Corruption Governance,Political Connections And The Allocation Of Entrepreneurial Talent

China is currently in a period of institutional transformation,and rights have been devolved from the government to the market gradually,but the government still has discretion over some resources such as land and finance.Therefore,the government and the market work together to allocate resources.There are two main ways for entrepreneurs to seek the resources needed for development: one is to enhance the strength of enterprises to obtain more resources through market competition,and the other is to obtain political resources through the establishment of political connections with certain powers through rent-seeking.Political connections are prevalent throughout the world,but political connections play different roles in different social systems.China's social culture regards relations as an important social resource,and relations become the basic link between economic activities and social life.In this context,entrepreneurs have strong incentives to build political connections,and political relations have become a way to seek benefits to a certain extent.Entrepreneurs establish political connections to gain political asylum and the benefit.Although entrepreneurs can gain some benefits by establishing a political connection through rent-seeking,the talents and energy of entrepreneurs are limited,this non-productive activity requires high resources and energy input,which interferes the efforts of entrepreneurs for productive activities.Baumol's theory of entrepreneurial aptitude has pointed out that the institutional environment is the key factor in determining the allocation of entrepreneurial talents.A good business environment will encourage entrepreneurs to invest more energy in productive activities to create wealth in the market.However,in a bad business environment,entrepreneurs tend to devote more energy to non-productive activities such as building relationships with government officials and securing more government invisible resources.This paper uses China's corruption governance action since the second half of 2012 as a quasi-natural experiment,using the data of listed companies in China's A-share market from 2010 to 2017,using the double difference method to study the impact of corruption governance actions on entrepreneurial decision-making decisions with different political backgrounds.The empirical results show that the corruption governance action will reduce the marginal benefits of non-productive profit-seeking activities and strengthen the incentives for entrepreneurs to invest in productive activities.Specifically,after the implementation of the corruption control action,the amount of government subsidies received by enterprises with political connections decreased,while the R&D investment increased significantly.The result shows that the corruption governance action will correct the non-compliant government subsidy,and at the same time strengthen the independent innovation incentives of enterprises,and promote the transfer of resources from non-productive profit-seeking activities to productive activities.Further research has found that regional enterprises with low degree of marketization are more dependent on government resources than regions with higher degree of marketization,and thus the impact of corruption governance on entrepreneurial talent allocation is weaker in these regions.The research in this paper provides new empirical evidence for how the institutional environment affects the ability of entrepreneurs to configure and choose,and the microscopic effects of this round of corruption governance actions are elaborated.