How Do Innovation-Driven Policies Help Sports Firms Sustain Growth? The Mediating Role of R&D Investment

Abstract

The sports industry features low energy intensity and low emissions through which it has played an important role in realizing sustainable development. This study aims to examine the driving factors that help sports firms improve their innovation development and sustain growth. Using a panel of 95 sports firms listed on the New Third Board in China from 2015 to 2021 with 582 observations, this study evaluated the effect of innovation-driven policies on sports firms’ long-term growth, measured by market value, and the mediating effect of R&D investment on this relationship. The results showed that innovation subsidies and the deduction of R&D expenses can effectively encourage sports firms’ engagement in innovation development and finally help improve the firms’ market value. Furthermore, we found that the effect of R&D subsidies on sports firms’ market values increases with firm size. This study provides new insights into the literature on the long-term growth of sports firms by showing that policy support for sports firms’ innovation activities enables them to invest more resources into research and development activities, which finally reinforce their potential of long-term growth. Furthermore, the findings provide practical suggestions for policymakers on enhancing the development of the sports industry and helping sports firms sustain growth.

1. Introduction

The sports industry is considered a green industry, which makes it one of the most important bases for the sustainable development and social advancement of a country [1]. China’s sports industry has grown rapidly and produced remarkable achievements since the central government of China emphasized the goal of building a strong sports country through extensive nationwide fitness activities. Specifically, the total scale of the national sports industry soared from CNY 1.71 trillion to CNY 2.95 trillion from 2015 to 2019, with an average annual growth rate of 14.6%. In 2019, the Chinese government issued several opinions on promoting the development of the sports industry that highlighted the importance of sports firms’ innovation for the sustainable growth of the industry. It was noted that sports firms’ innovative actions can enable the firms to continuously create value for the society by supplying high-quality sports products or services. Accordingly, a series of innovation-driven policies were introduced to support sports firms in raising their investment in innovation activities and finally helping the firms sustain growth [2]. The policy support for innovation applied to a broad range of sports firms operating in different industrial sectors. However, it is not clear yet whether the innovation-driven policies enhanced the growth of sports firms. It is thus important that scholars and managers develop a better understanding of how innovation-driven policies matter for sports firms’ long-term benefits.

In the extant literature, it is well documented that innovation is an important means by which firms develop new capabilities in order to meet the requirements of the changing environment [3]. Especially, innovation is an essential component of competitiveness and, thus, economic growth and sustainability on the firm level [4,5]. R&D investment plays an important role in maintaining a firm’s innovative capabilities and innovation performance [6]. Following this line of thought, some studies argue that firms with higher R&D investments may develop new products or services more effectively and efficiently and finally realize higher performance [7]. Nowadays, the goal of sustainable development calls for critical technological advances in green products and services, which create economic benefits while protecting the natural environment and enhancing social well-being [8]. An increasing number of studies have begun to examine the role played by investment in green innovations in building new businesses that fulfill the new requirements of sustainable development [9,10]. For instance, some researchers adopted machine learning approaches to precisely examine the energy consumption of electric vehicles, which are considered as a typical green product that brings economic value together with benefits for the environment and social wellbeing [11,12,13,14], others examined the driving factors of high-tech industries such as e-commerce and low-carbon industrial sectors [15,16,17,18]. Meanwhile, the sports industry has been viewed as another important vehicle that drives the realization of sustainable development. Recent studies noted that sports business lines are characterized by low energy-consumption and low emissions [19]. Furthermore, the literature argues that sports firms need to engage in innovation development activities to continuously introduce new products or services with superior quality in order to fulfill the increasing demand of sports consumers [20,21]. For instance, the combination of virtual reality and various indoor exercises provide people with plenty of options to keep fit during the COVID-19 pandemic [22]. This body of literature implies that innovation may play an important role in the long-term performance of sports firms. For this reason, governments in many countries introduced industrial policies to support innovation activities in sports firms in order to improve the development of the sports industry and in turn promote sustainable development in those countries [23]. The extant literature on the effects of policy support for innovation on firms’ performances have resulted mixed findings [24,25,26]. For example, Lee found positive effect of public support for R&D investment on firm performance in the medical device industry [24] and Guan and Yam reported that government financial incentives improved the performance of high-tech firms in Beijing in the 1990s [25]; however, Speed and Roberts argued that there was no significant effect of policy support on the innovation of the sports medicine industry [26]. Thus, the relationship between innovation-driven policies and the performance of sports firms remains an academic puzzle. Additionally, researchers have noted the specific implications of firm heterogeneity on R&D investment, policy support for innovation, and market value [2,27]. Consequently, the relationships between R&D investment and the market value of the firm may vary across different sports firms. In sum, we still have limited knowledge about how policy support may affect the innovation activities of sports firms and finally influence their long-term growth.

Specifically, we identified three research gaps concerning this topic that we should fill in for gaining a better understanding of how governments can formulate effective measures to help sports firms sustain growth in order to build a more sustainable society. First of all, it remains controversial whether innovation-driven policies may positively affect the long-term profits of sports firms. Secondly, the mechanism of how policy support for innovation influences sports firms’ long-term growth is underexplored. Finally, it is still not clear how firm heterogeneity may influence the effects of innovation-driven policies on the performance of sports firms in a long run.

Accordingly, this study aims to fill in these gaps by examining three specific issues regarding how innovation-driven policies affect sports firms’ long-term growth. First, we tested the effect of two typical innovation-driven policies, including R&D subsidies and tax deduction of R&D expense, on the long-term performance of sports firms. The efficient market theory suggests that the market value captures how investors assess a firm’s ability to sustain growth over the long run [28]. Therefore, we used the market value to reflect the growth potential of sports firms in a long run. Then, we further examined the mechanism underlying such an effect. It is well-documented that the government often promotes the innovation activities of sports firms by providing them with extra financial resources specifically for their R&D activities. Thus, it is important to explore how the two innovation-driven policies influence sports firms’ growth by complementing the firms’ R&D investment. Finally, we analyzed how the effects of the two innovation-driven policies on sports firms’ performance may be moderated by firm size.

The study’s findings could have important implications for our understanding of how policy support from the government for innovation activities may influence the long-term growth of sports firms. The literature argues that industrial policies that aim to promote firms’ innovation activities have an important impact on firms’ R&D investment and innovation efficiency [29,30]. However, it remains underexplored what is the implication of such policies for firms’ long-term performance. This study extended the literature by exploring how policy support for innovation promotes firms’ potentials of long-term growth. Specifically, we examined how innovation-driven policies introduced in China’s sports industry help the sports firms sustain growth. The sports industry provided an ideal research context because the Chinese government considers the sports industry as an important vehicle of sustainable development and has introduced a series of industrial policies to promote the innovation activities in this industry.

