Les Cahiers de Recherche - HEC Paris
Political Activism and Firm Innovation
() and Syed Reza
Abstract: Political activism positively affects firm innovation.
Firms that support more politicians, politicians on Congressional
committees with jurisdictional authority over the firmsí industries and
politicians who join those committees innovate more. The authors employ
instrumental variables estimation and a natural experiment to show a causal
effect of political activism on innovation. The results are consistent with
the hypothesis that political activism is valuable because it helps reduce
policy uncertainty, which, in turn, fosters firm innovation. Also
consistent with this hypothesis, we show that politically active firms
successfully time future legislation and set their innovation strategies in
expectation of future legislative changes.
Keywords: political contributions; innovation; investment policy; policy uncertainty; (follow links to similar papers)
JEL-Codes: D72; D80; G31; G38; O31; O38; (follow links to similar papers)
48 pages, July 24, 2014
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