 State ownership, political connection, and innovation subsidies in ChinaHong Cheng, Hanbing Fan, Takeo Hoshi and Dezhuang Hu Journal of the Japanese and International Economies, 2024, vol. 71, issue C Abstract: We examine how a firm's political connection measured by the membership of its CEO in the People's Congress (PC) or Chinese People's Political Consultative Conference (CPPCC) influences its likelihood of receiving the innovation subsidies given by the state. We find that politically connected firms are more likely to receive innovation subsidies. The political connection measured in this way is found much more important than state ownership in explaining the allocation of innovation subsidies. We also investigate if the firms that receive innovation subsidies are more innovative, productive, or profitable. Our results show that the firms that receive innovation subsidies file and receive more patents, but that their patents are not necessarily of high quality. They do not have higher productivity or profitability, either. The results collectively suggest politically induced inefficiency in the allocation of innovation subsidies in China. Keywords: Innovation subsidies; State-owned enterprises; Political connection; Patents; Allocation efficiency (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:71:y:2024:i:c:s0889158323000424 DOI: 10.1016/j.jjie.2023.101287 Access Statistics for this article Journal of the Japanese and International Economies is currently edited by Takeo Hoshi More articles in Journal of the Japanese and International Economies from Elsevier |
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