DO FIRMS’ POLITICAL CAPABILITIES INCREASE THEIR R&D INVESTMENTS? EVIDENCE FOR DIRECT AND CONTINGENCY EFFECTS IN THE EUROPEAN UNION

Philipp C. Richter, ESCP Business School, Berlin, Germany
Benedikt D. S. Kapteina, ESCP Business School, Berlin, Germany
Rolf Brühl, ESCP Business School, Berlin, Germany

Published in

EUROPEAN JOURNAL OF MANAGEMENT
Volume 22, Issue 1, p108-124, December 2022

ABSTRACT

Corporates’ political activities have been identifies as important for affecting firm-level innovation outcomes. The present study examines the ways these corporate political activities may influence innovation inputs. We draw on the capability literature to theorize a positive relationship between political capabilities (i.e., firms’ organizational and strategic capacities to conduct political activities effectively) and firm-level R&D intensity. Moreover, we theorize on the contingencies of this relationship. Our hypotheses are tested by using a hand-collected data set in the context of the supranational European Union. The results of the regression technique confirm that political capabilities are positively related to R&D intensity. Market dynamism positively moderates the relationship between political capabilities and R&D intensity, whereas industry concentration negatively moderates the relationship. At a higher level of abstraction, our study makes important contributions to our understanding of how and under what conditions political activities relate to corporate innovation.

Keywords

political capability; political activity; R&D intensity; market dynamics; industry concentration; regression analysis


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