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Innovation quantity or quality? The role of political connections

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  • Liu, Shiyuan
  • Du, Jiang
  • Zhang, Weike
  • Tian, Xiaoli
  • Kou, Gang

Abstract

Based on the heterogeneity of innovation quantity and quality, this study investigates the impact of political connections on enterprises' innovation. Using the data of Chinese listed enterprises from 2003 to 2015, we find that political connections have a positive impact on enterprises' innovation quantity, but they are detrimental to innovation quality. We further find that political connections weaken the promotion of government subsidies on innovation quality and even reduce the R&D intensity of enterprises, which serves as an essential determinant of innovation quality. The government can stimulate enterprises' innovation quality by improving marketization, intellectual property protection, and anti-corruption.

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  • Liu, Shiyuan & Du, Jiang & Zhang, Weike & Tian, Xiaoli & Kou, Gang, 2021. "Innovation quantity or quality? The role of political connections," Emerging Markets Review, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:ememar:v:48:y:2021:i:c:s1566014121000273
    DOI: 10.1016/j.ememar.2021.100819
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    More about this item

    Keywords

    Political connections; Innovation quantity; Innovation quality; Innovation heterogeneity;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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