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More money, more innovation? The role of government connectedness

In: Research Handbook on Entrepreneurial Ecosystems

Author

Listed:
  • Jing A. Zhang
  • Conor O’Kane

Abstract

This chapter examines how financial slack influences innovation performance through innovation capability and how government connectedness impacts the effect of financial slack on innovation performance in an entrepreneurial ecosystem. Specifically, we hypothesize that innovation capability represents a valuable firm-specific asset and an important mechanism through which financial slack enhances innovation performance; and the effect of financial slack is hypothesized to be contingent on government connectedness. Using data from 1081 Chinese industrial firms, we find that innovation capability mediates the relationship between financial slack and innovation performance, while government connectedness has an insignificant effect on this relationship. These findings add new insights into the resource slack-innovation-performance relationship and have important implications for our understanding of innovation activity in entrepreneurial ecosystems.

Suggested Citation

  • Jing A. Zhang & Conor O’Kane, 2024. "More money, more innovation? The role of government connectedness," Chapters, in: James A. Cunningham & Matthias Menter & Conor O’Kane & Marco Romano (ed.), Research Handbook on Entrepreneurial Ecosystems, chapter 22, pages 446-467, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:20352_22
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    File URL: https://www.elgaronline.com/doi/10.4337/9781800378988.00032
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