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R&D subsidies, novelty of firm innovation and industrial technological complexity: the knowledge recombinant view
Author(s) -
Ning Lutao,
Guo Rui,
Chen Kaihua
Publication year - 2022
Publication title -
randd management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.253
H-Index - 102
eISSN - 1467-9310
pISSN - 0033-6807
DOI - 10.1111/radm.12523
Subject(s) - subsidy , novelty , reuse , industrial organization , business , investment (military) , marketing , economics , market economy , ecology , philosophy , theology , politics , political science , law , biology
Firms receiving R&D subsidies are often assumed to be able to overcome market failure and have a socially desired level of R&D investment for technological innovation. However, we know relatively little about the impact of R&D subsidies on the way firms achieve innovation novelty. Drawing upon the knowledge recombinant view, this paper investigates how subsidized firms innovate with different dimensions of novelty by exploring their underlying knowledge recombination mechanisms. Using a unique dataset of 21,084 Chinese firms with 433,321 patents located in China’s equivalent of Silicon Valley, Zhongguancun, for the period 2009–2015, our empirical findings reveal that R&D subsidies foster firms to reuse existing combinations to innovate while discouraging the creation of new combinations beyond firms’ existing knowledge repertoires. These effects are further subject to industrial technological complexity in firms’ innovation environment which heightens subsidized firms’ innovation novelty based on recombinant reuse while damping recombinant creation. Theoretical and managerial implications are discussed.