The Intensity of Local Government Innovation Policies and Corporate Innovation

Existing studies on government innovation policies have largely focused on individual policy instruments or partial effects, while paying less attention to overall policy intensity and its systemic impact. At the prefecture level, particularly, the number, content, and enforcement of policy documents jointly shape the external environment for corporate innovation, potentially exerting profound effects on innovation output, efficiency, and performance. This raises the question: how does the intensity of local government innovation policy influence corporate innovation? Using a sample of A-share listed firms from 2004 to 2020, policy documents are classified through an LDA topic model, and the intensity of local government innovation policy is measured by the number of documents and the frequency of innovation-related terms under the theme of innovation support and innovation environment. The results show that policy intensity significantly promotes corporate innovation output, with more pronounced effects in the later stages of R&D and in regions with higher levels of marketization. Government funding support, financing environment development, talent attraction, and firm agglomeration are identified as the main mechanisms through which the intensity of innovation policy fosters innovation. Further analysis indicates that the intensity of innovation policy also significantly enhances the efficiency and performance of corporate innovation.