How government innovation subsidies facilitate concurrent improvements in the quantity and quality of firm innovation?

Abstract Against the backdrop of scientific and technological innovation continuously driving China’s high-quality economic development, the balanced development of corporate innovation has become increasingly important. As a key policy instrument for resource allocation and institutional embedding, government innovation subsidies provide an important perspective for examining their dual impact on the quantity and quality of corporate innovation. This study finds that government innovation subsidies can significantly promote the simultaneous improvement of both quantity and quality in corporate innovation, alleviating the prevalent imbalance of emphasizing quantity over quality. Mechanism analysis shows that government innovation subsidies achieve such dual improvements in innovation quantity and quality mainly through three channels: increasing corporate innovation input, intensifying market competition, and easing financing constraints. Further research indicates that higher levels of industry-university-research collaboration and stronger institutional investor attention both strengthen the positive effect of government innovation subsidies on the quantity of corporate innovation. In particular, government innovation subsidies can improve the quality of innovation in high-tech enterprises, manufacturing enterprises, and non-heavy-polluting enterprises. The conclusions of this paper not only provide empirical evidence for the government to optimize innovation subsidy policies, but also offer important implications for enterprises to allocate innovation resources more efficiently and achieve innovation-driven high-quality growth.