Abstract: By conducting differences-in-differences model analysis, whether or not the practice of GEM might improve enterprise innovation is explored. The evaluation index system of enterprise innovation is first constructed, and the data from 51 SMEs and GEM board listed corporations from the year of 2008 to 2010 are collected. The results indicate that the launch of the GEM is unable to significantly lead on to the enterprise innovation and it even has the negative influence in a short term. However, along with the operation and adjustment, the GEM market will turn back to rationality gradually and in turn has an increasing positive influence on enterprise innovation. Thus, it is suggested that the GEM should be treated positively. While constructing the systems of perfect suspension, delisting, transfer boards, and other related institutions, the service target of GEM should be further identified and highlighted. Therefore, it is important to dispel all kinds of misgivings, increase the listed resources, and serve the small and mid-sized innovation enterprises that are at the initial stage of pioneering, so as to ensure the full development of GEM potential function for enhancing enterprise innovation.

Key words: GEM, enterprise innovation, differences-in-differences model