The importance of large firms for generating economic value from subsidized technological innovation: A regional perspective

This study investigates the relationship between government subsidies and the commercial value obtained from a region's scientific and technological achievements, and argues that this relationship will depend on the average size of the firms present in that region. Using panel data on the high-tech industry in 27 provinces and autonomous regions in China from 2009 to 2019, we show that government subsidies have a significant double threshold effect on the commercial/economic value obtained from scientific and technological achievements. When the average size of enterprises in a region is small, government subsidies have a negligible effect on the commercial/economic value obtained from technological innovation. As the average firm size reaches a first threshold value, the impact of government subsidies becomes significant and positive. This impact increases further when the average firm size in a region exceeds a second threshold value. These findings improve our understanding of the role of government subsidies for the commercialization stage of the technological innovation process and have important implications for policy makers.

Automated summary

The study reveals a significant double threshold effect of government subsidies on the commercial/economic value obtained from technological innovation, with the impact becoming significant and positive as the average firm size in a region reaches certain threshold values. These findings enhance our understanding of the role of government subsidies in the commercialization stage of the technological innovation process and provide important insights for policy makers.