Political Connections as an Impediment to Chinese Firms’ Innovation? A Motivation–Opportunity–Ability Perspective

Abstract

Aiming to have a deeper understanding of innovation in emerging economies, this article investigates the relationship between political connections and research and development (R&D) intensity of Chinese enterprises. In particular, we examine the moderating effects of firm-level factors (i.e., financial slack and state ownership) and regional-level institutional development from the motivation-opportunity-ability perspective. Using a panel dataset of 1010 Chinese enterprises between 2008 and 2014, we find that political connections have a negative effect on R&D intensity. We further observe that this negative effect is attenuated when firms have less financial slack or are state-owned enterprises. Nevertheless, institutional development does not significantly influence the impact of political connections on R&D intensity. This article extends the innovation management literature by providing insights into the relationship between political connections and R&D intensity as well as its boundary conditions in an emerging economy context.