During the “14th five year plan” period, China will encourage enterprises to increase R & D investment, implement tax incentives for enterprise investment, and enhance the technological innovation ability of small, medium and micro enterprises. This article selects the relevant data of small and medium-sized listed technology enterprises from 2014 to 2020 in our country as the research sample, and uses the PSM model to study the effect of government R&D subsidy on the innovation of small and medium-sized technology enterprises. The research found that the government R&D subsidy significantly stimulated the R&D investment of enterprises; the R&D subsidy of the government has a more incentive effect for non-state-owned small and medium-sized technology enterprises and the enterprises in high-tech industries and lower marketization areas. It proposed to perfect the government R&D subsidy policy system aimed at stimulating the innovation of small and medium-sized technology enterprises in our country.