More money, more innovation? The role of government connectedness

Jing A. Zhang and Conor O’Kane

Chapter 22 in Research Handbook on Entrepreneurial Ecosystems, 2024, pp 446-467 from Edward Elgar Publishing

Abstract: This chapter examines how financial slack influences innovation performance through innovation capability and how government connectedness impacts the effect of financial slack on innovation performance in an entrepreneurial ecosystem. Specifically, we hypothesize that innovation capability represents a valuable firm-specific asset and an important mechanism through which financial slack enhances innovation performance; and the effect of financial slack is hypothesized to be contingent on government connectedness. Using data from 1081 Chinese industrial firms, we find that innovation capability mediates the relationship between financial slack and innovation performance, while government connectedness has an insignificant effect on this relationship. These findings add new insights into the resource slack-innovation-performance relationship and have important implications for our understanding of innovation activity in entrepreneurial ecosystems.

Keywords: Business and Management; Development Studies; Economics and Finance; Innovations and Technology; Politics and Public Policy (search for similar items in EconPapers)
Date: 2024
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