Abstract:

This paper studies the effect of government research and development (R&D) subsidies and political relations on the innovative activities of technological small and medium-sized enterprises (SMEs). Moreover, the technology innovation path of SMEs is an important issue related to government R&D subsidies. This paper explores these effects using multiple case studies. Through case analyses of four biological pharmaceutical enterprises, we found that first, technological SMEs that receive a significant amount of government R&D subsidies will transform from exploitative innovation to explorative innovation in a short amount of time, whereas technological SMEs that receive less government R&D subsidies will perform less innovative activities over a long time. Second, technological SMEs with strong political relations tend to do more explorative innovation, whereas technological SMEs with weak political relations tend to do more exploitative innovation. Third, technological SMEs with strong political relations will promote the positive effect of government R&D subsidies on their innovation performance.