Political Connection And Technology Innovation

Since the reform and opening up, although China’s economy has experienced more than thirty years of rapid development, the innovation ability of the whole society is not enough.The construction of an innovative country, which is supported by innovative enterprises, is the only way to achieve sustainable economic development and become an economic power. The incentive policy of the government has an important influence on the enterprise’s innovation behavior. Therefore, in order to encourage enterprises to make more innovation,In addition to the internal market driven, the government’s incentive and guidance is needed. In the background of China’s economic transformation, and the market system is still not perfect, the political association of executives will bring financial and tax subsidies, financing and other aspects of the convenience, which is conducive to the survival and development of enterprises. Therefore, the political connection between the enterprise and the government has become a common phenomenon. As a common phenomenon in most countries, the political connection has become a hot topic in the domestic and foreign scholars in recent years. China as the largest developing country in the world, and in the special period of transition to a market economy, inquiry under the special background of political connection firms on technology innovation effect, and between the two there may be indirect effects of path has a certain theoretical and practical significance.Therefore, this paper attempts to explore its impact on enterprise technological innovation and its mechanism from the perspective of political connection. First, we has reviewed on the political connection and technological innovation literature, we found that most of the existing literature focus on the political association has a direct impact on the technological innovation of the enterprise, but few studies consider indirect effects that may exist between the two factors. Then we according to the existing theory, a detailed analysis of the effects produced by the political connection and technology innovation, and puts forward the two possible indirect factors: tax incentives and subsidies, to verify the above factors may exist the mediating effect.Then, this paper uses 2009-2014 GEM listed companies data, using fixed effect panel data model made an empirical test of the impact, and using the Propensity ScoreMatching(PSM) to further verify the robustness of the empirical results. This paper from the empirical results are as follows:(1) political connections significantly increased the level of technology innovation in the enterprise;(2) variables of fiscal subsidy is political association of intermediary variables affect enterprises’ technological innovation, and is part of the intermediary role;(3) Tax incentives have an impact on the technological innovation of enterprises, but it is not the intermediary variable.Finally, according to the research conclusions, this paper puts forward the relevant policy recommendations.