The impact of demand-pull and supply-push policies on technological innovation: does the type of policy matter?
by Fang Yuan; Mingshan Li; Xiaohua Sun; Yu Zhai
International Journal of Technology Management (IJTM), Vol. 92, No. 4, 2023

Abstract: This paper probes the impact of industrial policy supports on innovation promotion for the equipment manufacturing industry in China. By sorting out the policy incentives in accordance with the types of demand-pull and supply-push, we go beyond the literature by further highlighting the differentiated effects of these two instrumental categories on different types of innovation. Based on provincial data, we applied a difference-in-differences method and used granted inventions and utility models for patents to indicate product innovation and process innovation, respectively. According to the empirical results, demand-pull policies promote process innovation, while supply-push policies could foster product innovation activities. In addition, demand-pull policies take effect with a time lag for process innovation. However, the impact of supply-push policies on product innovation reaches its apex one year later and then decreases over time. Our findings indicate that the incentive effect on firm innovation primarily comes from the enhancement of R&D investments.

Online publication date: Tue, 14-Mar-2023

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