{"title":"Pushing boundaries or overstepping? Exploring the paradoxical impact of radical innovation on government subsidies in Chinese SMEs","authors":"Xin Pan , Xuanjin Chen , Shumin Qiu","doi":"10.1016/j.technovation.2024.102988","DOIUrl":null,"url":null,"abstract":"<div><p>Does radical innovation always benefit small and medium-sized enterprises (SMEs)? This paper explores the potential drawbacks of radical innovation by examining the complex relationship between the degree of innovation radicalness and government subsidies, within the framework of dual-process signalling theory. The study highlights the importance of both signal observability and the costs of signal interpretation in the context of obtaining government subsidies. Although an increase in innovation radicalness may enhance a firm's visibility to governments, it also significantly raises the costs associated with interpreting signals. As a result, there is an inverted U-shaped relationship between innovation radicalness and government subsidies. Furthermore, we found a positive moderating effect of political connections, suggesting that signal observability increases with stronger political ties. We tested our hypotheses using data from listed SMEs in China between 2004 and 2019. Our findings contribute to the literature on innovation and SMEs by indicating that the effects of radicalness may represent a case of ‘too much of a good thing’ for firms.</p></div>","PeriodicalId":49444,"journal":{"name":"Technovation","volume":null,"pages":null},"PeriodicalIF":11.1000,"publicationDate":"2024-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Technovation","FirstCategoryId":"91","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0166497224000385","RegionNum":1,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ENGINEERING, INDUSTRIAL","Score":null,"Total":0}
引用次数: 0
Abstract
Does radical innovation always benefit small and medium-sized enterprises (SMEs)? This paper explores the potential drawbacks of radical innovation by examining the complex relationship between the degree of innovation radicalness and government subsidies, within the framework of dual-process signalling theory. The study highlights the importance of both signal observability and the costs of signal interpretation in the context of obtaining government subsidies. Although an increase in innovation radicalness may enhance a firm's visibility to governments, it also significantly raises the costs associated with interpreting signals. As a result, there is an inverted U-shaped relationship between innovation radicalness and government subsidies. Furthermore, we found a positive moderating effect of political connections, suggesting that signal observability increases with stronger political ties. We tested our hypotheses using data from listed SMEs in China between 2004 and 2019. Our findings contribute to the literature on innovation and SMEs by indicating that the effects of radicalness may represent a case of ‘too much of a good thing’ for firms.
期刊介绍:
The interdisciplinary journal Technovation covers various aspects of technological innovation, exploring processes, products, and social impacts. It examines innovation in both process and product realms, including social innovations like regulatory frameworks and non-economic benefits. Topics range from emerging trends and capital for development to managing technology-intensive ventures and innovation in organizations of different sizes. It also discusses organizational structures, investment strategies for science and technology enterprises, and the roles of technological innovators. Additionally, it addresses technology transfer between developing countries and innovation across enterprise, political, and economic systems.