Using a panel of 95 sports firms listed on the New Third Board in China from 2015 to 2021, with 582 observations, we explored the implications of two typical innovation-driven policies, R&D subsidies, and deductions of R&D expenses on sports firms’ long-term performances. This research provides new insights to our knowledge of how public policies for promoting firm innovation may affect firms’ growths in the long term. Besides, this study offers practical suggestions to the policymakers regarding the design and implementation of innovation-driven policies concerning how to use effective measures to promote the development of the sports industry and finally build a sustainable society.

In the remainder of this paper, we first develop a theoretical framework and develop hypotheses regarding the relationships between R&D investment, innovation-driven policies, and market value of sports firms. Next, we test the hypotheses using a series of regression models with a sample of sports firms listed on the New Third Board in China. Finally, we conclude with a thorough discussion of the implications of this study for the relevant theories and the government’s practices.

2. Literature Framework and Hypothesis Development

The efficient market theory holds that new public information is continually assessed, valued, and reflected in the stock price and all future cash flows implied by the new information are discounted by the financial markets to the present. Thus, a firm’s stock market return reflects its value and the future long-term performance assessed by the market. Based on the efficient market theory, when an event becomes public knowledge, the implication of the public event for a specific firm is rapidly reflected in that firm’s stock price. Any sudden change in the firm’s value, called a stock market reaction, implies that the market has changed its assessment of the future performance of the firm. Therefore, a firm’s market value or stock market performance indicates the expectation of the firm’s long-term performance, which is assessed by the market [28]. Accordingly, this study examines the effects of policy support for innovation in sports firms’ long-term performance by testing the relationship between innovation-driven policies and the market value of sports firms.

2.1. Innovation-Driven Policies and Market Value of Sports Firms

Industrial policies are created by the government to achieve certain economic and social development goals [29]. Policies for the sports industry provide the foundation for the establishment and development of firms, promoting their core capabilities and long-term strategies [30]. Specifically, this study focused on two sports industry policies that provide financial support for innovation: R&D subsidies and add-on deductions of R&D spending [31,32]. Next, we analyze how the two specific policies may affect sports firms’ market values.

The government can provide strong support for firms to engage in research and development activities. For instance, ex ante innovation subsidies can effectively reduce firms’ financial pressure when they start a new R&D project, which often requires a considerable amount of investment at the beginning [33,34]. Thus, R&D subsidies can encourage firms to invest in R&D more intensively, which may serve as a solid foundation of the subsequent innovation development in the companies [35,36,37]. Consequently, firms that received R&D subsidies from the government may send a positive signal to external investors that they may invest more resources in R&D [38] and in turn may achieve more innovative outcomes in the future [39]. Specifically, Szücs found that R&D subsidies have a positive impact on firms’ market values both in the current period as well as in the lagged period [40]. Lee et al. showed that firms that received policy support for invention and innovation activities sent positive signals to the stock market, which led to higher assessment of the firms’ value [41]. Kleer argued that government R&D subsidies may serve as a signal for good investments for private investors because the government grants are intended to promote the projects with high returns to society [42].

Following this line of thought, we argue that investors may perceive that sports firms receiving more R&D subsides for innovation from the government may have more resources to innovate and find new growth opportunities. Thus, investors may believe that those sports firms may have a higher potential of growth in the future. As a result, the market value of the sports firms that received more R&D subsidies would be higher.

H1. 

Ex ante innovation subsidies have a positive effect on market value.

Similarly, ex post add-on deductions may also help sports firms improve their market value. The ex post add-on deduction of R&D expenses can effectively relieve firms’ tax pressures when the firms have invested considerable financial resources in R&D projects [43]. Mukherjee et al. reported that tax avoidance for the firms that have been very active in innovation development can save a large amount of cash flow for the firms [44]. Furthermore, Lee emphasized that tax deduction for innovative firms can significantly alleviate their financing constraints and weaken the negative impact of R&D investment on the firms’ financial risk [24]. Thus, add-on deductions of R&D expenses can effectively reduce the financial pressures of the firms that have engaged in R&D activities for some years. This policy support can also encourage firms to increase their preliminary investment at the beginning of an innovation development project, which may enable them to create new products or services more efficiently [43,45]. For this reason, firms that qualify for add-on deductions of R&D expenses may send a positive signal to the stock market that they may have less financing constraints and risk when conducting innovation development activities and, in turn, may realize higher innovation efficiency and sustain growth [46].

Thereby, we argue that the add-on deduction of R&D expenses may enable sports firms to realize higher market values. We contend that sports firms that qualify for add-on deductions of R&D expenses can save more cash flow and in turn have fewer financial concerns. Thus, investors may perceive that such sports firms may be more efficient in innovation development and achieve abundant innovative outcomes. As a result, investors may have higher expectations of those sports firms’ growth potentials in the future. Thus, the market value of the sports firms that realize more add-on deductions of R&D expenses would be higher.

H2. 

Ex post add-on deductions have a positive effect on market value.

2.2. Mediating Effect of R&D Investment on the Relationship between Innovation-Driven Policies and Firms’ Market Values

It is well-documented in the literature that public policies can provide strong support for firms to carry out R&D activities. Specifically, ex ante R&D subsidies can provide firms with extra financial resources that can be used in their invention and innovation activities. Prior studies found that the appropriate implementation of R&D subsidies can lead to an increase in firms’ R&D investments [33,34,35,36,37]. These supporting policies can encourage firms to engage in R&D activities more intensively and, in turn, achieve more innovative outputs. Bronzini and Piselli (2016) argued that public policies that aimed to support firms’ R&D activities helped firms accumulate new technological knowledge and reinforce their potential of innovation development [47]. Choi et al. predicted that government subsidies that support innovation can significantly reinforce firms’ innovation capabilities [48]. Yu et al. reported that firms that received higher R&D subsidies are associated with a greater number of innovative outcomes, such as new product lines [39]. In turn, firms that have accumulated abundant innovative outcomes through intensive R&D activities may have more growth opportunities, for which the market valuation of those firms would be higher. Belderbos et al. found that firms that have invested more resources in R&D are related to higher earnings per share [49]. Using an event study method, Da Silva et al. examined the market reactions to firms’ announcements of an R&D project and reported that an increase in R&D expenses resulted in abnormal returns of these firms [50].

