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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

By Langzi Chen, Jian Li and Peter Zander

Abstract

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

Topics: political connections, sustainability of R&amp, D investment, policy burden, ownership, Environmental effects of industries and plants, TD194-195, Renewable energy sources, TJ807-830, Environmental sciences, GE1-350
Publisher: MDPI AG
Year: 2018
DOI identifier: 10.3390/su10114238
OAI identifier: oai:doaj.org/article:148434cb0c754d3a8b0269512792f0af
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