Positive or negative? R&D subsidies and green technology innovation: Evidence from China's renewable energy industry

Existing studies have separately discussed the significance of R&D subsidies (RDS) and green technology innovation (GTI) in the renewable energy (RE) industry. However, there is limited research exploring the relationship between them, underestimating the actual incentive effect of RDS on GTI in the RE industry. Using data from 160 listed RE companies in China from 2011 to 2020, this study aims to investigate the direct influence of RDS on GTI in the RE industry and uncover the underlying theoretical mechanisms. Our results reveal an inverted U-shaped association between RDS and GTI of RE companies, indicating an optimal value for the promotion effect of RDS on GTI. Furthermore, we find that RDS can indirectly influence the performance of GTI of RE companies by affecting the intensity of their R&D investments. The results of heterogeneity analysis show that the influence of RDS on GTI in the RE industry varies depending on factors, such as company lifecycles, ownerships, scales, and geographical characteristics. The empirical results of this study have significant implications for optimizing existing subsidy mechanisms to foster the development of GTI in China's RE industry.