In general, R & D activities of the enterprise are a kind of systematic activity which refers to the improvement of technology, products and services, and the transformation of scientific research results into reliable, cost-effective and innovative products, materials, equipment, processes and services. The R & D activities of enterprises are not only the main way to obtain the core technology, but also the foundation of the survival and development. Since in 2006, the Central Committee of the Communist Party of China put forward the goal of building an innovative country in 2020, the impact factors of R & D investment have been a hot topic in Chinese academic circles. This paper intends to sort out the relevant research results about the factors influencing the R & D investment in enterprises in recent years, and puts forward some ideas and suggestions for further research in the future. The innovation of this research lies in a comprehensive review of the influencing factors of Chinese enterprises’ R & D investment. This article will firstly review the internal factors that affect R & D investment, which includes corporate governance mechanisms, human resources, financial conditions and other internal factors; then the external influence factors, that is fiscal policy and financial support, are reviewed; at the end of the article, we make a summary of the reviews and put forward some recommendations.
2. The Internal Factors Affecting the R &D Investment
In the study of the impact of R & D investment from the company itself, the relevant literature mainly examines the impact of corporate governance mechanisms, human resources, financial conditions and other internal factors on R & D investment.
2.1. Corporate Governance
On the impact of corporate governance mechanism on corporate R & D investment, many domestic scholars have studied from the perspective of the size of the board of directors, executive incentive mechanism, ownership concentration and equity. Evidence from China Gem enterprise data shows that the number of board members and the proportion of executive stock ownership can promote the research and development strength ( Liu Xiaoyuan & Li Yongzhuang, 2012 ). By using the world bank survey data on China’s manufacturing enterprises in 1483, Li Chuntao studied the effect of executive compensation incentive on R & D investment under different ownership structure, which found that the state-owned enterprise is higher than the private enterprise in the R & D intensity, and the manager’s salary incentive can promote the innovation of the enterprise ( Li Chuntao & Song Min, 2010 ). Furthermore, research on Chinese Listed Companies demonstrate that high tech listed companies implementing executive stock incentive are tending to promote their R & D investment ( Tang Qingquan & Xie Weimin, 2013 ), but there is no significant positive correlation between institutional ownership and R & D investment, and the impact of different institutional investors on R & D investment is different ( Li Yingzhao & Wu Jihui, 2013 ). Wen Fang studied R & D data from China listed companies, and found that the incentive effects of equity type on listed company R & D investment intensity ranked from strong to weak: private property holdings, holdings of state-owned enterprises directly under the central government, the local state-owned holding enterprises, state-owned assets management institutions holding ( Wen Fang, 2008 ). In addition, evidence from listed manufacturing and IT industry companies shows that the R & D intensity of state controlled listed companies is significantly lower than that of non-state-owned listed companies.
2.2. Human Resources
From the perspective of human resources, top management team has become the main research subject. In view of Luo Zhengying ( Luo Zhengying, Tang Lingling, & Chang E, 2013 ), the average age of the top management team has no significant impact on R & D investment, but their average tenure is negatively correlated with corporate R & D, and the proportion of the team members with technical background and corporate R & D investment was positively correlated. Besides, the number of R & D personnel and R & D investment is positively related and the number of R & D personnel changes in R & D investment is significantly positive correlation.
2.3. Financial Situation
Another main focus of the research on the factors influencing the R & D investment is the financial situation of the enterprise. Insight from China small board listed companies demonstrates that the more redundant financial resources the company possesses the harder it will promote R & D investment. On the other hand, strict corporate financial control may hinder company’s R & D investment, corporate debt ratio is negatively correlated with R & D investment, corporate profits have significant positive correlation with R & D intensity of private enterprises and foreign-funded enterprises, but the state-owned enterprises are not significant ( Cheng Liwei & Dai Xiaoyong, 2012 ).
