Political tie hot potato: The contingent effect of China's anti-corruption policy on cash and innovation

Lu, F; Zhu, Z; Zhu, L; Gao, H

Political tie hot potato: The contingent effect of China's anti-corruption policy on cash and innovation

Lu, F Zhu, Z Zhu, L Gao, H

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Publisher:: ELSEVIER
Publication Type:: Journal Article
Citation:: Research Policy, 2022, 51, (4)
Issue Date:: 2022-05-01

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Field	Value	Language
dc.contributor.author	Lu, F
dc.contributor.author	Zhu, Z
dc.contributor.author	Zhu, L
dc.contributor.author	Gao, H
dc.date.accessioned	2022-12-06T23:57:28Z
dc.date.available	2022-12-06T23:57:28Z
dc.date.issued	2022-05-01
dc.identifier.citation	Research Policy, 2022, 51, (4)
dc.identifier.issn	0048-7333
dc.identifier.issn	1873-7625
dc.identifier.uri	http://hdl.handle.net/10453/164172
dc.description.abstract	In this study, we combine the resource-based view (RBV) with institutional theory to examine how a firm's cash holding affects its innovation investments and outcomes and explore the contingent roles of political ties and the national anti-corruption policy. Using 18,125 firm-year observations of Chinese firms from 2007 to 2016, we reveal a three-way interactive effect of cash holding, political ties, and the anti-corruption policy on innovation. Before the policy is implemented, cash holding has the greatest positive effect on R&D investment for politically connected firms, and after the implementation this positive effect for these firms is strongest for R&D outcomes. We propose that the logic of resource utilization efficiency implied by the anti-corruption policy strongly motivates politically connected firms to convert their R&D investment into actual output. The theoretical and practical implications are discussed.
dc.language	English
dc.publisher	ELSEVIER
dc.relation.ispartof	Research Policy
dc.relation.isbasedon	10.1016/j.respol.2022.104476
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1402 Applied Economics, 1503 Business and Management, 1505 Marketing
dc.subject.classification	Science Studies
dc.title	Political tie hot potato: The contingent effect of China's anti-corruption policy on cash and innovation
dc.type	Journal Article
utslib.citation.volume	51
utslib.for	1402 Applied Economics
utslib.for	1503 Business and Management
utslib.for	1505 Marketing
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
utslib.copyright.status	closed_access	*
dc.date.updated	2022-12-06T23:57:18Z
pubs.issue	4
pubs.publication-status	Published
pubs.volume	51
utslib.citation.issue	4

Abstract:

In this study, we combine the resource-based view (RBV) with institutional theory to examine how a firm's cash holding affects its innovation investments and outcomes and explore the contingent roles of political ties and the national anti-corruption policy. Using 18,125 firm-year observations of Chinese firms from 2007 to 2016, we reveal a three-way interactive effect of cash holding, political ties, and the anti-corruption policy on innovation. Before the policy is implemented, cash holding has the greatest positive effect on R&D investment for politically connected firms, and after the implementation this positive effect for these firms is strongest for R&D outcomes. We propose that the logic of resource utilization efficiency implied by the anti-corruption policy strongly motivates politically connected firms to convert their R&D investment into actual output. The theoretical and practical implications are discussed.

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http://hdl.handle.net/10453/164172