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Political Connections, Government Subsidies and Technical Innovation of Wind Energy Companies in China

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  • Jiaan Qu

    (School of Economics and Management, Nanjing University of Information Science & Technology, Nanjing 210044, China
    China Institute of Manufacturing Development, Nanjing University of Information Science & Technology, Nanjing 210044, China)

  • Jie Cao

    (China Institute of Manufacturing Development, Nanjing University of Information Science & Technology, Nanjing 210044, China)

  • Xinting Wang

    (School of Economics and Management, Nanjing University of Information Science & Technology, Nanjing 210044, China)

  • Jiexin Tang

    (College of Economics and Management & Research Centre for Soft Energy Science, Nanjing University of Aeronautics and Astronautics, Nanjing 211106, China)

  • James O. Bukenya

    (College of Business and Public Affairs, Alabama A&M University, Normal, AL 35762, USA)

Abstract

Developing wind energy is one of the win win measures in response to climate changes and energy security. In order to promote technical innovation in the wind-energy industry, the government grants various fiscal subsidies to wind-energy companies every year. To acquire these subsidies, enterprises often employ those with political backgrounds as members of the board of directors and board of supervisors. On the one hand, the acquisition of subsidies may indeed promote the technical innovation capacity of enterprises, but, on the other hand, due to the existence of “the grabbing hand”, the technical innovation capacity of enterprises may be weakened. We selected 35 Chinese wind-energy listed companies to analyze the relationship between political connections, subsidies and the technical innovation capacity. Results indicate that, political connections to an enterprise weaken its innovative potential and achievement. Moreover, the higher the strength of political connections is, the stronger the negative impact it will bring to the innovative capacity of the enterprise. Modulation of government subsidies, however, can alleviate the negative effects of political connections.

Suggested Citation

  • Jiaan Qu & Jie Cao & Xinting Wang & Jiexin Tang & James O. Bukenya, 2017. "Political Connections, Government Subsidies and Technical Innovation of Wind Energy Companies in China," Sustainability, MDPI, vol. 9(10), pages 1-13, October.
    • Handle: RePEc:gam:jsusta:v:9:y:2017:i:10:p:1812-:d:114336
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    References listed on IDEAS

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    Cited by:

    1. Wang, Zhongcheng & Li, Xinyue & Xue, Xinhong & Liu, Yahuan, 2022. "More government subsidies, more green innovation? The evidence from Chinese new energy vehicle enterprises," Renewable Energy, Elsevier, vol. 197(C), pages 11-21.
    2. Lien‐Wen Liang & Tsui‐Jung Lin & Hui‐Fun Yu & Ya‐Wen Li, 2022. "The impact of political connection and board diversity on company performance: Evidence from China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2347-2357, September.
    3. Zhenji Jin & Yue Shang & Jian Xu, 2018. "The Impact of Government Subsidies on Private R&D and Firm Performance: Does Ownership Matter in China’s Manufacturing Industry?," Sustainability, MDPI, vol. 10(7), pages 1-20, June.
    4. Daquan Gao & Christina W. Y. Wong & Kee-hung Lai, 2023. "Development of Ecosystem for Corporate Green Innovation: Resource Dependency Theory Perspective," Sustainability, MDPI, vol. 15(6), pages 1-28, March.
    5. Unsal, Omer, 2020. "Two faces of corporate lobbying: Evidence from the pharmaceutical industry," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).

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