2.4. Other Internal Factors
In fact, the size of the enterprise also directly affects the ability of research and development, and affects the R&D input. According to Jiang Tao’s research, there is a positive correlation between R & D investment and firm size ( Jiang Tao, 2013 ). Besides, based on data from 1465 A -stock companies from 2010-2013, Jiang Nanchun’s study shows that earnings per share have significant positive correlation with R & D intensity while asset liability ratio has significant negative correlation with R & D intensity ( Jiang Nanchun, 2015 ).
3. The External Factors Affecting the R & D Investment
In the aspect of external factors, the paper mainly studies the influence of fiscal policy and financial support on R & D investment.
3.1. Fiscal Policy
Research on Yangtze River Delta 77 listed high-tech enterprises about the incentive effect of current income tax preferential policies on R & D investment shows that income tax preferential policies have a positive role in promoting R & D investment, and the long-term effect of this promotion is stronger than the short-term effect (Zhao Yuehong & Xu Min, 2013 ). Similarly, evidence from 67 small board company demonstrates that tax incentives and government subsidies have contributed to R & D investment, and from World Bank data for 2003 it is found that the tax relief policy has significantly promoted the domestic enterprises to increase R & D investment. There’s also research using samples from Chinese Listed Companies shows that with the change of the income tax rate, the tax burden of the company has a significant negative correlation with the intensity of research and development. Research on government R & D subsidies shows that there’s a negative relationship between government subsidies and R & D investment. Base on Gem high-tech enterprises, it is found that the government subsidies and R & D investment of high-tech enterprises are significantly negatively correlated, and only exist in the enterprises with political connections. There’s also similar conclusion derive from Shenzhen SME Board Listed Companies at year 2008. However, some studies have found the opposite conclusion that government subsidies are positively correlated with R & D investment. Evidence from 2003-2005 China listed companies demonstrates that Government R & D subsidies significantly promote enterprise technology innovation.
3.2. Financial Support
Research on the influence of financial support on R & D investment, it’s found that the effect of capital market debt financing on the R & D investment of high-tech listed companies is not obvious, while equity financing is positively correlated with the R & D investment of high-tech listed companies. The reform of the banking market and regional financial development actively promote the R&D investment development of China’s listed companies. Besides, the positive impact of financial development on R & D investment is obvious for small scale enterprises and private companies. More importantly, the development of domestic finance, which is measured by bank credit, stock market and corporate bond market, has greatly promoted the development of the whole industry.
Overall, in the existing literature, the researchers based on different angles studied the influence factors of corporate R & D investment by empirical analysis, which leads new factors to continue to increase, different degree of innovation on the starting point, and continuous improvement of the research system. The conclusions and suggestions for the government and enterprises also have some guidance and reference significance.
Nevertheless, there are also some notable problems. Firstly, the relevant literatures are mostly based on the listed companies, and the discussion of unlisted private enterprises is less. In fact, because of small scale, weak research and less social supervision, there is a big difference between non-listed private enterprises and listed companies in R & D investment decision and behavior. Besides, to enhance the ability of independent innovation of small and medium sized non-listed enterprises is the key link to realize the transformation of the mode of economic growth in China and to build an innovative country. Then to strengthen the study on the non-listed private enterprise of R & D investment factors is necessary. Secondly, in the study of individual factors, although with basically the same samples, data and methods, it leads to different conclusions. It is of great significance to strengthen the research on the transmission mechanism to increase the study efficiency. Last but not least, the present research on the influence of government policy on enterprise R & D investment mainly focuses on tax incentives and Government R & D subsidies; however, the policy of intellectual property rights and human resources policy also have an important impact on R & D investment. I recommend that the future study of government policy should include intellectual property policy and human resource policy.
The authors would like to thank the guest editors and the anonymous reviewers for their constructive comments and developmental suggestions throughout the revision process. I would also like to thank Iris, Flora for invaluable comments and suggestions on previous versions of this manuscript. All remaining errors are my own.
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