TY - JOUR
T1 - Political tie hot potato
T2 - The contingent effect of China's anti-corruption policy on cash and innovation
AU - Lu, Feifei
AU - Zhu, Zhu
AU - Zhu, Lina
AU - Gao, Hao
N1 - Publisher Copyright:
© 2022
PY - 2022/5
Y1 - 2022/5
N2 - In this study, we combine the resource-based view (RBV) with institutional theory to examine how a firm's cash holding affects its innovation investments and outcomes and explore the contingent roles of political ties and the national anti-corruption policy. Using 18,125 firm-year observations of Chinese firms from 2007 to 2016, we reveal a three-way interactive effect of cash holding, political ties, and the anti-corruption policy on innovation. Before the policy is implemented, cash holding has the greatest positive effect on R&D investment for politically connected firms, and after the implementation this positive effect for these firms is strongest for R&D outcomes. We propose that the logic of resource utilization efficiency implied by the anti-corruption policy strongly motivates politically connected firms to convert their R&D investment into actual output. The theoretical and practical implications are discussed.
AB - In this study, we combine the resource-based view (RBV) with institutional theory to examine how a firm's cash holding affects its innovation investments and outcomes and explore the contingent roles of political ties and the national anti-corruption policy. Using 18,125 firm-year observations of Chinese firms from 2007 to 2016, we reveal a three-way interactive effect of cash holding, political ties, and the anti-corruption policy on innovation. Before the policy is implemented, cash holding has the greatest positive effect on R&D investment for politically connected firms, and after the implementation this positive effect for these firms is strongest for R&D outcomes. We propose that the logic of resource utilization efficiency implied by the anti-corruption policy strongly motivates politically connected firms to convert their R&D investment into actual output. The theoretical and practical implications are discussed.
KW - Anti-corruption policy
KW - Cash holding
KW - Institutional theory
KW - Political ties
KW - R&D
UR - http://www.scopus.com/inward/record.url?scp=85122667812&partnerID=8YFLogxK
U2 - 10.1016/j.respol.2022.104476
DO - 10.1016/j.respol.2022.104476
M3 - Article
AN - SCOPUS:85122667812
SN - 0048-7333
VL - 51
JO - Research Policy
JF - Research Policy
IS - 4
M1 - 104476
ER -
