Burgeoning research on trust has revealed an incomplete understanding of how government trust shapes the R&D behaviors of small and medium enterprises (SMEs). To study this, we use data collected on 3001 Chinese SMEs to find that for every standard deviation increase in the government trust...

We use a difference-in-difference research design to examine the effect of an exogenous shock to a firm's R&D investment from Chinese regulations regarding technology exports revised in 2008. We document that these technology export restrictions (TERs) decrease a firm's R&D investment....