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Government industrial priorities, public corporate governance and corporate innovation: A political push perspective

Author

Listed:
  • Bai, Junhong
  • Cai, Qishuo
  • Yao, Nengzhi
  • Guo, Qiaozhe

Abstract

This study develops a “political push” framework, largely rooted in institutional theory, to explain how government can foster corporate innovation through designating firms as industrial priorities and using public governance tools. Leveraging the sudden release of national prioritized industries under the Made in China 2025 (MiC2025) policy, our difference-in-difference analysis shows that government industrial priorities can significantly improve the innovation output of the prioritized firms. In addition, we find that the impact is strengthened when firms are governed more closely by the government in the forms of political appointment, party monitoring and state ownership. Our mechanism analysis further suggests that the positive impact of government industrial priorities is primarily achieved through enhanced human capital, improved tax incentives and increased government subsidies. Our findings offer a novel perspective and robust empirical evidence on the interplay between government industrial policy, public governance, and corporate innovation.

Suggested Citation

  • Bai, Junhong & Cai, Qishuo & Yao, Nengzhi & Guo, Qiaozhe, 2025. "Government industrial priorities, public corporate governance and corporate innovation: A political push perspective," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 1885-1900.
    • Handle: RePEc:eee:ecanpo:v:85:y:2025:i:c:p:1885-1900
    DOI: 10.1016/j.eap.2025.02.023
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    More about this item

    Keywords

    Government industrial priorities; Innovation; Made in china 2025; Public Governance;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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