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Will Increasing Government Subsidies Promote Open Innovation? A Simulation Analysis of China’s Wind Power Industry

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  • Wei Gao

    (School of Economics and Management, China University of Mining and Technology, Xuzhou 221116, China)

  • Daojuan Wang

    (The Faculty of Social Sciences, Aalborg University Business School, DK-9220 Aalborg, Denmark)

Abstract

Keeping open innovation both stable and sustainable can be difficult when it involves cooperation between large enterprises. Some empirical studies suggest that subsidy policies can play a positive role. This study addresses two key questions that follow from this observation: first, if the intensity of a subsidy policy is increased, can it play a greater role in strengthening the stability of cooperation between firms? Second, what other factors play a mediating role in this effect? Utilizing a dynamic game model, this paper analyses influential factors such as absorptive capacity, frequency of engagement and technical value on cooperative stability, and investigates the role of innovation policy in the process of cooperation through a random number-driven simulation. The findings indicate that only when the absorption capacity and technological value of both partners meet a certain threshold is the probability of positive cooperative behavior improved. Otherwise, increased subsidies tend to foster negative cooperative behavior instead.

Suggested Citation

  • Wei Gao & Daojuan Wang, 2021. "Will Increasing Government Subsidies Promote Open Innovation? A Simulation Analysis of China’s Wind Power Industry," Sustainability, MDPI, vol. 13(23), pages 1-20, December.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:23:p:13497-:d:696178
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    Cited by:

    1. Jing Li & Bingqing Liang & Zhenjun Yan, 2022. "Too Much of a Good Thing? The Impact of Government Subsidies on Incubator Services: Empirical Evidence from China," Sustainability, MDPI, vol. 14(21), pages 1-23, November.

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