The Influence of Party Organization Involvements in Corporate Governance on Innovation: Evidence from China’s Private-Owned Enterprises

Xiaoxue Liu, Jingyun Zhou, You Wu () and Na Hao
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Xiaoxue Liu: School of Economics, Beijing Technology and Business University, Beijing 100048, China
Jingyun Zhou: School of Economics, Beijing Technology and Business University, Beijing 100048, China
You Wu: School of Economics, Beijing Technology and Business University, Beijing 100048, China
Na Hao: School of Economics, Beijing Technology and Business University, Beijing 100048, China

Sustainability, 2022, vol. 14, issue 24, 1-30

Abstract: As the grassroots-party organizations of the Communist Party of China (CPC) are increasingly involved in the governance of private-owned enterprises (POEs), whether this new pattern promotes corporate innovation is still a research gap. Therefore, based on the data of 1357 POEs’ party-organization involvements and their patent applications from 2003 to 2017, this paper analyzes the impact of the party-organization involvements on corporate innovation by using the multiple regression model. The results include: (1) party-organization involvements including party organization activities and senior executives’ participation can significantly promote innovation, especially after 2012; (2) party-organization activities improve innovation by increasing research and development (R&D) investment and reducing operating risk, while the senior executives’ participation only influences on R&D investment; (3) the party-organization involvements have a stronger promotion on non-invention patent applications, especially for the utility-model-patent applications, than invention-patent applications; (4) the promotion is more pronounced for family businesses, technology-intensive and capital-intensive enterprises, as well as those located in the northern, Beijing-Tianjin-Hebei region and Yangtze River delta. After applying PSM sampling and difference-in-differences (DID) analyses, and substituting the dependent variables, the results remain robust. This paper provides Chinese evidence for party construction and corporate innovation, and also provides references about political connection and corporate innovation for other countries to some extent.

Keywords: party organization; innovation; private-owned enterprises; relational embeddedness; R&D investment; operating risk (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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