Innovative enterprises have been regarded as an essential element of industrial upgrading and economic growth in China. Local governments introduced various public policies to create a favourable environment for the development of innovative enterprises. However, it is not clear yet how these policies have impact on innovative enterprises and there has been little empirical research to test effects of these public policies. This study aimed to understand the multilevel mechanism through which public policy relates to innovative performance. This paper has investigated the relationships among government support, key development elements of enterprises and innovation performance by collecting data from 96 innovative enterprises in Dalian city of China. Stepwise regression analysis was first used to simplify the relationships between variables. Sobel judgement was then needed to test the significance of mediating effects. This study proposed a theoretical model analysing the relationships among public policies, key development elements of enterprises, and innovative performance. The empirical results revealed that public polices had various effects on different key elements of enterprises to further influence the performance of innovative enterprises. This study expanded our understanding of the role of public policies on innovative enterprises and offered advice on promoting innovation in developing countries.