In a recent article published in the Economic Information Daily, Professor Luo Jinlian and doctoral students Wang Xianglu and Tang Huijie from Tongji SEM’s Department of Organizational Management (under preparation) stated that policies pertaining to innovation protection and support should be improved in areas such as innovation initiation, R&D processes, achievement implementation, and sustainability, in order to create a favorable environment for enterprise innovation. The published original text is as follows.

Chinese sci-tech innovation enterprises have been evolving and expanding as vanguards and fresh forces for fostering and developing new quality productive forces. They have pushed China to the forefront of industries including information technology, satellite navigation, new energy, key materials, and biomedicine, while continuously giving fresh impetus to economic growth. On the other hand, it is important to recognize that sci-tech innovation enterprises still face problems, such as inadequate assistance from the innovation ecosystem, and a scarcity of compound talents. Therefore, in order to create a favorable environment for enterprise innovation, it is imperative that relevant support policies be improved as soon as possible from aspects such as innovation initiation, R&D processes, achievement implementation, and sustainability.

Bottlenecks in innovation

The sci-tech innovation and achievement transformation of sci-tech innovation enterprises require long-term high-level R&D investment. Government departments in China have introduced a series of policies to encourage sci-tech innovation. However, some policies do not align well with the requirements of enterprises, and more improvements are needed to maximize the effectiveness of these policies.

First, current policies on scientific research projects do not match the development status of sci-tech innovation enterprises; second, finance challenges and high financing costs are major issues for sci-tech innovation enterprises; and third, it is challenging for sci-tech innovation enterprises to take advantage of tax incentives.

Sci-tech innovation enterprises face many access constraints and unseen hurdles in the competitive market.

The innovation ecosystem offers little support to sci-tech innovation enterprises, and upstream-downstream collaborative innovation is still constrained.

There is a dearth of compound talents who are aware of both technology and the market, and even if such talents are available, there are no development pathways for them. The majority of employees at sci-tech innovation enterprises are technical talents; there is a deficiency of compound talents with knowledge of market demand and core technologies.

First, the technical talents of sci-tech innovation enterprises have weaknesses in corporate governance, particularly a lack of knowledge of the authorization system and equity distribution; they tend to prioritize technology over resources and products over management, making it difficult for these enterprises to establish themselves and grow in the market after achieving technological breakthroughs; second, the professional title evaluation of talents is not available to sci-tech innovation enterprises, and the management functions of their human resources departments are primarily restricted to daily attendance, payment of salaries, distribution of benefits, and recruitment of personnel in the start-up stage. These departments are unable to adequately support the professional title application and evaluation of enterprise talents, which limits the opportunities for talent advancement in such enterprises; and third, because some sci-tech innovation enterprises are worried about brain drain, they are hesitant to invest too much in employee training, which further erodes employees’ confidence and loyalty to the enterprises.

Protection for innovation initiation

In order to maximize the government’s leverage, a series of support policies should be developed according to the characteristics of sci-tech innovation enterprises. Firstly, the government should maximize financing and other forms of assistance for start-up enterprises engaged in sci-tech innovation. Small in size and lacking a steady stream of revenue, start-up sci-tech innovation enterprises urgently need legislative backing for R&D expenditures. To fund the technological breakthrough activities of start-up sci-tech innovation enterprises, the government can, therefore, set aside a specific amount of money for National Science and Technology Major Projects. Additionally, the government can advise localities to establish sub-funds for sci-tech innovation enterprises in guiding funds that support the transformation of various sci-tech achievements and create special risk compensation funds in order to attract more capital for conducting early and small-amount investments in hard technology and to promote the vitality of sci-tech innovation in sci-tech innovation enterprises. Secondly, the government should modernize its financing system and fully utilize the leverage that comes with using public money. If funding is scarce, in addition to providing targeted assistance for sci-tech policies, the government can establish guarantee institutions and a government-bank financing guarantee mechanism to provide enterprises with external legitimacy. This would increase the number of financing channels available to sci-tech innovation enterprises. Thirdly, the government should increase tax incentives before or during scientific research and development. The government can adjust tax incentives, in addition to implementing indirect incentives, such as investment tax credits, expense deductions, and the drawing of specific reserves.

