Is the incentive of Mixed Industrial Policy to enterprise innovation “real”?

Abstract

This paper uses the 2005-2015 Chinese industrial enterprise data to analyze the impact of China's mixed industrial policy on corporate innovation behavior, attempting to solve2 questions: Does the mixed industrial policy have a real positive effect on innovation? what kind of enterprises can create real innovation？Through theoretical analysis and preliminary regression, we find that companies that are motivated by industrial policies have significantly increased patent applications, but only non-inventive patents, pursuing “quantity” and neglecting “quality”. Further analysis of the grouping of enterprises found that the above phenomenon is more prominent in enterprises with government contacts. This shows that the selective industrial policy only encourages strategic innovation of enterprises, and enterprises increase the “quantity” of innovation for “seeking support”, and the innovation “quality” has not been significantly improved.