How Do Innovation-Driven Policies Help Sports Firms Sustain Growth? The Mediating Role of R&D Investment

Abstract

The sports industry features low energy intensity and low emissions through which it has played an important role in realizing sustainable development. This study aims to examine the driving factors that help sports firms improve their innovation development and sustain growth. Using a panel of 95 sports firms listed on the New Third Board in China from 2015 to 2021 with 582 observations, this study evaluated the effect of innovation-driven policies on sports firms’ long-term growth, measured by market value, and the mediating effect of R&D investment on this relationship. The results showed that innovation subsidies and the deduction of R&D expenses can effectively encourage sports firms’ engagement in innovation development and finally help improve the firms’ market value. Furthermore, we found that the effect of R&D subsidies on sports firms’ market values increases with firm size. This study provides new insights into the literature on the long-term growth of sports firms by showing that policy support for sports firms’ innovation activities enables them to invest more resources into research and development activities, which finally reinforce their potential of long-term growth. Furthermore, the findings provide practical suggestions for policymakers on enhancing the development of the sports industry and helping sports firms sustain growth.