Political Connection,Internal Control And Enterprise Innovation

At present,China is in the important period of economic restructuring,industrialrestructuring and upgrading,in view of which,in 18 th National Congress the Communist Party of China clearly put forward that scientific and technological innovation,serving as the strategic support to increase social productivity and strengthen comprehensive national strength of our country,have to be given the first priority.It also stresses the necessity to adhere to the path of independent innovation with Chinese characteristics and implement the innovation-driven development strategy.On the way to national innovation and development,enterprise innovation functions as the key force and high-tech enterprises are very ones who carry out the innovation.Study on the factors that influence the innovative activities of high-tech enterprises could help to provide useful theoretical basis for the establishment of the innovation-related policies.To this end,scholars discuss the impact of different factors from different perspectives,namely regional environment,government behavior,resource status,corporate behavior,corporate governance and executive characteristics,etc.Through the combing of the existing literature,the author finds that political connection is a kind of special social resources that have been used as an angle to study the enterprise innovation,but the research on the relationship between internal control and enterprise innovation is rarely paid attention to.At the same time,there is little literature on the impact of internal control quality on the relationship between political connection and corporate innovation.Based on the existing research results,this paper,by means of combining the social capital theory,rent-seeking theory,information asymmetry theory and principal-agent theory,employs the data of private listed companies from 2010 to2015 in the fields of pharmaceutical manufacturing,computer,communication and other electronic equipment manufacturing and information transmission,software and information technology as the research samples to study the relationship between political connection and enterprise innovation as well as internal control and enterprise innovation respectively.At the same time,internal control,one of the internal governance mechanisms,is introduced to study how it affects the relationship between political connection and enterprise innovation.This paper consists of six chapters.The first chapter introduces the research background,research significance,research methodology,research choroid,maincontent and the research innovation included in this paper;the second chapter is the literature review,which summarizes the various factors that influence the innovation of enterprises,cards the related literature of political association and enterprise innovation as well as internal control and enterprise innovation,and reviews these studies to find out the contributions and existing problems of existing literature so as to give purpose to the paper;the third chapter is the theoretical analysis and research hypothesis,which defines the enterprise innovation,political connection and internal control to be studied in this paper,expounds the theory of social capital theory,rent-seeking theory,information asymmetry theory and principal-agent theory and analyzes the relationship between R&D investment and R&D output in the political connection,internal control and enterprise innovation by combining the theory and the existing literature;the fourth chapter is the study design,which includes the variable description,model design and sample selection and data sources;the fifth chapter is the empirical analysis,trying to prove whether the relevant hypothesis is valid through descriptive analysis,correlation test and multiple regression analysis and robustness check of the empirical data;the sixth chapter is the conclusion of the study and the policy recommendations,which draw the final conclusions of this article on the basis of the results of empirical analysis,put forward the relevant recommendations according to the conclusions and points out some of the shortcomings at the same time.The paper finds that:(1)the high-quality internal control in the private high-tech enterprises can effectively promote scientific and technological researches as well as innovation activities of the enterprises,i.e.the internal control can ensure that the management decisions follows the objective of the maximum value of the enterprises,keep a good momentum of high-tech research and development and make use of the enterprise resources to improve the efficiency of enterprise innovation;(2)the existence of political connection makes management decisions deviate from the long-term objectives of enterprises,reduces the R&D investment as well as the output of the research and innovation activities,making it difficult for the enterprises to realize their long-term objectives;(3)supervision of management decision-making from internal control can help enterprises ease the problems of principal-agent and rent-seeking by the government,and have a positive effect on internal supervision and governance control of the enterprises in the long term.In view of the conclusion of this paper,the author puts forward some relevant suggestions to help the private high-tech enterprises improve the level of innovation andR&D:(1)to accelerate the construction of social systems to guarantee the justice of market competition;(2)to improve the promotion mechanism of government officials and establish a wide range of assessment indicators;(3)to establish and improve the management incentive system,taking into account the long-term and short-term interests of high-tech enterprises;(4)to set up high-quality internal control system and improve the internal system of the enterprises.