Abstract:
Based on director interlocks of all public companies in China, this article explores how board networks affect non-state-owned enterprises' innovation. We find that there are two positive effects of political connection: attracting resources and introducing intelligence. Being a carrier of capital flows, board networks have significantly positive influence on accessing to external resources for R&D expenditure, which is called attracting resources; being a carrier of knowledge dissemination, board networks play great roles in accessing to heterogeneous information for enterprises' patents, which is called introducing intelligence. Empirical evidence also shows that trade credits are major sources for R&D expenditure, heterogeneous information are mostly provided for invention patents not for utility model patents and design patents. A direct policy implication of our research is that, in order to improve levels of technical innovation, non-state-owned enterprises can build board networks with other enterprises, which contributes to not only mitigating financing constraints but also providing intellectual support.
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