Political Connection With The Technology Innovation Investment And Their Efficiency Analysis

As the main body of technology innovation, the enterprises’ research anddevelopment activities are undoubtedly the key factor to technological progress, andthe corporate R&D decision-making become the one of the important decisions. Theformer literature have political connection as an important research study, but theyhave not study the impact of political connections on corporate R&D decision-makingand technical efficiency, thus lack a valuable path in which the political connectionsaffect the value of the companies. At the same time most of the literature focused onthe political connection can help companies to get government resources, and seepolitical connection as a way to protect enterprise property rights of shareholders fromthe government damage, and a few studies have found that the political relevanceharmed the value of the business. However, they are not able to answer under whatcircumstances to the political connection can improve corporate value, and underwhat circumstances to reduce the value of the company as well as the means by whichto enhance the enterprises’ value.The paper studies the impact of political connection on corporate innovation andtheir efficiency under different ownership structure. Choose the listed high-techcompanies as the sample, use the methods of empirical research, Select variables andfinancial model, expand the analysis and summarize the research.State-holding enterprises and non-state-holding enterprises have different way inestablishing the political connection. State-holding enterprises, duo to their specialnature, often have a kind of natural connection with the government, and thegovernment control state-owned enterprises by the appointment of executives of theenterprises. Rather than state-owned enterprises, non-state-holding enterprises aremainly hire former government officials or participate political life to establishpolitical connection. This means that the impact of the political connection tocorporate economic behavior may be different for different structure of property rightsof enterprises. Based on the above analysis, the paper studies the impact of politicalconnection on corporate innovation and technical efficiency under different ownershipstructure. Choosing the listed high-tech companies as the sample and using themethods of empirical research, study political connection with technologicalinnovation and technical efficiency, as well as the impact of differences between the different types of enterprises. The results showed that, in the state-owned company,political connection does not promote R&D spending and technological innovation;but in the non-state-owned company, political connection can significantly raise thelevel of enterprise technology, R&D expenditures and technological innovation power.Whether it is state-owned enterprises or non-state-owned enterprises, the technicalefficiency of companies with political connection is lower than the companies’without political connection. Compared to non-state-owned companies, politicalconnections have greater negative impact on technical efficiency of state-ownedcompanies. Whether it is state-owned enterprises or non-state-owned enterprises, thesensitivity of technical innovation to technical efficiency of the company with thepolitical connections more higher than companies’ without political connections.The paper introduces political connections into finance, and this will promote theprogress of the study of financial relations theory. Corporate finance relationship isthe important reason of the financial activities. Researching the impact of politicalconnection on technical innovation and technical efficiency enhance ourunderstanding of the inherent mechanism of the political connection to corporatebehavior and performance, deep the technical innovation theory and will help to openup a new field of study for the theoretical studies of the impact of politicalconnections on firm value. This paper compare different impact of politics connectionon technical innovation and technical efficiency in different property types ofcompanies, and enrich our understanding of political association in different types ofproperty rights companies.