Political connection heterogeneity and corporate innovation

State Ownership Heterogeneity and Corporate Innovation: New Evidence from a Hierarchical Perspective

“…The coefficient of SO is significant at the 1% level (α = 0.105), indicating that state ownership has a significantly positive overall effect on corporate innovation.The aforementioned findings suggest that the relationship between state ownership and corporate innovation is hierarchical, with central state ownership promoting innovation and local state ownership inhibiting it. This provides a new explanation for the mixed evidence on the relationship between state ownership and corporate innovation (e.g., K. Kroll, H. Kroll; Y. Liu et al[8; 20]), indicating that whether state ownership promotes or inhibits corporate innovation depends on whether central or local state ownership predominates in the innovation process.Furthermore, the signs of the control variables are consistent with previous literature (e.g., Q. Hou et al; K. Kroll, H. Kroll; R.Zhang et al [8;17;37]). The results demonstrate that firm size, return on assets, and board size are positively and significantly related to Patent_apply in all columns, while firm age and financial leverage exhibit negative relationships with Patent_apply in all columns.…”

“…Second, two subsample tests. Addressing the argument by R. Zhang et al [17] that firms in high-tech industries may have distinctive innovation needs, this study re-evaluates primary models using two different subsamples: one composed of high-tech industry firms and the other consisting of non-high-tech industry firms. Results in Panel B of Table 7 demonstrate that both SO and SO_C have a significantly positive influence on corporate innovation in both high-tech and non-high-tech industries.…”

“…Third, alternative estimation methods. Considering the count nature of patents, R. Zhang et al [17] suggest that fixed-effect model estimation might be misleading even with the logarithmic transformation of patent data. Therefore, this section employs the maximum likelihood method to estimate the Poisson regression model in Panel C of Table 8.…”

The impact of government support on firm innovation: Evidence from China

“…For facilitation effect, the literature finds that government subsidy plays a positive role in firm innovation. Subsidy can reduce R&D costs (Guellec, 2003) and financing costs (Zhang, Xiong, et al, 2022) and provide financial support (Du & Li, 2019; Jia et al, 2021) for firms' innovation activities. Government subsidies can convey a signal to outsiders about the government's demand for innovation, improving firm value through innovation (Lerner, 1999).…”

“…Republican CEO has a lower innovation level (Han, 2019). The political connection at the central level promotes innovation, while the one at the local level inhibits innovation (Zhang, Xiong, et al, 2022). However, we more concerned the effect of the internal factors on the relationship between government support and firm innovation.…”