Based on this, we argue that R&D subsidies can help sports firms invest more financial resources into their R&D, which enables them to improve their innovative outcomes and gain higher market values. Innovation can be viewed as an important tool for firms to fulfill more market demands [51,52]. The sports firms that invest more resources in R&D activities are more likely to introduce new products or services to create more value for the consumers. For this reason, investors may react positively to the increase in R&D investment of the sports firms, which means the market value of those firms may be higher. Therefore, we hypothesize:

H3. 

R&D subsidies increase the market value of sports firms through the mediation of R&D investment of those firms.

Similarly, we argue that add-on deductions of R&D expenses may reinforce sports firms’ market values through the mediation of R&D investment of those firms. Specifically, ex post add-on deductions of R&D expenditure can relieve firms’ financial pressures in the short term. The firms can reserve more cash flow to continuously fuel their R&D activities [45,46]. In other words, firms that qualify for add-on deductions of R&D expenses have more financial resources to invest in R&D activities. The previous studies found that tax deductions for R&D spending can effectively increase firms’ R&D investment. Thomson argued that tax avoidance can encourage firms to invest more resources in R&D activities [53]. Sterlacchini and Venturini analyzed firm size and tax deductions and the interaction term between them on a firm’s R&D spending and found that tax deductions for smaller firms can increase their R&D expenditure [54]. Thus, firms that conduct intensive R&D activities may accumulate abundant technological knowledge, which enables them to create more innovative outcomes by applying the knowledge base [34]. Then, firms that have achieved various new products and services may be able to exploit more growth opportunities [51,52]. For this reason, the market value of those firms may be much higher.

Based on this, we argue that add-on deductions can relieve sports firms’ financial pressures and enable them to increase their R&D spending. In turn, those sports firms can accumulate more technological resources to develop new products or services, which facilitate the sports firms to seize more growth opportunities. For this reason, we argue that sports firms that qualify for add-on deductions of R&D expenses may have higher market values by increasing their R&D investment. Therefore, we hypothesize:

H4. 

Add-on deductions of R&D spending increase the market value of sports firms through the mediation of R&D investment of those firms.

The extant literature has emphasized that firm size has important implications for its innovation process and performance [27,54]. It follows that the mechanisms by which policy support for innovation affects sports firm’s innovation development and finally influences their performance may vary across sports firms of different sizes. We next analyzed how firm size may influence the effects of innovation-driven policies on sports firms’ market values.

2.3. Moderating Effect of Firm Size on the Relationship between Innovation-Driven Policies and Market Value

The firm size may also influence the relationship between innovation-driven policies and a firm’s market value [55]. The innovation literature has emphasized that whether financial support for innovation can effectively lead to firms’ value creation depends on the innovation capabilities and complementary resources of these companies [56,57]. Innovation capability is a firm’s ability to identify new ideas and transform them into new products, services, or processes that create value [56]. The complementary resources are those factors essential for the commercialization of a new technology [58].

Larger firms may have accumulated more technological know-how by investing considerable resources in R&D activities and thus possess stronger innovation capabilities [59,60]. The superior innovation capabilities enable the firms to develop a new technology more effectively [61]. What is more, larger size firms have a greater resource base, holding various valuable complementary resources, for instance, marketing capability and the knowledge of customers [62]. Thus, it is easier for larger firms to apply a new technology in new product development and meet customers’ demands. Understood together, because of the innovation capabilities and complementary resources of larger firms, it is likely that the government’s financial support for innovation will play a more critical role in larger firms [47,63]. Specifically, larger firms that receive excess financial resources from the government can better exploit their technologies to create more valuable products or services [64]. In turn, those firms can achieve higher market values. Therefore, for firms with a larger size, innovation-driven policies can have a greater positive impact on their market value.

Specifically, sports firms that have reached a considerably large size are likely to possess a greater repository of technological knowledge through continuous investment in R&D activities. Additionally, larger sports firms may have established plenty of complementary resources, such as manufacturing, marketing, sales, distribution, and financial and managerial resources, to facilitate their innovation development. Given this, when those sports firms received R&D subsides from the government, they can use such excess financial resources to exploit more technological knowledge and create more innovative outcomes. By then, those sports companies are likely to realize more growth opportunities for which the increase in the firms’ market value would be even higher. In other words, the positive impact of R&D subsides on sports firms’ market values may be enlarged for those with a greater size. Thus, we hypothesize:

H5. 

The positive effect of R&D subsidies on market value is stronger for larger sized firms.

In parallel, we argue that for firms with a larger size, add-on deductions of R&D expenses can lead to a greater increase in the firms’ market values [24,45,46]. As mentioned above, the sports firms with bigger sizes may own much more technological knowledge since they may have more resources to invest in R&D activities [59,60,61]. Additionally, they may also possess a solid base of complementary resources that are necessary for innovation development [62]. Understood together, when sports firms with a larger size qualify for add-on deductions of R&D spending, they can reserve considerable cash flow and more efficiently use the financial resources [65,66]. Specifically, they can apply technological knowledge in increasing innovation development projects and gain more innovative outcomes, by which they can reach higher market value. In sum, the positive effect of add-on deductions of R&D expenses on sports firms’ market values may be greater for those with a greater size. Thus, we hypothesize:

H6. 

The positive effect of add-on deductions of R&D spending on market value is stronger for larger sized firms.

The theoretical framework of this study is shown in Figure 1.

3. Empirical Analysis

3.1. Research Context and Data

The New Third Board market is a stock transfer trading venue for small- and medium-sized enterprises in China, originally referring to the high-tech firms listed in the share transfer pilot of the Zhongguancun Science and Technology Park. The main targets of the New Third Board market are innovative, entrepreneurial, and growth-oriented small- and medium-sized enterprises. The national policies for supporting the innovation development of sports firms implemented in 2014 have greatly driven investors to focus on the sports industry. As a result, the sports industry in China began to grow rapidly and an increasing number of sports firms were listed and traded on the New Third Board market, playing an important role in the development of China’s sports industry. Thus, we used the publicly traded sports firms listed on the New Third Board market as sample firms in the research on how R&D investment and innovation-driven policies affect the market value of sports firms. Furthermore, this study only focused on the sports firms that have obtained national high-tech qualification, because firms with the national high-tech qualification attach more importance to R&D investment and are more likely to receive policy support—the identification of high-tech firms listed on the New Third Board must meet a very clear set of criteria that is reset in every three years. For instance, the core technology of the qualified firms must belong to the category of “national key support of high-tech fields”, the number of R&D staff must fulfill the requirement, and the research and development expenses are calculated relative to the firms’ latest sales, which is divided into three sections: less than CNY 50 million, CNY 50 million–200 million, and more than CNY 200 million.

