Organization Capital and Corporate Innovation: Evidence from China

In this paper, we examine the impact of organization capital on corporate innovation activities by using a large sample of Chinese data during the period of 2005-2015. The main findings suggest that organization capital is one important determinant of corporate innovation output. Additional cross-sectional tests show that both political connection and industrial concentration will moderate the positive effect of organization capital on corporate innovation. We further identify that ensuring sufficient funding support and accelerating internationalization are two possible channels by which organization capital contributes to positive innovation output. Robustness tests help rule out possible endogenous concerns.