What the study found
The study found that firms' political connections are associated with lower innovation performance. It also found that R&D investment intensity is the channel through which political connections affect innovation.
Why the authors say this matters
The authors say the findings clarify the "innovation paradox" of political ties in emerging markets. They also conclude that dynamic capabilities and board independence are important mitigating factors, and they advise regulators and firm managers to use these mechanisms to reduce innovation costs associated with political connections.
What the researchers tested
The researchers used dynamic capability theory and a non-market perspective to examine the impact of political connections on corporate innovation performance. They tested hypotheses with regression analysis on panel data from 5,549 Chinese listed companies covering 2008 to 2021.
What worked and what didn't
Political connections had a negative influence on innovation. R&D investment intensity served as the channel linking political connections to innovation, while dynamic capabilities and board independence mitigated the negative effect. The negative impact was especially prominent in state-owned and technology-intensive enterprises compared with non-state-owned and non-technology-intensive enterprises.
What to keep in mind
The abstract does not describe limitations in detail beyond the study's focus on Chinese listed companies and the period 2008 to 2021. The findings are presented as evidence about this sample and context.
Key points
- Political connections were found to have a negative influence on corporate innovation.
- R&D investment intensity was identified as the channel linking political connections and innovation.
- Dynamic capabilities and board independence reduced the negative effect.
- The negative impact was stronger in state-owned and technology-intensive enterprises.
- The study analyzed panel data from 5,549 Chinese listed companies from 2008 to 2021.
Disclosure
- Research title:
- Political connections are linked to lower corporate innovation
- Authors:
- Qianqian Chen, Baoying Zhu, Seong-Jin Choi
- Institutions:
- Hanyang University, University of International Business and Economics, Shandong University of Finance and Economics
- Publication date:
- 2026-03-07
- OpenAlex record:
- View
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