UPSI Digital Repository (UDRep)
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UPSI Digital Repository (UDRep)
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| Abstract : Perpustakaan Tuanku Bainun |
| This study investigates the impact of tax incentives on the performance of China_s Specialized and Sophisticated Small and Medium-sized Enterprises (SMEs), with particular attention to the mediating role of innovation input and the moderating role of innovation output. Utilizing an unbalanced panel dataset comprising 591 SMEs and 3,237 firm-year observations from the Growth Enterprise Market (GEM) Board of the Shenzhen Stock Exchange over the period 2010_2022, the study employs a two-way fixed effects model for empirical analysis. The results indicate that tax incentives significantly improve enterprise performance (_ = 0.044, p-value < 0.01) and substantially increase innovation input (_ = 0.103, p-value < 0.01). Innovation input is found to partially mediate this relationship, contributing to a marginal improvement in performance (_ = 0.005, p-value < 0.01). Furthermore, innovation output exerts a significant moderating effect (_ = 0.002, p-value < 0.05), suggesting that enterprises with higher levels of innovation output derive greater benefits from tax incentives. The analysis also reveals heterogeneity in the effects of tax incentives across ownership structures and geographic regions, with stronger impacts observed among non-state-owned enterprises and those located in western China. Grounded in Institutional Theory and Resource-Based Theory, this study demonstrates that tax incentives improve enterprise performance by facilitating institutional alignment and promoting more effective resource deployment. The findings offer practical implications for policymakers seeking to refine incentive schemes based on regional and ownership characteristics, and for enterprises aiming to strengthen their resource integration and policy responsiveness capacities. |
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