Spreading wide, building deep? How SME-targeted certification policy shapes innovation quantity and quality

While certification policy is widely used to promote innovation, how it shapes SMEs’ strategic orientation toward expanding innovation output or enhancing innovation quality remains insufficiently understood. To explore the effects and mechanisms of SME-targeted certification policy on innovation quantity and quality, we employ a time-varying DID model using panel data from Chinese listed companies. Benchmark analysis results show that the certification policy significantly promotes both innovation quantity and quality. Mechanism analysis indicates that the certification policy enhances innovation quantity and quality via different channels. Further heterogeneity analysis reveals that the policy’s effects vary by firm and industry factors. This study advances theoretical and empirical understanding of how the certification policy shapes firms’ strategic orientation toward innovation and provides practical implications for policy implementation.