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ORIGINAL RESEARCH article

Front. Public Health
Sec. Health Economics
Volume 13 - 2025 | doi: 10.3389/fpubh.2025.1531622

Examining how fiscal policies influence innovation in TCM enterprises: The role of R&D investment and executives with pharmaceutical backgrounds

Provisionally accepted
Dan Guo Dan Guo *Liwen Qi Liwen Qi Xiaoting Song Xiaoting Song
  • International College of Intellectual Property, Tongji University, Shanghai, China

The final, formatted version of the article will be published soon.

    Innovation is crucial to realize the modernization and industrialization of traditional Chinese medicine (TCM), so its incentive methods and influence mechanisms are worth exploring. Based on externality theory and imprinting theory, this paper demonstrates the significance of external support and internal resources in the innovation of TCM enterprises.This study adopts a sample of listed TCM enterprises in China during 2007-2023 to examine the impacts and differences between innovation subsidies and tax incentives on TCM enterprise innovation. Innovation in TCM enterprises is deconstructed into five dimensions, including innovation quantity (InNum), innovation quality (InQua), substantive innovation (SubIn), strategic innovation (StrIn), and inheritance innovation (InhIn).Results: It is found that the incentive effect of innovation subsidies on other dimensions of innovation in TCM firms is generally stronger than that of tax incentives, except for strategic innovation. Heterogeneity analysis indicates that the promoting effect of tax incentives is more significant in the southern TCM production region. Moreover, R&D investment mediates the relationship between innovation subsidies and innovation of TCM enterprises. Furthermore, executives with pharmaceutical backgrounds (EPB) strengthen the impact of innovation subsidies on innovation in various dimensions of TCM enterprises, while EPB only strengthens the impact of tax incentives on innovation quality and substantive innovation.Discussion: The findings provide new insights for government and TCM enterprises to promote innovation.

    Keywords: Innovation subsidies, tax incentives, Executives with pharmaceutical backgrounds, Traditional Chinese Medicine, Enterprise innovation

    Received: 20 Nov 2024; Accepted: 07 Feb 2025.

    Copyright: © 2025 Guo, Qi and Song. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

    * Correspondence: Dan Guo, International College of Intellectual Property, Tongji University, Shanghai, China

    Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.