ISSN: 2225-8329
Open access
In the context of globalization, numerous nations have adopted tax incentives aimed at fostering technological innovation and economic development. The paper seeks to investigate global tax incentive policies in detail with specific focus on their efficiency and corporate innovation capacity and performance. It is shown that this strategy has vaguer results in terms of innovation and performance for different kinds and sizes of enterprises. Despite the fact that rewards provide the participants with a positive stimulus, several problems in policy design and implementation were outlined, including the absence of sufficient motivational measures and the complexity of the policy implementation. By comparing the two, this review outlines key elements of effective tax incentive policy, which include the flexibility of the policy, clear policy goals, and policy support for proper internal management within firms. These findings, hence, offer fresh insights for theoretical research and managerial prescriptions to policy makers and business managers for framing and fine-tuning their policy of taxation. Finally, such approaches have the task of defining the conditions for the possible technological advancement and economic growth.
Jahanshahi, A., Gashti, M. A. H., Mirdamadi, S. A., & Nawaser, K. (2011). Studying the relationship between entrepreneurship and innovative performance. Interdisciplinary Journal of Contemporary Research in Business, 3(2), 432-441.
Abernathy, W. J., & Clark, K. B. (1985). Innovation: Mapping the winds of creative destruction. Research Policy, 14(1), 3-22.
Abdelhakim, B. E. N., & Zouaghi, L. (2022). The effect of taxation on financial performance: The case of Tunisian companies. Retrieved from https://doi.org/10.21203/rs.3.rs-2359367/v
Aghion, P., & Howitt, P. (1992). A model of growth through creative destruction. Econometrica, 60(2), 323-351.
Ahmetogullari, K., & Yucel, R. (2022). How do R&D and firm size play a role in the relationship between public incentives and firm performance? Third Sector Social Economic Review, 57(1), 210-230.
Bloom, N., Griffith, R., & Van Reenen, J. (2002). Do R&D tax credits work? Evidence from a panel of countries 1979-1997. Journal of Public Economics, 85(1), 1-31.
Freitas, I., Castellacci, F., Fontana, R., Malerba, F., & Vezzulli, A. (2017). Sectors and the additionality effects of R&D tax credits: A cross-country microeconometric analysis. Research Policy, 46(1), 57-72.
Cataltepe, V., Kamasak, R., Bulutlar, F., & Alkan, D. P. (2022). Dynamic and marketing capabilities as determinants of enterprise performance: Evidence from automotive industry. Journal of Asia Business Studies, 17(3), 617-638.
Chen, L., & Yang, W. (2019). R&D tax credits and firm innovation: Evidence from China. Technological Forecasting and Social Change, 146, 233-241.
Chu, D. Y., Ji, F., & Yang, S. (2017). Fiscal subsidies, tax incentives and patent output of strategic emerging industries. Taxation Research, 99-104.
Cohen, W. M., Nelson, R. R., & Walsh, J. P. (2002). Links and impacts: The influence of public research on industrial R&D. Management Science, 48(1), 1-23.
Costa, J., & Moreira, A. C. (2022). Public policies, open innovation ecosystems and innovation performance: Analysis of the impact of funding and regulations. Journal of Open Innovation: Technology, Market, and Complexity, 8(4), 210.
Dai, C., & Chapman, G. (2022). R&D tax incentives and innovation: Examining the role of programme design in China. Technovation, 113, 102419.
Dai, C., & Liu, Y. (2008). Comparative analysis of the influence of tax incentives and financial subsidies on enterprise R&D. Economic Science, (3), 58-71.
Damanpour, F., Walker, R. M., & Avellaneda, C. N. (2009). Combinative effects of innovation types and organizational performance: A longitudinal study of service organizations. Journal of Management Studies, 46(4), 650-675.
Dhar, B. K., & Mutalib, M. (2020). Leadership of Xi Jinping behind unstoppable sustainable economic growth of China. International Journal of Organizational Leadership, 9, 39-47.
Drucker, P. F. (1986). Innovation and entrepreneurship: Practice and principles. Harper & Row.
