Political connections, financing constraints, and the optimization of innovation efficiency among China's private enterprises

Song, Malin; Ai, Hongshan; Xie, Li

doi:10.1016/j.techfore.2014.10.003

Cited by 131 publications

(83 citation statements)

References 27 publications

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“…For example, aiming at the Chinese transitional economy, Peng and Luo [3] found that political relations were positively correlated with innovation performance. Song [4] maintained that "a visible hand" and "an invisible hand" simultaneously controlled market resources in a market marked by imperfect competition; enterprises with government relations indeed had less financing limitation than other enterprises, which was beneficial for the innovation input of enterprises. Zeng [5] selected 173 enterprises in Guangdong Province as samples, studied the relationship between the technical innovation of enterprises, political connections and government support to innovation, and found that the setting up of government relationships was the most important approach for enterprises to acquire government support for innovation.…”

Section: The Impacts Of Political Relationships On Technical Innovationmentioning

confidence: 99%

Political Connections, Government Subsidies and Technical Innovation of Wind Energy Companies in China

Cao

Wang

et al. 2017

Sustainability

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Developing wind energy is one of the win win measures in response to climate changes and energy security. In order to promote technical innovation in the wind-energy industry, the government grants various fiscal subsidies to wind-energy companies every year. To acquire these subsidies, enterprises often employ those with political backgrounds as members of the board of directors and board of supervisors. On the one hand, the acquisition of subsidies may indeed promote the technical innovation capacity of enterprises, but, on the other hand, due to the existence of "the grabbing hand", the technical innovation capacity of enterprises may be weakened. We selected 35 Chinese wind-energy listed companies to analyze the relationship between political connections, subsidies and the technical innovation capacity. Results indicate that, political connections to an enterprise weaken its innovative potential and achievement. Moreover, the higher the strength of political connections is, the stronger the negative impact it will bring to the innovative capacity of the enterprise. Modulation of government subsidies, however, can alleviate the negative effects of political connections.

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Section: The Impacts Of Political Relationships On Technical Innovationmentioning

confidence: 99%

Political Connections, Government Subsidies and Technical Innovation of Wind Energy Companies in China

Cao

Wang

et al. 2017

Sustainability

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“…As the Chinese government is deeply involved in businesses and resource allocation [36], it appears impossible for firms to stay entirely independent of the government, particularly large or state-owned firms. In this case, merely discovering that a political connection exists (e.g., [19,20,35,37]) may not be sufficient, as a close relationship with the government may bring Sustainability 2020, 12,1617 3 of 17 about different consequences for firms than having a weaker relationship. It is therefore necessary to introduce an index to measure the political connection strength.…”

Section: Introductionmentioning

confidence: 99%

Impact of Political Connection Strength on the Internationalization Outcome of Chinese Firms: Perspectives from Market Exploration and Technology Acquisition

Zhang

Huang

2020

Sustainability

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Although the role of a home country's government in firms' internationalization processes has been investigated, there is a gap in the literature concerning the effectiveness of the government's effort. Based on the data of 1996 Chinese listed firms, this study investigates how the strength of Chinese firms' political connection with their home country government impacts the outcomes of their internationalization activities. These activities are classified into market exploration and technology acquisition. We establish an index to measure the firms' political connection strength and find that it exhibits a bimodal distribution, which indicates that some firms maintain a close relationship with the government, while the business activities of others are distant from the government. The strength of the political connection has different moderating effects on firms' internationalization processes when either the international market context or the firms' internationalization activities vary. A strong political connection is beneficial for firms to explore the markets and acquire beneficial technology from developed countries. Compared with its role in exploring international markets, political connection plays a more significant moderating role in augmenting the positive effect of international technology acquisition on firms' innovation capability. Therefore, Chinese firms may perform better in the internationalization process if they maintain a close relationship with the Chinese government, which engages in promoting the internationalization of domestic firms through an array of policies that may compensate for the firms' disadvantages. Our results show the mechanism through which emerging countries' governments use directives and incentives to facilitate the internationalization of domestic firms.

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“…For instance, Wang et al (2016) study how family firms with political connections transform their business and adopt M & a strategy. Linking political connections and corporate innovation has also been studied by some papers not only in management field (Song et al, 2015) but also in corporate finance (Hou et al, 2017).…”

Section: Business Strategy Innovation and Randd Intensitymentioning

confidence: 99%

A Recent Literature Review on Corporate Political Connections

Trinugroho

2017

JDM

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It has always been an interesting issue deliberating the connectedness between corporation and political power. There have been a substantial number of papers in the academic literature empirically studying what so call "corporate political connections" over the last 17 years. Using 81 papers published in 2010-2017 in finance, economics, accounting, management and other journals, in this present paper, I provide a recent literature review on firm political connections particularly with respect to the empirical studies discussing the impact of being politically connected firms. A number of issues related to the effect of political connections on corporate strategy, behaviors and outcomes have been addressed. Few other papers provide different perspective by looking at the antecedents of corporate political connections and the contingency role of such connections. Little is found on the development of new measures of corporate political connections. Finally, it could be suggested that the interaction between political connections and the technological-based business innovation would be an interesting issue to study.

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Political connections, financing constraints, and the optimization of innovation efficiency among China's private enterprises

Cited by 131 publications

References 27 publications

Political Connections, Government Subsidies and Technical Innovation of Wind Energy Companies in China

Political Connections, Government Subsidies and Technical Innovation of Wind Energy Companies in China

Impact of Political Connection Strength on the Internationalization Outcome of Chinese Firms: Perspectives from Market Exploration and Technology Acquisition

A Recent Literature Review on Corporate Political Connections

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