Political Activism and Firm Innovation

Alexei Ovtchinnikov, Syed Walid Reza and Yanhui Wu

Working Papers from HAL

Abstract: Political activism positively affects firm innovation. Firms that support more politicians, politicians on Congressional committees with jurisdictional authority over the firms' industries and politicians who join those committees innovate more. We employ instrumental variables estimation and a natural experiment to show a causal effect of political activism on innovation. The results are consistent with the hypothesis that political activism is valuable because it helps reduce political uncertainty, which, in turn, fosters firm innovation. Also consistent with this hypothesis, we show that politically active firms successfully time future legislation and set their innovation strategies in expectation of future legislative changes. Keywords: political contributions, innovation, investment policy, policy uncertainty

Date: 2014-07-25
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Journal Article: Political Activism and Firm Innovation (2020)
Working Paper: Political Activism and Firm Innovation (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-02058269

DOI: 10.2139/ssrn.2471058

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