Febrianti, A. M., & Jufri, N. S. N. (2022). Examining the predictors of enterprise performance: The role of transformational leadership, HRM digitalization, and organizational commitment. International Journal of Research in Business and Social Science, 11(4), 131-139.
Genschel, P., & Seelkopf, L. (2016). Did they learn to tax? Taxation trends outside the OECD. Review of International Political Economy, 23(2), 316-344.
Ghazinoory, S., & Hashemi, Z. (2020). Do tax incentives and direct funding enhance innovation input and output in high-tech enterprises? The Journal of High Technology Management Research, 32(4), 100394.
Gokhberg, L., Kitova, G., & Roud, V. (2014). Tax incentives for R&D and innovation: Demand versus effects. ???????, 8(3), 18-41.
González-Rodríguez, M. R., Diaz-Fernandez, M. C., Shi, F., & Okumus, F. (2021). Exploring the links among corporate social responsibility, reputation, and performance from a multi-dimensional perspective. International Journal of Hospitality Management, 99, 103079.
Hall, B. H., & Van Reenen, J. (2000). How effective are fiscal incentives for R&D? A review of the evidence. Research Policy, 29(4-5), 449-469.
Hofman, B. (2018). Reflections on 40 years of China's reforms. In R. Garnaut, L. Song, & F. Cai (Eds.), China's 40 Years of Reform and Development (pp. 53-66). ANU Press.
Huang, N., & Liu, Y. (2024). Structural tax reduction, financing constraint relief and enterprise innovation efficiency. Finance Research Letters, 60, 104848.
Imran, M., & Rehman, Z. U. (2024). Interplay of government support and foreign investment in enhancing R&D in China's strategic sectors. Journal of Organizational Technology and Entrepreneurship, 2(1), 1-13.
Jahanger, A. (2021). Influence of FDI characteristics on high-quality development of China's economy. Environmental Science and Pollution Research, 28, 18977-18988.
Jia, J., & Ma, G. (2017). Do R&D tax incentives work? Firm-level evidence from China. China Economic Review, 46, 50-66.
Keen, M., & Mansour, M. (2010). Revenue mobilisation in sub?Saharan Africa: Challenges from globalisation I–Trade reform. Development Policy Review, 28(5), 553-571.
Knoll, B., Riedel, N., Schwab, T., Todtenhaupt, M., & Voget, J. (2021). Cross-border effects of R&D tax incentives. Research Policy, 50(9), 104326.
Kotsemir, M., & Meissner, D. (2013). Conceptualizing the innovation process–trends and outlook. Higher School of Economics Research Paper No. WP BPR, 10.
Lee, M., & Huang, Y. L. (2020). Corporate social responsibility and enterprise performance: A hybrid text mining algorithm. Sustainability, 12(8), 3075.
Li, H. (2023). The effect of tax incentives on high-tech industries innovation. In Proceedings of the 4th Management Science Informatization and Economic Innovation Development Conference, MSIEID 2022, December 9-11, 2022, Chongqing, China.
Li, J. (2023). Can fiscal subsidies and tax incentives stimulate high-quality innovation in strategic emerging industries? Explanation based on enterprise life cycle theory. Frontiers in Business, Economics and Management, 9(2), 62-71.
Lin, M., & Lin, Y. (2023). Government incentive and R&D innovation: Based on the research of environmental protection listed companies. Frontiers in Business, Economics and Management, 9(1), 244-247.
Lin, Z. F., & Liu, S. Y. (2017). Tax burden and enterprises' R&D innovation - Empirical evidence from World Bank Chinese enterprise survey data. Fiscal Studies, (2), 15.
Liu, Y., & Mao, J. (2019). How do tax incentives affect investment and productivity? Firm-level evidence from China. American Economic Journal: Economic Policy, 11(3), 261-291.
McElroy, M. W., & Van Engelen, J. M. (2012). Corporate sustainability management: The art and science of managing non-financial performance. London, UK: Routledge.
Moore, J. F. (1993). Predators and prey: A new ecology of competition. Harvard Business Review, 71(3), 75-86.
Mousavi, S., Bossink, B., & Van Vliet, M. (2019). Microfoundations of companies' dynamic capabilities for environmentally sustainable innovation: Case study insights from high?tech innovation in science?based companies. Business Strategy and the Environment, 28(2), 366-387.
