Abstract:    Whether incentive policies of technological innovation affect technological innovation performance no longer seems to be the focus of discussion, but the mechanism by which policy works remains controversial. This paper argues that it is necessary to revisit this issue from the perspective of industrial characteristics by introducing industrial technology absorptive capacity and market competition degrees. Taking the enabling technologies (ETs) related manufacture industries as the object of study is of great significance to the enhancement of technological competitiveness and industrial upgrading. ETs are pre-competitive technologies that promote the innovation of other scientific and technological achievements. In recent years, developed countries laid stress on the development of enabling technologies and listed them as strategic development areas. In 2010, China identified the national emerging sectors of strategic importance, of which enabling technologies are the core and key part. Thus, study the incentive policies of technological innovation on the ET related manufacture industries is significant for Chinese manufacture industries′ technology upgrading and industrial competitiveness. 
   As innovation policies are formulated for industries or sectors rather than firms, this paper′s theoretical model not only helps policy makers to tailor policies to industry characteristics, but also to adjust policy tightness according to industrial conditions. Government innovation incentives are exogenous forces for industrial technological innovation. To study the effect of incentive policies of technological innovation on industrial technological innovation. The characteristics of industries should be considered, due to that the technological absorptive capacity of the industry matters with the industry′s ability of technology innovation. Meanwhile, the competitiveness of the industrial market relates with the industry′s motivation to do technology innovation. Thus, take the two characteristics of industries into the effect model of will give us more comprehensive picture of the effect of incentive policies of technological innovation on industrial technological innovation.
   There are two types of innovation incentives widely used in China: direct incentives and indirect incentives. We chose the most used government R&D subsidies to represent direct incentive policy and tax incentives to represent indirect incentives. The sample industries of the empirical study are 16 ET-enabling industries. We first measure the technological innovation performance of each industry using a window DEA model, and in the descriptive statistics section provide a longitudinal comparative analysis of the technological innovation efficiency values of each enabling technology sector. Then, after verifying the external incentive effects of innovation policies, we investigate the triple interaction effects of technology absorptive capacity, market competitiveness and innovation policies. The regression results show that the incentive effect of tax incentives is better than that of R&D subsidies, and the technology absorptive capacity is also more facilitative to tax incentives. Finally, the triple interaction term shows a significant effect, with high market competition being conducive to stimulating the moderating effect of technology absorptive capacity on tax incentives and improving the technological innovation performance of industries.
   This paper′s academic contribution is threefold. Firstly, most of the existing domestic studies take enterprises as the perspective for interpreting the effects of policies, lacking attention to the industry level. The paper uses industry data to target the effects of policies on enabling technology related industries, which is more conducive to observing the effects of existing innovation policies and making recommendations with practical guidance. Secondly, the paper does not limit itself to discussing whether innovation policies have influenced technological innovation but examines in depth the mechanism of their effects after verifying their incentive effects. The paper looks at the incentive effects of policies by taking industrial motivation and ability into consideration, and found the three-way interactive effect of incentive policies of technological innovation on industrial technological innovation performance. Finally, in terms of the measurement of innovation performance, the paper extends the scope of innovation performance to technological innovation, and instead of using a single indicator to simply measure technological innovation performance, a data envelopment approach is used to measure the efficiency of each unit in a comprehensive manner using both input and output variables. Instead of using a single indicator to simply measure technological innovation performance, a data envelope approach is used to measure the efficiency of each unit using a combination of input and output variables.
   Based on the findings of this paper, the following recommendations are made: firstly, policy makers should pay attention to the degree of market competition in the target industry in order to take full value of incentive policies of technological innovation. Secondly, tax incentives are better for R&D subsidies in fostering industrial technological innovation.

Key words: tax incentive, R&D subsidy, industrial technological innovation performance, technological absorptive capacity, industrial market competition