The Research On The Influence Of Political Connection On The Private Enterprise Innovation Efficiency From The Perspective Of Financing Constraint

Political connection is an important subject explored by economics, it will bring nobility, power, resources and, furthermore, deterrence and influence provided by the political party, the regime and the ideology. These years, with the deep-going process of marketization, the competition between enterprises is becoming increasingly fierce, and if the enterprises want to survive in the fierce competition in the down, it is essential to have the core competitiveness. While the innovation efficiency is an important index to measure the core competitiveness of enterprises, therefore, more and more people began to pay attention to the impact of political connection on enterprise innovation level. Usually people hold the mind that, the industries, enterprises or persons with political power still occupy the top level of society, own relatively more government subsidies, tax incentives, government loans and other preferential policies in the process of carrying out the innovation activities. So they can obtain a more abundant innovation funds and reduce the enterprise’s risk and pressure. Whether the enterprise can improve the production efficiency and transform the production mode are depending on the business of innovation efficiency. But whether the enterprise is willing to innovation is not only depends on the enterprise’s knowledge capital and entrepreneurial consciousness, but also is closely related with the healthy system of environmental.In the economic transition period in our country,due to the coexistence of dual system, the operation of the market is not perfect, and the phenomenon of government intervention in the market and use power configuration of resources is serious. This period produces all kinds of benefit, and induces the private enterprises to establish political connection, and increases nonproductive expenditure. In order to improve their own economic growth, private enterprises use resources for rent-seeking activities instead of innovation activities, and this phenomenon will hinder the development of private enterprises.In view of these, it is very necessary to investigate whether these preferential policies provided by the government can really relax financing constraints of enterprises, and whether political connection can promote enterprise innovation.The efficiency of innovation as an important standard to measure the efficiency of enterprise innovation activities is the focus basis of this paper.What affection does political connections on enterprise innovation efficiency under the effect of financing constraints is the focus of this article. Using dynamic panel data model, this paper uses GMM and Threshold regression to make an empirical test on 269 private listed enterprises across the year of 2003 to 2008, in order to explain these three questions.1)what influence does the political association on the financing constraints; 2) What is the effect of financing constraints on the innovation efficiency; 3) Under the effect of financing constraints what impact does the political association on the enterprise innovation efficiency? The research results show that, with relevant variables controlled, the enterprises with political connection are facing lower financial constraint level than failing to establish political connection ones; the greater the financing constraints is, the higher the efficiency of enterprise innovation; Further study shows that under the effect of financing constraints, political connections has a threshold effect to the enterprise innovation efficiency.