Innovation Activity and Social Responsibility of Big Business: The Role of Political Connections

Abstract

The presented article is devoted to identifying the role of political connec-tions of big business in the process of implementing innovation activity and social responsibility. It is shown that political connections and innovation activity can be both substitutes and complements depending on the institutional environment in which interaction between economic and political actors occurs. Investments in political connections can facilitate innovations that to help firms to overcome non-market barriers. The negative consequences of its using are determined with the lack of motivation, organizational inertia, government control and agency prob-lem. It is noted that political connections reduce the amount of resources allocated to R&D but they increase the effectiveness of the protection of intellectual property rights. This means that political connections bring support and valuable know-ledge about public policy to the firms reducing information asymmetry. It is shown that the flip side of using political connections is social responsibility. It is used by big business to legitimize its activities in the eyes of society. The more a company uses political connections, the more likely it is to provide a higher level of social responsibility reporting. Large Russian companies are actively involved in the im-plementation of social responsibility in the territories where they operate. The key factor ensuring the functioning of large business on domestic markets is social re-sponsibility, while accumulated political connections allow it to enter global mar-kets with the support of the state.