More is less? The curvilinear effects of political ties on corporate innovation performance.

Mingchuan Yu, Yujie Lu, Chao Li, Han Lin, Philip Shapira

Research output: Contribution to journalArticlepeer-review

Abstract

Previous research has explored the impact of political ties on corporate innovation performance, yet with controversial results. This study proposes that political ties have a curvilinear impact on innovation performance, and the resulting curvilinear relationship is moderated by absorptive capacity and external environment. We conduct examination based on a survey among Chinese manufacturing firms, which demonstrates an inverted U-shape relationship between political ties and corporate innovation performance. This inverted U-shape relationship is moderated by the absorptive capacity, which means the positive effect of political ties on corporate innovation performance is strong when the absorptive capacity of a firm is high. Furthermore, political ties, absorptive capacity and external environment (i.e. dynamism, munificence, and complexity) have a three-way interactive effect on corporate innovation, which means firms with strong political ties exhibit the highest innovation performance when their absorptive capacity and external environmental condition (dynamism or munificence or complexity) stand at high level simultaneously. The research findings provide a comprehensive understanding for firms, especially for those with different characteristics and under different external environments, to exploit political ties to facilitate corporate innovation performance.
Original languageEnglish
Pages (from-to)1309-1335
Number of pages27
JournalTechnological and Economic Development of the Economy
Volume25
Issue number6
Early online date24 Sep 2019
DOIs
Publication statusPublished - 2019

Keywords

  • absorptive capacity
  • external environment
  • innovation performance
  • political ties

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