Premium
Do Political Connections Promote Innovation in Environmentally Polluting Enterprises?
Author(s) -
Zhang Jianhua,
Li Xiaoqing,
Fung HungGay,
Qiao Penghua
Publication year - 2019
Publication title -
china and world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.815
H-Index - 28
eISSN - 1749-124X
pISSN - 1671-2234
DOI - 10.1111/cwe.12281
Subject(s) - business , panel data , politics , government (linguistics) , industrial organization , affect (linguistics) , stock (firearms) , sample (material) , commerce , economics , political science , law , mechanical engineering , linguistics , philosophy , chemistry , chromatography , econometrics , engineering
We use an unbalanced panel data analysis to examine the effect of political connections (PCs) in state‐owned enterprises (SOE) and non‐SOEs on the innovation of Chinese environmentally polluting enterprises listed on the Shanghai and Shenzhen Stock Exchanges from 2007 to 2016. Our sample consists of 792 firms and 4587 firm‐year observations. There are several interesting findings. First, SOEs that are politically linked to the central government promote more innovation in general and more environmental innovation than SOEs without these links. Second, privately‐owned enterprises (non‐SOEs) with PCs promote less environmental innovation than non‐SOEs without PCs. Third, environmental regulation does not affect the environmental innovation of SOEs but it drives non‐SOEs with PCs to become more environmentally innovative. Our results enable us to better understand how PCs and regulations affect environmental innovation.