Protection for innovation processes

The government should integrate the innovation ecosystem to encourage upstream-downstream collaborative innovation along the industry chain. Firstly, in order to provide a trial environment for the verification of core technologies in key fields, the government can build incubation bases for sci-tech innovation enterprises in future industries, guide these enterprises in planning for new arenas, and gradually cultivate specialized and innovative enterprises, high-tech enterprises, and “little giant” enterprises. Additionally, it can increase support for sci-tech innovation enterprises’ pilot test and maturation bases and platform construction, and build a group of pilot test and application verification platforms based on industrial needs. Secondly, by deploying the innovation chain around the industry chain, the government can support sci-tech innovation enterprises in overcoming development roadblocks, and develop the future industry chain while building an advanced technology system reliant on leading enterprises; the government can incentivize eligible regions to carry out pilot projects to establish future industry pilot zones in combination with national independent innovation demonstration zones, national high-tech industrial development zones, and new industrialization demonstration bases, and to promote the distinctive and clustered development of industries. Thirdly, in order to foster diverse forces for future industry development, the government can assist sci-tech innovation enterprises in establishing partnerships with government departments, financial institutions, research institutes, and colleges and universities. It can also reinforce industry-university-research-application collaboration, and create future industry innovation consortia.

Protection for innovation application

In addition to performing its procurement function and working to increase domestic demand, the government can assist sci-tech innovation enterprises in applying technologies by working with them to create the conditions necessary for them to receive more orders. First, the government can establish systems of certification and insurance for sci-tech innovation enterprises and their products, thereby enhancing standard mutual recognition and factor interflow in the unified national market. In particular, the government can develop certification standards for sci-tech innovation enterprises, certifying the enterprises through related bodies organized by local science and technology authorities, and incorporating eligible ones into the government procurement supplier database. Additionally, the government can develop systems of performance certification and insurance for the products of sci-tech innovation enterprises, giving priority to the technological products that meet quality and performance standards. Second, a portion of the government’s procurement share may be set aside for sci-tech innovation enterprises: The government can specify the scope, priority, and support intensity for procurement from sci-tech innovation enterprises in related regulations that encourage their development. These regulations can also provide detailed information about government procurement procedures, methods, effect evaluation, review, and supervision. In addition to encouraging sci-tech innovation enterprises to bid on government contracts, relevant authorities should also publish procurement catalogs of sci-tech innovation products, and clarify the state’s innovation orientation and government technology demands. Third, the government can develop application scenarios to assist sci-tech innovation enterprises in their early and mature stages.

Protection for continuous innovation

The government should value human capital and encourage enterprises to grow sustainably. First and foremost, government departments should improve the system for reviewing grants and thoroughly evaluate the backgrounds in science and technology, managerial skills, and social influence of the founders and executives of sci-tech innovation enterprises. The government can assist sci-tech innovation enterprises in implementing a shared leadership model, in which various leaders jointly assume leadership roles and exert their distinct advantages in expertise, information resources, and social connections to create a mechanism for innovation empowerment and collaboration. This will support the enterprises’ continuous innovation and successfully fulfill the mission of promoting the development of new quality productive forces. Secondly, the government can concentrate efforts on building a collection of high-end training bases for sci-tech talent, emphasizing strategic scientists, top talents in science and technology, and innovation teams. This will help to foster the growth of young talent and excellent engineers, encourage all sectors of society to give the development of sci-tech talent more consideration and funding, and encourage scientific researchers to pursue their entrepreneurial aspirations and innovate. Finally, the government should support the development of these researchers’ organizational and innovation management skills to help them advance their careers.