The Impact of Innovation Policy Mix on Innovation Capability of SMEs

Abstract

Innovation has become an important engine for promoting rapid economic development to high-quality development in the 21st century. Small and medium-sized enterprises (SMEs) are the most important innovation subjects in China, but due to the risk characteristics and positive externalities of innovation, innovation cannot only rely on the spontaneous behavior of enterprises, but also needs the support of national innovation policies. Based on this, this paper takes the listed SMEs from 2015 to 2019 as a sample to study the impact of three types of innovation policies—supply-based innovation policies, demand-based innovation policies, and environmental-based innovation policies on the innovation activities of SMEs. Further, we will explore whether there is synergy between different types of policies from the perspective of policy tool combination. The study found that supply-based innovation policy and environmental-based innovation policy can significantly improve the innovation capability of enterprises, while demand-based innovation policy has no significant impact. In addition, supply-based policies and environmental-based policies are complementary, which can alleviate the inhibitory effect of corporate financing constraints on innovation. This conclusion still holds under different robustness tests. Finally, this paper finds that the single and combined effects of innovation policies show differences in enterprises with different characteristics. For enterprises in the eastern region, high-tech enterprises, and large-scale enterprises, the supply-based innovation policy has a stronger role in promoting innovation. For enterprises in the central and western regions and high-tech enterprises, the environmental innovation policy has a stronger incentive for innovation, and the policy synergies exist only in eastern enterprises, high-tech enterprises and small-scale enterprises.