Are political ties only based on interpersonal relations? The organizational political tie and its role in firms’ innovations in China

Purpose: Despite most studies on political ties focusing on the interpersonal relationships between firms and government officials, this study suggests that local party committees (LPCs) create special forms of political ties in China – i.e. organizational political ties. The purpose of this paper is to examine the influences that these organizational political ties have on Chinese firms’ innovative activities. Design/methodology/approach: Drawing upon data based on a nationwide survey of Chinese firms in 2013, this study uses a structural equations model to examine the relationship between LPCs and firms’ innovations. Findings: This study found that LPCs do affect firms’ innovations positively, including both radical innovations and incremental innovations. Research limitations/implications: By suggesting that LPCs are a form of political tie particular to China – i.e. an organizational political tie – this study’s findings may shed fresh light on the research into political ties in other emerging economies. Originality/value: Compared to traditional political ties, maintaining the organizational political ties fostered by LPCs benefits firms’ innovations significantly in China, making them less costly and more stable.