A Research On The Impacts Of Industrial Policies On Business Innovation And Its Mechanism

In today’s world,a century of changes and world epidemics are intertwined and superimposed,the international power contrast continues to evolve,and human society has entered a new historical juncture.In this complex and severe international environment,in order to achieve our ambitious goals,we must seize innovation as the "bull’s nose" to lead development.Enterprises’ core competitivity can be further strengthened by enhanced innovation capacity,so that they can better adapt to current social and economic development.How to effectively enhance enterprise innovation to promote the high-quality development of China’s economy has become a top priority at present.However,the innovation activities of enterprises rely solely on the guidance of the market inevitably lead to market failure and resource mismatch,so the guidance of the government is essential,and only in this way can we better improve the quality of enterprise innovation.Industrial policy is the sum of various government policies that intervene in the formation and development of industries in order to achieve certain economic and social goals.The government has always taken industrial policies as an important tool to deal with market failure and regulate resources allocation.The government can influence the R&D investment of enterprises through the introduction of industrial policy,which in turn can affect the innovation of enterprises.The introduction of the ten industrial revitalization plans can help alleviate the market downturn caused by the economic crisis in 2008 in a short period of time,and help transform and upgrade China’s economic structure in a long period of time so as to better solve the deep-seated structural problems in industrial development.This paper investigates the impact and mechanism of industrial policy on enterprise innovation by using the double difference method with the introduction of China’s ten major industrial revitalization plans in 2009 as a natural experiment.The study found that industrial policy can significantly improve the level of innovation of enterprises,and the promotion effect of industrial policy shocks on enterprise innovation shows a gradual increase.The heterogeneity analysis found that the innovation effect of industrial policy was stronger for state-owned enterprises,local government intervention and enterprises in high-tech industries.The mechanism test shows that industrial policy promotes the technological innovation of enterprises,especially the technological innovation of private enterprises,through three mechanisms: taxation,government subsidies and market competition.In addition,the threshold test shows that the institutional environment,trade openness,and intellectual property protection strength have non-linear characteristics in the innovation and technology upgrading of enterprises caused by industrial policy,and all of them have positive threshold effects.In summary,This research provides proof that industrial policies have a positive motivation on enterprise innovation.This is very important to rationalize industrial policy,promote corporate innovation and promote quality economic development.