The impact of organisational ageing and political connection on organisation technology innovation: an empirical study of IT industry and pharmaceutical industry in China

Abstract

© 2014 Korean Society for Innovation Management and Economics (KOSIME).Through a sample of 243 listed firms in the information technology industry and 120 listed firms in the pharmaceutical industry in China, we empirically examine the relations between the age, political connection, and technology innovation outputs of these organisations. The results show that both organisational ageing and political connection have positive impact on organisation technology innovation outputs. The benefits from the knowledge and momentum accumulated over the years as the organisation gets older exceed the losses that resulted from organisational rigidity and path dependence. The technology innovation outputs of politically connected firms are significantly greater than those of non-connected firms. In addition, the impact of an organisation's political connection to different levels of governments on its technology innovation differs by industries, and firms with political connections to higher level of governments do not differ from those with political connections to lower level of governments in terms of how organisational ageing affects their technology innovation outputs.