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NTU Management Review Vol. 36 No. 1 Apr. 2026

Does Political Activism Matter for Firm Innovation Capability?

Yu-Hsuan Chung, Department of Accounting and Information Technology, National Chung Cheng
University
Shaio Yan Huang, Department of Accounting and Information Technology, National Chung Cheng
University
Zih-Ling Ding, MediaTek Inc.

1. Purpose and Objective

In pursuit of long-term value and sustainable operations, firms adjust their
operating strategies to meet market demands and social development while continuously

enhancing product upgrades and technological advancements to strengthen and maintain
competitiveness. Engaging in research and development to increase innovation capabilities
is a fundamental factor in creating a competitive advantage (Gökkaya and Özbağ, 2015;
Harrison and Samaon, 2002), as innovation activities can lead to higher profits (Deng,

Lev, and Narin, 1999) and generate better operating performance (Zahra, Ireland, and Hitt,
2000), thus contributing to increased firm value. Cho and Pucik (2005) document that,
in response to changes in the global economic environment, firms cannot sustain profit
growth without innovation. Innovation activities are essential for corporate development in

a rapidly shifting market economy. Innovation capability not only reflects sustained growth
and operational efficiency but also determines whether firms have sufficient capacity
to adapt to the current economic environment and maintain competitiveness. Since
innovation results from research and development, patents are the most direct indicators

of capabilities and technology application derived from research and development inputs,
representing firms’ innovation capabilities and industrial competitiveness (Hagedoorn and
Cloodt, 2003; Deng et al., 1999; Su, Xiao, and Yu, 2019; Ovtchinnikov, Reza, and Wu,
2020), and the future development trends of industry and practical technology.

Davis (2016) argues that innovation is a crucial component of corporate investment
decisions, but it involves long-term, high-cost commitments (Holmstrom, 1989). When
firms face uncertainty in political and economic policies, the business environment can
be affected, impeding corporate innovation (Bhattacharya, Hsu, Tian, and Xu, 2017).

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