In line with the purpose of this study, we created a panel of Chinese sports firms listed on the New Third Board market and collected data on these firms’ financial conditions. First, we identified all the firms that met the industry’s statistical classification as New Third Board sports firms. Then, we double checked these firms to ensure that they provided sports-related products or services, including sporting goods manufacturing, sports training and information services, sports clubs, e-sports, sports equipment and supplies retailing, sports managers, etc. In total, we found 95 sports companies were listed and traded on the New Third Board market from 2015 to 2021. These firms were mainly involved in the fields of sporting goods manufacturing, sports media, e-sports, sports and fitness training, and sports event planning and management.

We collected the data on R&D investment, R&D subsidies, add-on deductions of R&D expenses, and financial conditions from the annual reports of the sample firms from 2015 and 2021. We also manually checked the official website of each sample firm to complement the information of the firms’ R&D investment. Despite this, the data on some firms in the sample were still missing for certain years in the research period. Thus, this sample was an unbalanced panel. Overall, we collected data for 95 sports firms between 2015 and 2021, with 582 observations.

3.2. Variables and Measures

Table 1 summarizes the variables included in the current study. Specifically, we used the annual financial reports of the sports firms to collect data on their financial conditions, R&D expenditures, and innovation-driven policies including the ex ante innovation subsidies and ex post add-on deduction of R&D expenditures. Then, we calculated the market value of the sports firms using the data from the New Third Board market. All innovation-related, financial, and policy support data used in the analysis below were on the firm-year level. The data for innovation subsidies were mainly obtained from the detailed items related to technological inventions and innovations in the notes to the annual financial reports of the sample firms, such as: special subsidies for science and technology, intellectual property rewards, awards for small firms in innovation, patent subsidies or book subsidies, technology renovation, R&D subsidies, patent subsidies, patent subsidies, etc. The data for add-on deductions of R&D expenditures were mainly obtained from the items of “Income tax expense adjustment-additional deduction expense” in the annual reports of the sample firms.

3.2.1. Dependent Variable

The dependent variable is the market values of sports firms. The market value is the value of a firm assessed by the market [67], indicated by the total value of the market price of the shares issued by a listed company multiplied by the number of shares issued. Many researchers believe that mid-year stock prices are still influenced by speculative factors [68]. Therefore, this study uses the closing price of the last trading day at the end of the year to calculate the market value of the sample firms.

3.2.2. Independent Variables

This study examined the effects of innovation-driven policies on sports firms’ market values. Thus, the independent variables of this paper are concerning government policies that are intended to support sports firms’ innovation activities. The first independent variable is ex ante R&D subsidies, which are measured by the financial subsidies offered by the government to encourage firms to increase their R&D investments and develop more innovative output [64]. The second one is ex post add-on deductions for R&D expense, which are a tax preferential policy implemented by the government to encourage firms to increase their R&D investments and enhance their innovative capabilities [2]. All the negative values of the deduction fees disclosed in the annual reports of sports firms are converted into positive values; thus, the higher the value of deduction fees, the more policy support the sports firm has received from the government. For the sports firms that do not have data on this policy support, this variable adopts the value of zero.

3.2.3. Mediation Variable

We argued that the two innovation-driven policies positively affect sports firms’ market values through the mediation of R&D investment of those sports firms. To measure the R&D expenditure of the sports firms, we calculate a sports firm’s overall expenditure of R&D activities [69].

3.2.4. Moderation Variable

We tested the moderation effect of firm size on the relationship between the two innovation-driven policies and sports firms’ market values. The size of a firm’s assets affects the expectation of the firm’s stock returns [59]. Meanwhile, it can also directly affect how much the firm invests in R&D and influence the strength of support from government policies. This study used the total assets at the end of the year as a measure of firm asset sizes. In order to adjust the scale of this variable, we adopted the natural logarithm of total assets to measure this variable.

3.2.5. Control Variables

Additionally, this study controlled for a variety of factors that could influence the extent to which the two innovation-driven policies affect sports firms’ market values.

First, we included two control variables concerning a sports firm’s short-term performance. One is ROA, which measures a firm’s return on assets [70], the other one is sale growth [3], which indicates a firm’s growth rate. It is important to control for the confounding effect of a sports firm’s short-term performance in this study because it may have critical impact on a firm’s market value. Meanwhile, the likelihood of a sports firm to receive policy support for innovation is associated with the short-term performance of the company.

Secondly, we controlled for debt ratio. The firm’s R&D expenditure is a kind of preliminary investment and the development of new products and services needs a certain amount of time and involves great uncertainty [71]. As a result, preliminary R&D investments can increase a firm’s debt ratio, leading to higher financial risks. The high debt ratio may thus send a negative signal to external investors, damaging their expectation of the firm’s long-term profits. A firm’s debt ratio is associated with both the market value and R&D expenditure of the company. Therefore, the article adopts debt ratio as a control variable in the regression analysis.

Table 1. Variables and measures.

Variable	Measure	Reference	Unit
Market value	Market value	Hu, Guo, and Zhu [67] Hsieh et al. [68]	RMB 1,000,000,000
R&D subsidies	Subsidies	Chen et al. [64]	RMB 1000
Add-on deductions of R&D expenses	Deductions	Chen and Breedlove [2]	RMB 1000
R&D investment	R&D investment	Ketchen et al. [69]	RMB 1000
Firm size	Total assets	Connolly and Hirschey [59]	RMB 1,000,000,000
Controls	ROA	Moliterno and Wiersema [70]
	Sale growth	Kaul [3]	RMB 1000
	Debt ratio	Bhagat and Welch [71]

Table 1. Variables and measures.

Variable	Measure	Reference	Unit
Market value	Market value	Hu, Guo, and Zhu [67] Hsieh et al. [68]	RMB 1,000,000,000
R&D subsidies	Subsidies	Chen et al. [64]	RMB 1000
Add-on deductions of R&D expenses	Deductions	Chen and Breedlove [2]	RMB 1000
R&D investment	R&D investment	Ketchen et al. [69]	RMB 1000
Firm size	Total assets	Connolly and Hirschey [59]	RMB 1,000,000,000
Controls	ROA	Moliterno and Wiersema [70]
	Sale growth	Kaul [3]	RMB 1000
	Debt ratio	Bhagat and Welch [71]

3.3. Specifications

Hypotheses 1 and 2 examine the impact of innovation-driven policies, consisting of ex ante innovation subsidies and ex post add-on deductions, on the market value of sports firms. To test Hypotheses 1 and 2, the following regression model was developed based on the literature review:

$$Market valu{e}_t=L_0+L_1\times Subsidie{s}_t+L_2\times Deduction{s}_t+controls+\epsilon$$

(1)

where the $Market valu{e}_t$ is a firm’s market value in year t; $Subsidie{s}_t$ denotes the ex ante innovation subsidies that a firm received in year t; $Deduction{s}_t$ indicates the ex post add-on deductions that a firm achieved in year t; $Total asset{s}_t$ is a firm’s total assets in year t; and $Debt rati{o}_t$ denotes the level of debt ratio of a firm in year t.

Hypotheses 3 and 4 explore the mediating effect of R&D investment on the relationship between the two innovation-driven policies and market values of sports firms. This study followed Baron and Kenny’s established approach [69] to test the mediation in three steps. Designating X as the independent variable, M as the mediating variable, and Y as the dependent variable, the first step was to establish that X significantly accounts for variations in Y. The second step was to establish that X significantly accounts for variations in M. In the third step, M must significantly explain Y when controlling for X, and the effect of X on Y should become smaller by a nontrivial amount when M is entered together with X to explain Y. It is important to note that the independent variable in the analysis is the innovation-driven policies and the mediation variable is R&D investment, by which we show that innovation-driven policies improve the market value of sports firms by raising the R&D investment of those firms. Specifically, Equations (2)–(4) are applied to test Hypothesis 3.

$$Market valu{e}_t=a_0+b_1\times Subsidie{s}_t+controls+{\epsilon }_0,$$

(2)

$$R\&D investmen{t}_t=a_1+b_2\times Subsidie{s}_t+controls+{\epsilon }_1,$$

(3)

$$Market valu{e}_t=a_2+{b^{\prime }}_1\times Subsidie{s}_t+b_3\times R\&D investmen{t}_t+controls+{\epsilon }_2$$

(4)

where $b_1$ is the total effect of ex ante innovation subsidies on the market value of sports firms, $b_2$ and $b_3$ denote the indirect effect of the subsidies on the market value of sports firms, ${b^{\prime }}_1$ is the direct effect of the subsidies on the market value of sports firms. If $b_1$, $b_2$, and $b_3$ are significant in the results, then R&D investment mediates the relationship between the subsidies and the market value of sports firms.

The same approach was used to test the mediating effect of R&D investment on the relationship between ex post add-on deductions and the market value of sports firms. Specifically, Equations (5)–(7) are applied to test Hypothesis 4.

$$Market valu{e}_t=a_0+c_1\times Deduction{s}_t+controls+{\epsilon }_0,$$

(5)

$$R\&D investmen{t}_t=a_1+c_2\times Deduction{s}_t+controls+{\epsilon }_1,$$

(6)

$$Market valu{e}_t=a_2+{c^{\prime }}_1\times Deduction{s}_t+c_3\times R\&D investmen{t}_t+controls+{\epsilon }_2$$

(7)

where $c_1$ is the total effect of ex post add-on deductions on the market value of sports firms, $b_2$ and $c_3$ denote the indirect effect of the deductions on the market value of sports firms, and ${c^{\prime }}_1$ is the direct effect of the deductions on the market value of sports firms. The interpretation of the coefficients $c_1$, $c_2$, $c_3$, and ${c^{\prime }}_1$ is the same as the interpretation of $b_1$, $b_2$, $b_3$, and ${b^{\prime }}_1$, as explained above.

Hypotheses 5 and 6 explore the moderating effect of firm size on the relationship between innovation-driven policies and the market value of sports firms. In order to test Hypotheses 5 and 6, the interaction terms between firm size and innovation-driven policies, consisting of ex ante innovation subsidies and ex post add-on deductions, were added into Equation (8) as follows.

$$\begin{array}{c}Market valu{e}_t=L_0+L_2\times firm siz{e}_t+L_3\times subsidie{s}_t+L_4\times deduction{s}_t+J_2\times firm siz{e}_t\times subsidie{s}_t\\ \hspace{1em}\hspace{1em}\hspace{1em}\hspace{1em}\hspace{1em} +J_3\times firm siz{e}_t\times deduction{s}_t+controls+\epsilon .\end{array}$$

(8)

4. Results

4.1. Descriptive Statistics

Table 2. Descriptive statistics.

	Mean	Min	Max	Std. Dev.	1	2	3	4	5	6	7	8
1. ln (market value)	5.27	−0.86	9.90	1.76	1.00
2. R&D investment	1.73	0.81	5.44	1.31	0.134	1.00
3. Subsidies	0.485	0.00	10.93	1.81	0.256	0.268	1.00
4. Deductions	0.694	0.00	7.22	2.08	0.331	0.099	0.309	1.00
5. ln (total assets)	4.55	−1.62	8.64	1.53	0.473	0.416	0.226	0.541	1.00
6. ROA	1.088	0.149	3.539	0.502	0.219	0.284	0.106	0.423	0.388	1.00
7. Sale growth	125	1.427	236.7	3.148	0.043	0.257	0.249	0.148	0.093	0.231	1.00
8. Debt ratio	1.32	0.00	87.90	6.62	0.268	−0.549	−0.366	−0.330	0.324	0.136	−0.331	1.00

Note: 582 observations.

presents the summary statistics. Since the unit of the market value and that of the total assets were dramatically larger than those of other variables in the dataset, we used the variable market value and the variable total assets in logarithmic form in the regression models to analyze a percentage change between the dependent variable and the independent variables. The variable market value was positively related to R&D investment. In addition, the market value was also positively related to R&D investment and subsidies and deductions, which was consistent with our argument that policy support for innovation is beneficial for sports firms’ engagement, for which these policies may result in fruitful innovative outcomes and a higher market value of those firms.

4.2. The Effect of R&D Input and Innovation-Driven Policies on Market Value

Hypotheses 1 and 2 regard the positive impact of innovation-driven policies on the market value of sports firms. As shown in

Table 3. Regression analysis on the effects of R&D investment and innovation-driven policies on the market value of sports firms.

