Political connections and corporate innovation: A stepping stone or stumbling block?

Hongjun Zhao, Jinlan Ni and Xiaomin Liu

International Review of Economics & Finance, 2024, vol. 89, issue PA, 310-326

Abstract: The impact of political experience on corporate innovation has been well studied. However, no study has specifically focused on the impact of political intensity on innovation. This paper addresses this gap by constructing an index of political connection intensity and examining the nonlinear effect of political connections on corporate innovation using a dataset of Chinese A-share listed firms from 2008 to 2017. The results demonstrate that the intensity of political connections has an inverted U-shaped impact on corporate innovation. Moreover, this relationship is more pronounced for firms located in the eastern or northern regions, state-owned enterprises, and firms in the mature stage. Further analyses indicate that innovation subsidies and rent-seeking behaviors mediate the inverted U-shaped relationship. Additionally, marketization negatively moderates this relationship, while the anti-corruption campaign in China positively moderates it. These findings strongly confirm that different intensities of political connections have varying impacts on corporate innovation. As a result, this study clarifies the seemingly contradictory conclusions found in the existing literature.

Keywords: Political connections; Corporate innovation; Inverted U-Shaped relationship (search for similar items in EconPapers)
JEL-codes: G3 O31 P16 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056023002496
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:89:y:2024:i:pa:p:310-326

DOI: 10.1016/j.iref.2023.07.041

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().