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Do Political Connections Promote Innovation in Environmentally Polluting Enterprises?

Author

Listed:
  • Jianhua Zhang
  • Xiaoqing Li
  • Hung‐Gay Fung
  • Penghua Qiao

Abstract

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.

Suggested Citation

  • Jianhua Zhang & Xiaoqing Li & Hung‐Gay Fung & Penghua Qiao, 2019. "Do Political Connections Promote Innovation in Environmentally Polluting Enterprises?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 27(3), pages 76-101, May.
    • Handle: RePEc:bla:chinae:v:27:y:2019:i:3:p:76-101
    DOI: 10.1111/cwe.12281
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    Cited by:

    1. Mengmeng Wang & Shufeng (Simon) Xiao, 2022. "How Do Political and Business Ties Matter for Supply Chain Management Capability? An Empirical Test of an Integrative Framework," Sustainability, MDPI, vol. 15(1), pages 1-14, December.
    2. Yong Geng & Wei Liu & Hanshu Chen & Xinyu Zou, 2023. "The Spillover Effects of Environmental Regulations: A Perspective of Chinese Unregulated Firms' Tax Burden," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(2), pages 84-111, March.
    3. Guo, Shujuan & Zan, Botao & Sun, Yuan & Zhang, Meili, 2020. "Effects of top managers’ military experience on technological innovation in the transition economies of China," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    4. Fang Fang & Tingbo Duan & Kun Li, 2022. "Political Connections, Ownership and Within-Firm Pay Gap," Sustainability, MDPI, vol. 14(14), pages 1-20, July.
    5. Hongwei Xu & Wenquan Liang & Kuanhu Xiang, 2022. "The Environmental Consequences of Place‐Based Policies in China: An Empirical Study Based on SO2 Emission Data," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(4), pages 201-229, July.
    6. Zhang, Cheng & Zhou, Bo & Tian, Xuan, 2022. "Political connections and green innovation: The role of a corporate entrepreneurship strategy in state-owned enterprises," Journal of Business Research, Elsevier, vol. 146(C), pages 375-384.
    7. Bingquan Lin & Junsong Wang, 2023. "Will the “Pairing Assistance” Policy Trigger the Migration of Polluting Enterprises? An Empirical Study Based on the Yangtze River Delta Region," Sustainability, MDPI, vol. 15(3), pages 1-19, January.
    8. Yu-Hong Ai & Di-Yun Peng & Huan-Huan Xiong, 2021. "Impact of Environmental Regulation Intensity on Green Technology Innovation: From the Perspective of Political and Business Connections," Sustainability, MDPI, vol. 13(9), pages 1-23, April.
    9. Caoyuan Ma & Pin Guo & Zhao Zhang, 2022. "Structural Deleveraging: Evidence from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(6), pages 137-162, November.
    10. Shukuan Zhao & Bochen Zhang & Dong Shao & Shuang Wang, 2021. "Can Top Management Teams' Academic Experience Promote Green Innovation Output: Evidence from Chinese Enterprises," Sustainability, MDPI, vol. 13(20), pages 1-21, October.
    11. Xijia Huang & Yiting Guo & Yuming Lin & Liping Liu & Kai Yan, 2022. "Green Loans and Green Innovations: Evidence from China’s Equator Principles Banks," Sustainability, MDPI, vol. 14(20), pages 1-20, October.
    12. Yufeng Xia & Peisen Liu, 2022. "Does Bank Competition Promote Corporate Green Innovation? Evidence from the Location of Bank Branches," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(2), pages 84-116, March.

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