Mulyadi, H. D. (2022). Determinants of financial performance and its impact on firm value. Accounting and Finance Studies, 2(1), 77-102.
Nelson, R. R., & Winter, S. G. (1982). An evolutionary theory of economic change. London, England: Harvard University Press.
Oltra, V., & Flor, M. L. (2010). The role of networks in the diffusion of technological innovation. European Journal of Innovation Management, 13(3), 299-322.
Pekarski, S. E. (2024). Soaring public debt: Return of financial repression and high inflation? Voprosy Ekonomiki, (1).
Razi, Y. M., Kharuddin, K. A. M., & Abd Hamid, N. (2024). Effective tax rate, board diversity, and enterprise performance: Evidence from the electric and electronic industry. Journal of Asian Scientific Research, 14(1), 10-21.
Rosenberg, N. (1982). Inside the black box: Technology and economics. Cambridge, England: Cambridge University Press.
Schumpeter, J. A. (1934). The theory of economic development. Cambridge, England: Harvard University Press.
Scott, W. R. (2008). Institutions and organizations: Ideas and interests. Los Angeles, CA: SAGE Publications.
Soni, T. K., Arora, A., & Le, T. (2022). Firm-specific determinants of enterprise performance in the hospitality sector in India. Sustainability, 15(1), 554.
Sterlacchini, A., & Venturini, F. (2019). R&D tax incentives in EU countries: Does the impact vary with firm size? Small Business Economics, 53(3), 687-708.
Sun, Y. (2018). Quantitative analysis of science and technology innovation tax incentives policy based on three-dimensional framework. Taxation Research, (9), 7.
Sun, Y. (2022). Tax incentives, tax enforcement, and enterprise R&D investment: Evidence from Chinese A-share listed companies. Frontiers in Psychology, 13, 953313.
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509-533.
Tian, B., Yu, B., Chen, S., & Ye, J. (2020). Tax incentive, R&D investment and firm innovation: Evidence from China. Journal of Asian Economics, 71, 101245.
Tidd, J., & Bessant, J. (2020). Managing innovation: Integrating technological, market and organizational change. New Jersey, USA: John Wiley & Sons.
Ting, Z. T., Sheng, H. Y., & Hong, W. (2019). Tax preference, R&D and innovation quality: An empirical study based on the mediating effect model. In 2019 International Conference on Strategic Management.
Wang, Q., Huang, Y. N., & Zhang, D. S. (2019). Research on fiscal and tax policies to support the transformation of scientific and technological achievements. Contemporary Finance and Economics, (7), 9.
Wang, R., & Kesan, J. P. (2022). Do tax policies drive innovation by SMEs in China? Journal of Small Business Management, 60(2), 309-346.
Wang, Y., Li, L., & Wang, B. (2019). On the effects of tax incentives and subsidies on promotion of enterprise innovation. Taxation Research, 6(06), 92-98.
Xie, Y. J. (2019). Research on the effect of tax and tax source deviation on inter-regional tax differences in China. Times Finance, (15), 5.
Xiong, R., Wei, P., Yang, J., & Cristofini, L. A. (2023). Tax incentive, R&D manipulation and enterprises' innovation performance: The moderating role of political connections. International Journal of Technology Management, 91(3-4), 264-285.
Yu, Y., & Xu, Q. (2022). Tax incentive policy and enterprise innovation: From enterprise heterogeneous perspective. Discrete Dynamics in Nature and Society, 2022, 1-8.
Zhou, C., Zhang, S., & Chen, H. (2020). The influence and adjustment of product market competition and tax incentives on enterprise innovation output. International Journal of Social Science and Education Research, 3(4), 115-125.
(Qiong et al., 2024)
Qiong, P., Ismail, Z., & Rapani, N. H. A. (2024). The Effect of Tax Incentives on Innovation and Enterprise Performance: A Literature Review. International Journal of Academic Research in Accounting, Finance and Management Sciences, 14(3), 183–195.
Copyright: © 2024 The Author(s)
Published by HRMARS (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode