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At present, small and medium-sized enterprises, entrepreneurial enterprises, and science and technology innovation enterprises have gradually become the main force of technological innovation and mode innovation. However, the characteristics of entrepreneurial enterprises, such as “small and weak,” “resource constraint,” and “low-risk resistance,” have become an important factor hindering the growth of entrepreneurial enterprises. Because of the constraint of innovation resources, start-ups adopt the gradual innovation mode of low R&D cost, short R&D cycle, and fast technology updates. What is incremental innovation? Incremental innovation refers to improving and enhancing existing technologies, products, and processes (Lennerts et al., 2019; Yang et al., 2022). In its formative days, the firm Toutiao, which specializes in developing recommendation engine products based on data mining, had no news website and lacked editors. Still, they later adopted pure technical algorithms to mine valuable content from massive news and websites and quickly push them to customers. Through this series of low-cost incremental innovations, it has surpassed many traditional news portals and APPs in China and gradually formed its unique value and competitive advantage. However, the development prospects of entrepreneurial enterprises are highly uncertain and often constrained by capital, technology, and other asset resources. Therefore, government departments must formulate supportive plans to support the growth of new ventures, including providing government subsidies and loan discounts. The hot issue of Chinese entrepreneurial enterprise growth theory and practice is how to help new ventures grow into “specialized, special and new” small and medium-sized enterprises, namely the type of small and medium-sized enterprises with the characteristics of “specialization, refinement, characteristics and novelty” and “little giant” enterprises referring to the small-sized enterprises with good performance, excellent development potential and cultivation value at the initial stage of growth.
As for the research on the impact of incremental innovation on government subsidies, scholars hold the same view that incremental innovation has a significant role in promoting government subsidies. Cao (2017) and Xiong et al. (2020) point out that the government will consider the resource accumulation, technological research and development, and management level of enterprises to evaluate their performance in implementing innovation subsidy policies when selecting subsidy targets. There has been a long debate on the promotion or inhibition effect of government subsidies on the growth of entrepreneurial enterprises. We roughly divided the research results of the academic community into two categories: first, government subsidies play a significant role in promoting the growth of entrepreneurial enterprises. Government subsidies serve as an “invisible credit guarantee” for enterprises. Enterprises receiving government subsidies indicate that the government recognizes their innovation ability or development potential. Through the signal transmission game between government departments and external investors, it is beneficial to reduce the information asymmetry risk of external investors and help enterprises obtain external financing. In addition, from the experience of many regions around the world, through the signal transmission between government departments and external investors, government subsidies also support the growth of entrepreneurial enterprises from the aspects of easing the financing constraints of entrepreneurial enterprises, reducing information asymmetry and system construction, to enhance the competitiveness of enterprises (Feldman & Kelley, 2006; Meuleman & Maeseneire, 2012; Ma & Wang, 2015; Zhu et al., 2016; Yue, 2018). Second, the rent-seeking behavior of enterprises may offset the positive effect of government subsidies. The rent-seeking theory points out that the government uses administrative power to intervene and regulate the economic activities of enterprises and individuals, which hinders market competition and creates opportunities for a few privileged people to obtain excess income (Krueger, 1974). From the perspective of rent-seeking theory, the rent-seeking behavior of enterprises will use limited resources for non-productive activities of enterprises, which will undoubtedly bring the “crowding out effect” to productive activities such as innovation, R&D, and project investment of enterprises, thus detrimental to the long-term development of enterprises (Hellman et al., 2019; Du et al., 2010; Yu et al., 2010; Yan et al., 2014; Bu & Wang, 2014).