Abstract:In China’s economic transition period, can the distribution of production resources improve downstream enterprises’ R&D whether by market power or government support? In this paper, we find that the companies which obtain less support from the government have higher dependence on the partners in factor market network, and can make full use of the factors and resources provided by supply chain to promote their R&D innovation, however, those companies which obtain big support from the government can get capital and production factors with low cost from the government, are short of the dynamic power to profit by R&D and have no significant stimulus on R&D innovation from the factors and resources provided by suppliers. Thus, under China’s background of backward development of factor market, in order to solve the problem in misallocation of factors and resources, the acceleration and promotion of marketoriented reforms is an important power to change the insufficient self-innovation of Chinese enterprises.