Research On The Impact Of Government Subsidies On Firm Innovation And Total Factor Productivity

Since entering the "new era",our economy has undergone rapid transformation,and a new stage of high quality development from the stage of rapid growth.The report to the 19 th CPC National Congress in 2017 for the first time put forward efforts to improve total factor productivity.Total factor productivity is the key to improve the competitiveness of enterprises and to achieve high quality development.It is of great significance to explore how to promote the improvement of total factor productivity to implement the strategic goal of high quality economic development.When enterprises carry out innovative research and development activities,due to various uncertainties and risks,enterprises lack the motivation for continuous innovation,which will lead to low production efficiency in the long run.As an important factor affecting the development of enterprise production and management,government subsidy is an important means for government to support the development of enterprise.Governments can correct "market failures" by handing out subsidies.However,from the perspective of effect,the effect of subsidies often fails to reach the expected target.Although the research on enterprise total factor productivity is becoming more and more important under the current economic environment,up to now,few academic studies have linked government subsidies,total factor productivity,enterprise innovation and executive background to deeply explore the correlation behind them,especially the lack of relevant studies on the actual problems of Chinese enterprises.In view of this,based on the existing research on government subsidies and total factor productivity of enterprises,this paper integrates externality theory,high-level ladder theory and information asymmetry theory,selects the balanced panel data of 1,489 A-share listed companies from 2013 to 2020,and uses fixed effect model for empirical analysis.To explore the effect of government subsidy on total factor productivity of enterprises.The findings are as follows: First,from the whole sample as a whole,government subsidies significantly inhibit the improvement of total factor productivity of listed enterprises,and this inhibition effect does not vary with the nature of property rights of enterprises.Second,in state-owned enterprises,the political association of senior executives moderates the relationship between government subsidies and total factor productivity of enterprises.The more stringent supervision environment for politically connected soes can reduce the inhibitory effect of government subsidies on total factor productivity of enterprises.In non-state-owned enterprises,the moderating effect of political association of senior executives does not exist.Thirdly,the technical background of CEO moderates the relationship between government subsidies and total factor productivity of enterprises.If the CEO of a firm has a technical background,the inhibitory effect of government subsidies on total factor productivity of the firm is reduced.Fourth,government subsidies can not only promote firms to increase R&D input,but also promote firms’ innovation output.However,compared with R&D input,innovation output is an important mechanism for government subsidies to affect firms’ total factor productivity.Government subsidies can alleviate the negative effect on total factor productivity by promoting innovation output.Fifth,in the further analysis,the panel threshold model is used to calculate the moderate range of the impact of government subsidies on the total factor productivity of enterprises.Only when the intensity of government subsidy is between 0 and 0.0024,government subsidy can promote the improvement of total factor productivity of enterprises.This indicates that,although government subsidies inhibit the improvement of enterprises’ total factor productivity within the full sample scope,government subsidies still have a moderate range according to the different intensity of subsidies.The research of this paper not only enriches the research on government subsidies,but also expands the research field of executive background and total factor productivity of enterprises.At the same time,this research explores the current subsidy policy in our country and puts forward the corresponding policy recommendations.