How government subsidies promote the growth of entrepreneurial companies in clean energy industry: An empirical study in China

Under the context that entrepreneurial risk in clean energy industry has become increasingly complex, government subsidies are helpful to guide and promote the entrepreneurial companies' survival and development. This paper explored the roles of government subsidies, more specifically, in forms of government subsidies beforehand and government subsidies afterwards on the relationship between R&D and entrepreneurial companies' growth, particularly in the clean energy industry. To delve deeper into the roles, this paper analysed data from the 2013 and 2014 annual reports of 58 listed companies in clean energy industries in China. By using a moderating effect model, this paper derived following conclusions: (1) R&D investment does not have a lag effect on entrepreneurial companies' growth; (2) Government subsidies beforehand have negative moderating effects on the relationship between R&D investment and entrepreneurial companies' growth; (3) Government subsidies afterwards have positive moderating effects on the relationship between R&D investment and entrepreneurial companies' growth. This paper helped to understand the difference between the functions of government subsidies beforehand and government subsidies afterwards. To some extent, the results can revise prior studies about the function of government subsidies to influence the relationship between R&D and entrepreneurial companies’ growth. The results will also be helpful for the government to evaluate the performance of government subsidies and design appropriate subsidies strategies.