Title: Incentive mechanism of SMEs innovation policy: empirical evidence from Zhejiang province, China

Authors: Ya Sheng; Xuan Xu; Kejie Zhu

Addresses: School of Business Administration, Zhejiang Gongshang University, No. 18 Xuezheng Street, Hangzhou, Zhengjang Province 310018, China ' School of Business Administration, Zhejiang Gongshang University, No. 18 Xuezheng Street, Hangzhou, Zhengjang Province 310018, China ' Agricultural Bank of China (ABC) Ningbo Branch, Yuyao Sub-branch, No. 238, South Binjiang Road, Yuyao City, Zhengjang Province 315400, China

Abstract: Small and Medium-Sized Enterprises (SMEs) are an essential part of the national economy in China. Both central and local governments attempt to encourage SMEs' development activities by designing various policies, but Chinese innovation policies and unsatisfied requirements of SMEs gaps are still obvious. Therefore, this paper investigated the incentive mechanism of SMEs innovation policy based on incentive theory and public policy theory. Using a unique data of 208 SMEs from Zhejiang in China, we examined how Chinese innovation policies impact on SMEs' innovation behaviours. We found that the all three sides of Chinese innovation policies, support, demand, and environment, have positive effects on SMEs' innovation behaviours, but the degrees of positive effects of these policies are different. Moreover, Chinese innovation policies have a great positive effect on SMEs' innovation incentives. Research suggested that SMEs' innovation incentives cannot be completely turned into their practical innovation behaviours.

Keywords: innovation policy; innovation incentives; innovation behaviour; incentive mechanisms; SMEs; small and medium-sized enterprises; China; SME innovation policy; entrepreneurship.

DOI: 10.1504/IJTPM.2014.060155

International Journal of Technology, Policy and Management, 2014 Vol.14 No.2, pp.160 - 179

Received: 04 Mar 2013
Accepted: 11 Aug 2013

Published online: 27 Oct 2014 *

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