The impact of business-government relations on firms' innovation: Evidence from Chinese manufacturing industry

Using stratified sample survey data from World Bank Enterprise Surveys, we conduct an empirical study of the relationship between business-government relations and firms' innovation in the Chinese manufacturing industry and explore both the internal and external boundaries that affect this relationship. The results suggest that in China, a transition economy in Northeast Asia, business-government relations have a significantly positive effect on firms' innovation. Female managers positively moderate the relationship between business-government relations and firms' innovation, but the market competition intensity negatively moderates the relationship between business-government relations and firms' innovation. This article makes some theoretical contributions to the study of firms' innovation, and, at the same time, provides a realistic operating path for firms to improve innovation.