Grabbing or helping hand? The impact of government subsidies on innovation and performance for firms in cultural and creative industries

This study explores how government subsidies contribute to the growth of culture and creative industries (CCIs) by analyzing their impact on R&D spending, market value, operational performance, and social commitment among CCI firms in Taiwan. It finds that subsidies significantly boost R&D expenditures and market value but do not enhance operational performance due to the increased social commitment through additional employment. Subsidies do not affect borrowing conditions, but financially constrained CCI firms with high R&D investments see improved operational performance, while those with lower R&D spending do not. The study highlights the crucial role of subsidies in driving R&D and improving performance in innovative, constrained CCIs. Unlike manufacturing, fostering CCIs benefits both economic growth and cultural development. These findings emphasize the need for CCIs to invest in R&D and offer guidance to policymakers on refining subsidy strategies.