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Can Political Connections Maintain the Sustainability of R&D Investment in China? There Is No Such Thing as a Free Lunch
Ist Teil von
Sustainability, 2018-11, Vol.10 (11), p.4238
Ort / Verlag
Basel: MDPI AG
Erscheinungsjahr
2018
Quelle
EZB Free E-Journals
Beschreibungen/Notizen
Combining resource-based theory and social exchange theory, this paper studies the role that political connections play in maintaining the sustainability of enterprises’ R&D investment. Furthermore, this paper discusses the moderating effect of policy burdens and ownership on political connections and R&D investment. Based on the Euler equation model, this study used dynamic panel data from Chinese listed companies over the period 2006–2015 to test the hypothesis. The results show that the sustainability of R&D investments of enterprises are more likely to face the threat of financing constraints. However, political connections can help maintain the sustainability of R&D investment of enterprises, but this effect exists only at the local political level, and firms need to undertake a policy burden in return. Additionally, this effect is more effective in private enterprises than non-private enterprises.