Research on Effects of Government Subsidies on SME R&D

This paper examines the effect of government RD subsidies on enterprise RD expenditure,and analyzes the effects on the SME performance by using the data listed companies in China's SME board. The empirical discoveries show that there is a positive effect of government RD subsidies on private RD expenditure of one-year lag as well as the year,and the effect is more significant on the one-year lag. In addition,there is an inverse U-type curve between RD expenditure and performance of SME. Although there is not a direct impact of government RD subsidies on the SME performance,government RD subsidies indirectly promote the SME development by stimulating the RD expenditure.