The Effects of Government Subsidy on Entrepreneurial Firm's R & D Expenditure: A Resource Dependence and Institutional Perspective

This study examines the effects of government subsidy, as a kind of government support, on Entrepreneurial Firm's research and development (R & D) expenditure. Using the data of 204 entrepreneurial firms, based on resource dependence theory and institutional theory, the positive relationship between government subsidy and R & D expenditure is found, and the moderating role of thin capital is tested as well. Supplementary study finds that firm size and firm experience are also moderating factors between government subsidy and R & D expenditure. Contributions to the research of R & D, entrepreneurship theory and SME's strategic choice are discussed.