The Impact Of Enterprise Political Connections On Technological Innovation

The phenomenon of corporate political connections is very common worldwide.In particular,China is in the process of economic transformation,and the political connection is more salient.It is always the focus of business,academic and political circles to establish the influence of political association on the enterprise itself.Especially,the effect of political connections on enterprise performance has aroused wide attention of scholars from worldwide.However,the attention to enterprise innovation is still insufficient.At present,our country is in the key time of innovation strategy implementation and economic transition.Innovation is the key source of competitive advantage for enterprises in dynamic environment.What is the influence of the informal system on the technological innovation that determines the competitive advantage of the enterprise,this is a question worth studying.The governing structure of the board of directors is another important factor affecting the strategy making of the company and the investment decision of the company.Under the condition that the external governance mechanism is not perfect,the internal governance mechanism of the company plays a very important role in restricting the senior managers.Therefore,it is of theoretical and practical significance to study the influence of political connections on the technological innovation of enterprises based on the perspective of board governance.After reviewing the domestic and foreign research,this paper has combined the rent-seeking theory,upper echelons theory,technology innovation theory and the principal-agent theory,and made use of the research methods of combining theoretical analysis and empirical analysis,this paper has carried out a comprehensive study on how the political connection has influenced technological innovation of private enterprises,and the moderating role of board governance.In accordance with the theoretical framework and research hypothesis,the thesis carried out careful research design.Based on the private enterprises listed on GEM board,selecting relevant data from 2014 to2016 as the sample to test the hypothesis through statistical analysis.At last,the thesis reaches the empirical result by regression analysis and robustness test.This paper has drawn following conclusions through the research: there is a negative correlation between the political connections and corporate technologicalinnovation level.The level of technological innovation is lower in enterprises with political connection which means political connection has hindered the activities of technological innovation for the private enterprises.The size and the degree of board independence of the board significantly moderates the political connection and private enterprise technological innovation level.The larger the scale of the board of directors,the weaker the negative impact of the political association on the level of technological innovation.The higher the independence of the board of directors,the weaker the negative impact of the political connection on the level of technological innovation.The results of this study also have practical implications for corporate executives and government officials.