Variable	Model 1 ln (Market Value)	Model 2 ln (Market Value)
R&D investment	0.404 **	0.414 ***
	(0.173)	(0.129)
Subsidies	0.059 ***	0.048 ***
	(0.012)	(0.003)
Deductions	−0.001	0.000
	(0.001)	(0.000)
ln (total assets)		0.130 ***
		(0.024)
ROA		−0.015 ***
		(0.004)
Sale growth		0.112 ***
		(0.016)
Debt ratio		0.308 ***
		(0.056)
2015	0.012	0.046
	(0.075)	(0.076)
2016	0.006	0.034
	(0.076)	(0.077)
2017	0.018	0.010
	(0.012)	(0.076)
2018	0.034 **	0.030
	(0.014)	(0.077)
2019	0.039 **	0.214
	(0.015)	(0.151)
2020	0.043 **	0.066 ***
	(0.014)	(0.018)
2021	0.053 **	0.072 ***
	(0.024)	(0.020)
Constant	0.265 **	0.064 ***
	(0.076)	(0.010)
F-value	18.21	15.60
R2	0.1577	0.1442

Note: The dependent variable is market value, ** p-value < 0.05, and *** p-value < 0.01.

, the coefficient of R&D subsidies was positive and significant at the 1% confidence level in Model 1, consistent with the argument of Hypothesis 1. Hypothesis 1 is supported. In addition, the coefficient of ex post add-on deductions of R&D spending was not significant in Model 1. The coefficient of subsidies was positive and significant at the 1% level in Model 2, supporting Hypothesis 1. However, the effect of ex post add-on deductions of R&D spending on the market value of sports firms remained insignificant in Model 2. Thus, the results do not support Hypothesis 2.

The coefficients of each year’s dummy variable provide us with additional knowledge of the factors that may influence the market values of sports firms during the period between 2015 and 2021. As can be seen in Table 3, the coefficient of the year dummy variable becomes positive and significant from the year 2018. The underlying reason might be that the National Congress of China proposed the importance of high-quality development of sports industry in 2017, based on which a series of public policies are introduced to guide and support the growth of sports firms. Besides, the magnitude of the positive impact of year dummy variable increases significantly in 2020 and 2021. It suggests that the environmental changes induced by the COVID-19 pandemic offer new growth opportunities for sports firms. On the one hand, people put greater emphasis on physical and mental health since the outbreak of the pandemic, which brings increasing market demand of sports products and services. On the other hand, digital technology is unlocking unprecedented potential in the sports industry, offering innovative ways to engage in exercises. We will further discuss the implications of the COVID-19 pandemic for our research findings in the next section.

4.3. The Mediation Effect of R&D Spending

Hypothesis 3 predicted that R&D subsidies increase the market value of sports firms through the mediating effect of R&D investment. The results are reported in

Table 4. Mediation effect of R&D investment on the relationship between R&D subsides and the market value of sports firms.

Variable	Model 1	Model 2	Model 3
	ln (Market Value)	R&D Investment	ln (Market Value)
R&D investment	---	---	0.427 ***
	---	---	(0.115)
Subsidies	0.026 *	0.003 *	0.012
	(0.015)	(0.002)	(0.075)
Deductions	---	---	---
	---	---	---
ln (firm size)	0.672 ***	0.043 **	0.733 ***
	(0.158)	(0.014)	(0.195)
ROA	−0.064 ***	0.079 **	−0.067 ***
	(0.015)	(0.028)	(0.017)
Sale growth	0.122 **	0.017	0.145 *
	(0.035)	(0.012)	(0.047)
Debt ratio	0.381 **	−0.034 **	0.321
	(0.016)	(0.012)	(0.601)
2015	0.017	0.033	0.041
	(0.617)	(0.607)	(0.067)
2016	0.003	0.002	0.003
	(0.605)	(0.622)	(0.582)
2017	0.045	0.049	0.841
	(0.077)	(0.082)	(0.734)
2018	0.031	0.181	0.084
	(0.078)	(0.756)	(0.073)
2019	0.218	0.609	0.842
	(0.148)	(0.746)	(0.734)
2020	0.110 *	0.097 *	0.144 **
	(0.056)	(0.054)	(0.062)
2021	0.184 **	0.129 **	0.655 **
	(0.077)	(0.058)	(0.292)
Constant	0.324 ***	−0.064 ***	−0.066 ***
	(0.055)	(0.010)	(0.009)
F-value	16.40	10.68	11.90
R2	0.1872	0.2512	0.2500

Note: The dependent variable is market value, * p-value < 0.1, ** p-value < 0.05, and *** p-value < 0.01.

. Model 1 tested the first step of Baron and Kenny’s approach [72], regressing the dependent variable market value on the independent variable subsidies and the full set of controls. The results of Model 1 are consistent with our findings shown in Table 3. Model 2 tested the second step of Baron and Kenny’s approach, regressing the mediator R&D investment on the independent variable subsidies and the full set of controls. As the result showed in Model 2, the estimated coefficient on subsidies was positive and significant at the 10% confidence level, suggesting that ex ante innovation subsidies provide sports firms with excess financial resources, leading to an increase in the firms’ R&D investment. Model 3 tested the third step of Baron and Kenny’s approach, regressing the dependent variable market value on both the mediator R&D investment and the independent variable subsidies, as well as the full set of controls. The positive and significant coefficients on R&D investment in Model 3 indicated that ex ante innovation subsidies help sports firms achieve a higher market value by reinforcing the R&D investment of those firms. Moreover, after adding the mediator R&D investment, the estimated coefficient on the independent variable subsidies in Model 3 became smaller in magnitude and insignificant compared with those in Model 1, thus supporting the mediating role of R&D investment. Hypothesis 3 is supported.

Hypothesis 4 predicted that ex post add-on deductions enhance sports firms’ market values through the mediation effect of R&D investment. The results are reported in

Table 5. Mediation effect of R&D spending on the relationship between deductions and market value of sports firms.

