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Do political connections enhance or impede corporate innovation?

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  • Su, Zhong-qin
  • Xiao, Zuoping
  • Yu, Lin

Abstract

We establish a comprehensive political connection index based on manually collected personal profiles of top firm managers or board members to examine the contribution of political connections to corporate innovation and the channels of this relation. Our results indicate that politically connected firms tend to have more innovation than non-connected firms, and government subsidies mediate this relation. Moreover, the innovation-enhancing value of political connections is especially important for firms that receive less government support, such as non-SOEs and low-tech companies.

Suggested Citation

  • Su, Zhong-qin & Xiao, Zuoping & Yu, Lin, 2019. "Do political connections enhance or impede corporate innovation?," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 94-110.
    • Handle: RePEc:eee:reveco:v:63:y:2019:i:c:p:94-110
    DOI: 10.1016/j.iref.2018.08.012
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