Impact Of R&D Subsidies on Enterprise R&D Inefficiency: Empirical Evidence from OECD Countries

Abstract

Due to information asymmetry, the undesirable effects of R&D subsidies misallocation becomes increasingly serious. Based on the OECD national data from 2006 to 2019, we find that R&D inefficiency generally occurs in OECD member countries, and R&D subsidies can aggravate R&D inefficiency. Further exploration into the roots of inefficiency suggests that R&D subsidies can exacerbate both R&D input redundancy and output insufficiency. The mechanism tests show that enterprise information disclosure and venture capital can effectively mitigate the undesirable effect of R&D subsidies on inefficiency. This study contributes to the formulation and implementation of R&D subsidy policies in OECD member countries, and provides practical suggestions for enterprise innovation governance.

Keywords: R&D subsidies, R&D inefficiency, Input redundancy, Output insufficiency