Abstract

The government plays a significant role in the National Innovation System (NIS) by allocating diversified resources, and government funding is one of the important instruments. This study focuses on the relationship between government R&D funding and regional industrial innovation performance by analyzing the innovation performance of the Chinese pharmaceutical manufacturing industry. The study divides the pharmaceutical manufacturing industry’s innovation process into the lab R&D and new product development (NPD) stages. A two-stage slacks-based measure (SBM) DEA model is applied to measure the Chinese pharmaceutical manufacturing industry’s innovation efficiency from 2009 to 2019. Whereafter, it investigates the impact of government funding on pharmaceutical manufacturing industry innovation performance. It is found that government funding has more effects on the lab R&D stage’s performance than the NPD stage’s performance. Meanwhile, in the open and economically developed regions, the effect of government funding will be weakened.