Variable	Model 1	Model 2	Model 3
	ln (Market Value)	R&D Investment	ln (Market Value)
R&D investment	---	---	0.630 ***
	---	---	(0.119)
Subsidies	---	---	---
	---	---	---
Deductions	0.016	0.017	0.016
	(0.024)	(0.033)	(0.043)
ln (firm size)	0.094 **	0.054 **	0.015 ***
	(0.040)	(0.017)	(0.004)
ROA	−0.032	0.047 *	−0.003
	(0.101)	(0.025)	(0.002)
Sale growth	0.124 ***	0.004	0.153 ***
	(0.015)	(0.002)	(0.004)
Debt ratio	0.306 ***	0.031	0.448
	(0.056)	(0.078)	(0.767)
2015	0.030	0.011	0.034
	(0.592)	(0.059)	(0.061)
2016	0.022	0.013	0.026
	(0.582)	(0.056)	(0.060)
2017	0.027	0.017	0.032
	(0.563)	(0.061)	(0.057)
2018	0.073	0.024	0.036
	(0.604)	(0.058)	(0.058)
2019	0.056	0.026	0.041
	(0.549)	(0.059)	(0.058)
2020	0.150 **	0.108 **	0.021 **
	(0.072)	(0.048)	(0.010)
2021	0.059 **	0.101 ***	0.363 **
	(0.024)	(0.028)	(0.114)
Constant	0.225 **	−3.211 ***	0.255 **
	(0.077)	(0.731)	(0.077)
F−value	16.13	10.13	16.40
R2	0.1617	0.1060	0.2379

Note: The dependent variable is market value, * p-value < 0.1, ** p-value < 0.05, and *** p-value < 0.01.

. Model 1 tested the first step of Baron and Kenny’s (1986) approach [72], regressing the dependent variable market value on the independent variable deductions. Model 2 tested the second step of Baron and Kenny’s approach, regressing the mediator R&D investment on the independent variable deductions and the full set of controls. As the result showed, the estimated coefficient on deductions was not significant, which cannot provide evidence that ex post add-on deductions provide sports firms with excess financial resources, leading to an increase in the firms’ R&D investment. Model 3 tested the third step of Baron and Kenny’s approach, regressing the dependent variable market value on both the mediator R&D investment and the independent variable deductions, as well as the full set of controls. The coefficients on R&D investment in Model 3 were not significant, indicating that there was no support for the mediation effect of R&D investment. Thus, Hypothesis 4 is not supported.

4.4. The Moderation Effect of Firm Size

Hypotheses 5 and 6 regarded the moderating effect of firms’ total assets on the impact of innovation-driven policies for sports firms on their market value. As can be seen in

Table 6. Moderation effect of firm size on the effects of R&D investment and innovation-driven policies on the market value of sports firms.

	Model 4 ln (Market Value)	Model 5 ln (Market Value)
Subsidies × ln (total assets)	0.107 **
	(0.037)
Deductions × ln (total assets)		−0.005
		(0.004)
R&D investment	1.337 **	0.031 *
	(0.031)	(0.017)
Subsidies	0.017 ***	0.211 *
	(0.004)	(0.127)
Deductions	0.530 **	0.211 *
	(0.178)	(0.127)
ln (total assets)	0.052	0.017
	(0.516)	(0.043)
ROA	0.035 *	0.031 **
	(0.020)	(0.013)
Sale growth	0.033 *	0.041
	(0.020)	(0.460)
Debt ratio	0.122 ***	0.108 **
	(0.175)	(0.048)
2015	0.029	0.109
	(0.592)	(0.477)
2016	0.023	0.128
	(0.582)	(0.498)
2017	0.032	0.164
	(0.574)	(0.601)
2018	0.075	0.238
	(0.539)	(0.617)
2019	0.058	0.255
	(0.569)	(0.587)
2020	0.451	0.017
	(0.563)	(0.011)
2021	0.023 **	0.154 **
	(0.009)	(0.072)
Constant	0.255 **	−0.311 ***
	(0.077)	(0.732)
F−value	10.13	11.65
R2	0.1060	0.1854

Note: The dependent variable is SZ, * p-value < 0.1, ** p-value < 0.05, and *** p-value < 0.01.

, the results of Model 4 showed that the coefficient for the interaction between total assets and innovation subsidies was positive and significant at the 1% confidence level. Figure 2 provides the graphical presentation of the moderation effect of total assets on the relationship between R&D subsidies and sports firms’ market values. It shows that the positive effect of R&D subsidies on a sports firm’s market value increases with the size of the sports firm. This indicated that the positive effect of ex ante innovation subsidies on sports firms’ market values was greater for the sports firms with a larger size. Hypothesis 5 is supported.

Then, the results of Model 5 show that the coefficient for the interaction between total assets and deductions of R&D expenditure was not significant. Furthermore, as can be seen in Figure 3, the effect of add-on deductions of R&D expense on a sports firm’s market values is very limited and there is little impact of the size of the sports firm on that effect. This indicated that there was no evidence for the moderating effects of the total assets of sports firms on the effect of ex post add-on deductions on the firms’ market value. Thus, Hypotheses 6 is not supported.

5. Discussion and Conclusions

This study examined how innovation-driven policies affect the innovation development of sports firms and in turn influence the firms’ long-term growth. Specifically, we focused on two typical public policies that are intended to improve innovation capabilities of sports firms, including R&D subsidies and tax deductions for R&D expenses. We found that when a sports firm received R&D subsidies, the investors may hold a higher expectation of the firm’s growth in the future, finally leading to an increase in the market value of the sports firm. In addition, we explored the underlying mechanism that leads to the positive effect of R&D subsidies on the long-term growth of sports firms. We argued that that R&D subsidies from the government can help sports firms increase their R&D investment and in turn enhance the firms’ market value. Furthermore, we investigated how firm heterogeneity may influence the how innovation-driven policies influence the performance of sports firms in the long run. Specifically, we examined the moderating effects of firm size on the effects of the two innovation-driven policies on sports firms’ long-term performances. The results indicated that the positive effect of R&D subsidies on sports firms’ market values increases with the asset size of the sports companies.

It is intriguing that there was no evidence for the effects of add-on deductions of R&D expenditure on the market value of sports firms. There are several possible reasons why add-on deductions provided by the government may not effectively improve the market value of the sports firms. First, zooming in on the data that we collected, only 438 out of 582 sample firms received policy support from the government, which means there are still many firms that received neither innovation subsidies nor add-on deductions of R&D expenses. The actual situation was far below the expected coverage of the policies. Second, the sports firms listed on the New Third Board were all in the period of rapid growth. Most of the firms were small in size, thus the development of innovative output based on emerging technologies occurred with great uncertainty [39]. Furthermore, the effects of add-on deductions on the market values of sports firms can be seriously affected by how the top management of the firms use the resources that they receive [40]. For instance, if the managers of a firm do not actually use the policy support to enhance R&D activities but use it as a source of revenue, the add-on deductions will not change the R&D investment of the firm and thus cannot improve the firm’s market value.

