth, high investment, high efficiency and high-risk features into a whole. The sufficient R&D investment and efficient R&D activity are the basic requirements for enterprises to gain sustainable growth.During the"Eleventh Five-Year Period", strengthening self-directed innovation, transiting increase mode, optimizing and upgrading the industrial structure, and constructing innovative country should be taken as the great strategic choice in IT industry for the future. Since 1990s, there has been an increasing number of governments are offering special fiscal and tax incentives to business to increase spending on R&D. Under such circumstances,the targeted and in-depth study on the incentive effect of China's current fiscal and tax incentives for IT companies have very strong realistic meaning.This study uses methods of a combination of empirical and theoretical research. On the basis of analyzing the R&D investment of China's IT industry and the fiscal and tax incentives, this paper chooses 56 firms in which direct government funding and R&D tax incentives gained, using 2003-2008 Annual Report data, to carry out empirical analysis to examine the major policy tools'stimulating effect on business R&D.The major results of the study are the following. First, Direct government funding of R&D and R&D tax incentives performed by firms have a positive effect on R&D investment. Second, direct government funding of R&D and R&D tax incentives have a different effect on firm's R&D by size of the firm. For large firms, income tax incentives are more effective on R&D investment than indirect tax incentives, and indirect tax incentives are more effective than direct funding. For small and medium-sized enterprises (SMES), indirect tax incentives are more effective on R&D investment than direct funding, and direct funding are more effective than income tax incentives.Based on the above empirical conclusions, our policy recommendations are as follows. First, direct government funding and R&D tax incentives should continue to be applied as stimulating instruments to promote R&D investments. Second, it is important for us to select R&D incentive policy based on firm size. For large firms, government has to focus on establishing tax incentives service, especially income tax incentives. For SMES, government should pay more attention to both indirect tax incentives and government funding to enhance R&D investment. The research finds and importance of this paper are mainly indicated on two aspects as follows.First, using analysis methods which combine theory with positivism, this article tries to analyze the influence of the fiscal and tax incentives to IT industry on R&D investment. This paper complements the research in this area. Second, this paper select IT firms from 2003-2008 which combine panal data and apply regression analysis by STATA10.0, including fixed effect and random effect. Third, on the basis of empirical analysis, this thesis compares the incentive effect of the fiscal and tax incentives according to the different IT firm size. It puts forward corresponding fiscal and tax incentive suggestions for government to prompt IT enterprises to enhance R&D investment. |
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