Abstract
Financing difficulty is recognized as the main bottleneck in the technology innovation process of small- and medium-sized enterprises (SMEs). The governments generally provide financial support for SMEs’ innovation activities. Numerous research studies have been conducted on the role of the government in enterprises’ innovation, while there is no consistent conclusion on whether government subsidies can improve stakeholder collaboration and effectively ease financing constraints of SMEs’ innovation. Due to information asymmetry and the bounded rationality, the dynamic game among the government, external investors, and SMEs has the characteristics of complexity. This paper aims to explore the collective strategies of the major stakeholders in SMEs’ innovation and investigate the effect of antecedents on innovation activities. We establish a trilateral evolutionary game model on the relationship among the government, external investors, and SMEs. The simulation results show that the evolutionary system converges quickly to the equilibrium; when the government subsidies decrease, the external investors’ appraisal costs decrease and the investment amount and return rates of external investors increase. Furthermore, under the condition of government subsidies, external investors will not change their investment strategies even if the external investors’ recognition costs have exceeded their return on SMEs’ investment. The findings can provide good reference for the government to solve the financing problem of SMEs’ innovation.
Highlights
Technology innovation is widely believed to be the main driving force for economic growth [1]. e enterprises may require a substantial capital investment, since technology innovation is a long-term and sustainable process
Government subsidies have become the common measures adopted by many countries to support enterprises’ innovation. e widely accepted reason for the government to subsidize R&D activities is the existence of market failures, which create a gap between private bene ts and social bene ts derived from R&D activities [8]. e positive spillover e ect of R&D activities will lead to lower R&D
We examine the effects of government subsidies on the strategy choices of small- and medium-sized enterprises (SMEs) and external investors
Summary
Technology innovation is widely believed to be the main driving force for economic growth [1]. e enterprises may require a substantial capital investment, since technology innovation is a long-term and sustainable process. We consider the effects of government subsidies on the investment decisions of external investors to SMEs’ innovation. We examine the effects of government subsidies on the strategy choices of SMEs and external investors. This paper mainly focuses on the cooperation mechanism among the government, SMEs, and external investors in the decision-making process of SMEs’ innovation. There is no consistent conclusion on whether government subsidies can alleviate the financing constraints of enterprises and bring significant increase in innovation output [4, 15] To solve this problem, it is necessary to sort out the decisionmaking behavior, disclose the conflicts of interest among groups of stakeholders, and find a practical solution.
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