A Study On How Political Connection And Anti-Corruption Influence Enterprise Innovation

Innovation is the primary driving force for development.The reports of the 19 th National Congress pointed out that an enterprise-centered innovation system should be established at the new era of development.Therefore,how to motivate enterprises to innovate and improve the level of enterprise innovation has become a key issue that needs urgent attention for the business community and academia community.At the same time,during the transitional period,it is common for enterprises to establish political connections through various ways.Some studies show that political connections have created favorable conditions for enterprises,so they are conducive to enterprise innovation.On the contrary,other studies point out that political connections distort the allocation of resources,so they bring out the crowding-out effect on enterprise innovation.There is no unified conclusion in the academic community on the relationship between political connections and enterprise innovation.In addition,since the 18 th National Congress,China’s anti-corruption efforts have been increased to an unprecedented extent.Undoubtedly,anti-corruption will create a more equitable development environment for enterprises and reduce the uncertainty of enterprise innovation.Will anti-corruption motivate the enterprises to innovate actively? Moreover,anti-corruption leads to the downfall of some government officials,which will inevitably affect the business activities of the enterprise they are associated with.What impact will these enterprises have on their political connections and innovation? The study of the issues is of great significance to stimulate enterprise innovation and improve the level of enterprise innovation.Based on the background of anti-corruption,this paper uses rent-seeking theory,government intervention theory,and institutional change theory to construct a mechanism model to study the influence of political connections and anti-corruption on enterprise innovation,and uses the enterprise data of Shanghai A-share from 2009 to 2014 for conduct empirical tests from the perspective of enterprise innovation investment and output.The results show:(1)The existence of political connections hinders enterprises innovation.Compared with state-owned enterprises,the hindrance to non-state-owned enterprises is more significant;(2)Anti-corruption can promote enterprise innovation.It also increases the cost of establishing and maintaining political connections.Therefore,the promotion of anti-corruption on innovation of enterprises with political connections is more obvious.(3)Compared with state-owned enterprises,anti-corruption promotes of enterprises innovation more greatly in non-state-owned enterprises that are politically connected.Based on the conclusions,this paper proposes that the government should reduce excessive government intervention in the economy to weaken the motivation of establishing political connections from the root;the government also should further deepen the reform of state-owned enterprises and establish a modern enterprise system.Not only should the enterprises focus on improving the level of innovation,but also should have an objective and comprehensive view on political connections to construct new types of political and business relationship.The study of this paper will enrich the perspectives of the theoretical researches on enterprise innovation,and provide an empirical basis for enterprises to have more comprehensively view on political connections.At the same time,this paper provides important support for anti-corruption at the micro level of the enterprise.