HOW FUNDING STRUCTURE AFFECTS EFFICIENCY OF R&D INVESTMENT BY LARGE- AND MEDIUM-SIZED INDUSTRIAL FIRMS IN CHINA? EVIDENCE FROM PROVINCE-LEVEL PANEL DATA

Abstract

© 2017 World Scientific Publishing Company This study explores the efficiencies of firm’s R & D investment depending on the degree of reliance on government funding relative to firms’ private funding. Stochastic frontier analysis is applied on a sample of 30 provinces with data on R & D inputs and innovation outputs by all large- and medium-sized industrial firms in these provinces from 2000 to 2013. It is found that R & D investment financed by firms’ private funding is more efficient than that by government funding in generating new products, whereas R & D investment financed by government funding is more efficient than that by firms’ private funding in producing new patents.