Do Local Party Committees Have Influence over Firms Innovations in China?

Abstract

Political tie in emerging economies like China has been a hot topic of economic and management research. We argued that the local party committee is a special form of political ties in China. Despite most studies on political tie focus on the personal relationships between firms and government officials or individuals with political power, we concentrated on the local party committees which act as both major departments of firms and grassroots-level organizations of the Chinese Communist Party. Examing the local party committees’ influences on firms’ innovation activities based on a national-wide survey of Chinese firms in 2013, we found the local party committees do positively affect the firms’ innovations, including both radical innovation and incremental innovation. Compared to traditional political ties, maintaining local party committees, which play more direct roles in firms’ innovation activities, is less costly but more stable. Our findings thus may shed fresh light on the research of political ti...