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Can government-guided funds promote innovation output in strategic emerging enterprises? Evidence from China

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  • Chunyan Zhao
  • Lu Zhang

Abstract

Using 9,138 observations from 731 strategic emerging enterprises in China’s A-share market between 2010 and 2023, this study explores the impact of government-guided funds on innovation in these enterprises and their underlying mechanisms. The main empirical findings are as follows: Firstly, there is a positive correlation between government-guided funds and innovation output in strategic emerging enterprises, and their endogeneity and robustness have been tested using instrumental variable methods and a series of other methods. Secondly, government-guided funds significantly enhance corporate innovation output through two pathways: one is by alleviating financing constraints on technological R&D; the other is by enhancing companies’ ability to access policy resources such as tax incentives. Thirdly, heterogeneity tests indicate that the innovative incentive effect of government-guided funds is more pronounced in eastern regions, state-owned enterprises, and companies with higher capital intensity from downstream customers. This study focuses on strategic emerging enterprises, providing a new perspective on the impact of government-guided funds on corporate innovation.

Suggested Citation

  • Chunyan Zhao & Lu Zhang, 2025. "Can government-guided funds promote innovation output in strategic emerging enterprises? Evidence from China," PLOS ONE, Public Library of Science, vol. 20(10), pages 1-14, October.
    • Handle: RePEc:plo:pone00:0334826
    DOI: 10.1371/journal.pone.0334826
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    References listed on IDEAS

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    1. Jacobson, Louis S & LaLonde, Robert J & Sullivan, Daniel G, 1993. "Earnings Losses of Displaced Workers," American Economic Review, American Economic Association, vol. 83(4), pages 685-709, September.
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