Abstract:     The existing literature on the impact of the pretax additional deduction policy for R&D expenditure on enterprise innovation performance has often overlooked the SMEs, and the impact of internal factors has been ignored. Based on the data from A-share listed companies, this study focused on SMEs as the research object, divided innovation performance into two dimensions: quantity and quality, and constructed a conceptual model of the relationship between the pretax additional deduction policy for R&D expenditure and innovation performance which is moderated by entrepreneurial orientation. Then the threshold regression method was used to test the incentive effects of the pretax additional deduction policy for R&D expenditure on enterprise innovation performance during the different intervals of entrepreneurial orientation. The empirical results indicated that: first, the benefits intensity of the pretax additional deduction policy for R&D expenditure has a significant positive effect on the SMEs′ innovation quantity and quality. Second, entrepreneurial orientation significantly moderates the incentive effect of the pretax additional deduction policy for R&D expenditure on SMEs′ innovation quality. Notably, there exist threshold effects in this moderation of the entrepreneurial orientation. When the value of entrepreneurial orientation lies in the lower range, the increase of the benefits intensity of the pretax additional deduction policy for R&D expenditure will lead to a decrease in innovation quality. However, when the value of entrepreneurial orientation lies in the higher range, the incentive effect of pretax additional deduction policy for R&D expenditure on enterprise innovation quality is optimal. Third, there exists an industrial discrepancy in the moderating effect of entrepreneurial orientation. Based on the above research conclusions, this paper proposed to increase the proportion of the pretax additional deduction for R&D expenditure in conjunction with the policies of encouraging entrepreneurial orientation, establish a screening mechanism for the entrepreneurial orientation of SMEs and formulate differentiated preferential policies according to different entrepreneurial orientation levels and different industries. This paper explored the practical effect of the pretax additional deduction policy for R&D expenditure from a new perspective of internal factors, and revealed the underlying reasons for opportunistic behavior of enterprises during the policy implementation process. The research results will provide insights and references for improving the effectiveness and precision of the pretax additional deduction policy for R&D expenditure.

Key words: innovation orientation, innovation quality, pretax additional deduction of R&D expenditure, small and medium-sized enterprise (SME)