The Effect of Tax Incentives on the Performance of Specialized and Sophisticated Small and Medium-Sized Enterprises: The Role of Innovation

Abstract

Tax incentives have been widely used to promote the development of enterprises, especially Specialized and Sophisticated enterprises in Chian. This research endeavors to examine the effects of tax incentives by amalgamating established theoretical frameworks and empirical data, while taking into account the attributes of specialized and sophisticated SMEs. Innovation, serving as a fundamental driver of contemporary economic, technological, and social development, exhibits diverse definitions across various academic fields. This research attempts to explain the direct and indirect ways in which tax incentives influence enterprise performance through examining the relationship between tax incentives, innovation input and output, and enterprise performance. To achieve this, the research uses a multiple linear regression model to test the direct effect of tax incentives on the performance of specialized and sophisticated SMEs. Additionally, a three-step method based on Baron and Kenny (1986) is used to test the mediating role of innovation input between tax incentives and enterprise performance. Furthermore, hierarchical regression is applied to assess the moderating effect of innovation output on the relationship between tax incentives and enterprise performance. The empirical analysis in this article confirms that all hypotheses are valid.