5.1. Contribution

The extant literature on sustainability and corporate environmental responsibility has noted that dramatic changes in the environment call for firms’ capabilities to continuously introduce new products and services to meet the increasing demands of consumers [5]. It is well documented that firms that actively engage in R&D activities may develop new products or services more effectively and efficiently and finally realize higher performance [6,7]. However, R&D activities require the investment of considerable financial resources and involve high levels of uncertainty. Researchers have thus paid much attention to the sources of R&D investment. A stream in the literature has begun to examine government policies that are intended to encourage firms to conduct R&D projects more intensively in order to sustain growth. However, there is a lack of consensus about what implications that innovation-driven policies have for firms’ innovation and long-term performances [23,24,25,26]. This study aims to shed new light on our understanding of the sources of R&D investment and the implications of those factors for firms’ long-term growth.

First, this study contributes to our knowledge of external sources of R&D resources and their implications for firms’ growth potentials in the future. Specifically, we discovered that a firm’s gaining of R&D subsidies leads to a positive market reaction. The underlying reason is that a sports firm’s access to R&D subsidies help it to increase its R&D expenditure, which may enable the firm to improve its performance in the long run. This finding provided additional support to the argument by previous studies [42,73,74] that an increase in a firm’s R&D expense leads to a favorable market reaction. Second, we provide new insights to this literature by clarifying the mechanism that leads to the positive impact of innovation-driven policies on firms’ long-term growth. It is firms’ R&D investments that mediate the positive impact of policy support on the firms’ long-term performances. On the other hand, if the managers of the firms do not actually invest the R&D subsidies into their R&D activities, the policy support would only have limited positive effects on the firms’ performances. Furthermore, we deepened our understanding of the mechanism by exploring how the effects of policy support for sports firms’ innovation may vary across different types of sports firms. We found that firm size can further strengthen the effects of R&D subsidies on the growth of sports firms. This indicated that sports firms with a larger size are more able to create value by using the subsidies. Previous studies argued that firms of a bigger size own more complementary resources that are necessary for the commercialization of an innovative output [59,61]. For this reason, investors may expect R&D subsidies to bring more benefits for the innovation development of the larger-size sports firms, which further improves the market value of those firms and is consistent to the argument by Horowitz et al. that firm size brings firms advantages in innovation development [62]. Accordingly, this study offers practical suggestions to the investors and the government policymakers concerning evaluating and enhancing the growth of sports firms. On one hand, we provide guidance for the investor on how to evaluate the innovation potential and long-term value of sports firms. When assessing a firm’s innovative capability, investors should pay more attention to the innovation support that the firm has gained from the external environment, including R&D subsidies and the deduction of R&D expenses. More importantly, investors should note whether the firm’s R&D investments can actually serve the development and improvement of the firm’s core competence and bring new growth opportunities. On the other hand, we offer suggestions to the government on optimizing the policies to improve the innovative capabilities of sports firms in order to enhance their long-term performance. It is important to prevent the opportunistic behavior of the firms in the application processes for innovation policy support. It is also of equal importance to monitor how the firms that are granted support use the financial resources they received from the government.

Besides, this study complements the conversation of how firms make in-time responses to the new requirement of sustainable development. The existing literature emphasized that green innovation serves as an important means by which firms can develop new business lines that create economic benefits while protecting the natural environment and enhancing social well-being [8,9,10], for example, electric vehicles [11,12,13,14]. This study chose a green industry, the sports industry, to investigate how firms that operate green business lines can sustain growth by sourcing financial resources to support R&D activities. We highlighted that sports firms need to learn how to receive government support to expand their R&D activities. Government policies can perform an important role in providing abundant resources for sports firms to carry out various projects of technological invention or new product development. The literature has emphasized that innovation is a critical tool that enables sports firms to continuously introduce new products or services with superior quality and sustain growth [20,21]. This study provided additional evidence to this argument. The COVID-19 pandemic imposed serious negative impacts on public health, for which people are increasingly aware of the importance of keeping fit. In addition, the combination of digital technology and sports products and services is unlocking the growth potential of the sports industry in new domains. Thus, the sports industry is confronted with new opportunities induced by the increasing customer demand and the emergence of new technologies. However, to capitalize on those opportunities, sports firms need to embed the technological knowledge in a broad range of business processes. A recent study by Alsharif et al. examined a novel approach to renew organizational processes in response to the COVID-19 pandemic, considering entrepreneurial leadership, entrepreneurial bricolage, and job insecurity [75]. This research provided us with valuable insights about organizational change facing the current socio-economic crisis. Extending this literature, this paper further highlights that it is crucial for firms to maintain and reinforce their innovation capabilities in this turbulent environment, which enables them to exploit new opportunities to realize growth. Especially, it can be a good strategic option to proactively seek government support for extra financial resources for innovation activities.

5.2. Limitations

Since there are several limitations to this study, there remains much room for future research. First, due to limited data availability, this study was prevented from conducting an extensive analysis of the driving factors of sports firm innovation. Future studies can conduct interviews and surveys to investigate innovation processes in sports firms more deeply. Second, we mainly focused on the sports industry in China, which allowed us to make specific suggestions on the innovation development of sports firms. Although the research methods can be generalized to other businesses, the results and conclusions of this study might not apply to other industries. Thus, future studies will enable us to generalize our findings to other backgrounds. Third, Feng, Chen et al. [76] focused on the add-on deduction policy as an ex post preferential measure and the results indicated that it is difficult for such a policy to positively affect the ability of firms to re-allocate more resources to R&D activities, so the combination of ex ante and ex post polices is necessary to measure the effectiveness of policy support for firms’ innovative activities [77]. Future studies can investigate the effects of the combination of innovation subsidies and deductions of R&D expenses on firms’ market values. Fourth, some studies have suggested an inverted U-shaped relationship between the intensity of policy implementation and firms’ market values, that is, the appropriate intensity of policy implementation can lead to an increase in firms’ earnings per share, the effect of policy support diminishes when the intensity exceeds a certain level [78]. Thus, it may be interesting to explore a non-linear relationship between the implementation of innovation-driven policies and firms’ market values. Finally, it is necessary to consider how government spending on public services for equity may influence the demand of sports products and services [79]. Following this line of thinking, future studies may focus on how government policies may affect the consumption of sports products and services and in turn promote the development of the sports industry.