Export, subsidy and innovation: China's state-owned enterprises versus privately-owned enterprises

In this study, we advance the literature on export and government subsidy by examining their effects in the context of China, a fast-growing emerging economy, and comparing the effects across ownership of enterprises. We examine the relationship among export, government support and firms' innovation capability, and how these relationships differ between state-owned and private owned enterprises, by using a large data sample of Chinese firms (2003-2007). First, we find that there exists an inverted U-shaped relationship between export and innovation in state-owned enterprises, but not in private owned enterprises. Second, there is a positive effect of government subsidy on firms' innovation capability. Finally, from the sub-sample analyses, we identify differences in the impact of government support between SOEs and POEs. This study will inspire future research into these issues in the disciplines of marketing, management and international business.