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In the second stage, this study analyzes the impact of corporate political activism
on innovation capabilities by incorporating the IMR estimated in the first stage into the
ordinary least squares regression to correct for self-selection bias. Political activism is
proxied by whether firms engage in political donations ( ) or by the amount
of political contributions to legislators ( ). We measure corporate innovation
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capabilities (the dependent variable) by using the adjusted number of patents
(ADJ_ ) and patent citations (ADJ_ ) to eliminate time
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heterogeneity, based on patents ( ) and patent citations ( ) over a single
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period or subsequent years. Additionally, this study further controls for election year
and industry fixed effects and establishes the following regression model:

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Does Political Activism Matter for Firm Innovation Capability? ���
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This study further examines the moderating effect of differences between
electronics and non-electronics industries on the relationship between corporate
and innovation capabilities. We assign a dummy variable equal to 1 if a firm belongs to
political activism and innovation capabilities. We assign a dummy variable equal to 1
the electronics industry and 0 otherwise. We analyze Innovation capabilities of electronics
if a firm belongs to the electronics industry and 0 otherwise. We analyze Innovation
capabilities of electronics across through interaction terms ( × or
across through interaction terms (DONATE ×IND or DOS_F ×IND ), and the
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× ), and the regression model is as follows:
regression model is as follows:
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(3)
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3. Findings
3. Findings

This study analyzes listed firms in Taiwan from 2008 to 2019 to examine how
This study analyzes listed firms in Taiwan from 2008 to 2019 to examine how
corporate political activism impacts innovation capabilities. We manually collect data
corporate political activism impacts innovation capabilities. We manually collect data on
on political donations made by profit-seeking enterprises to legislators from Control
political donations made by profit-seeking enterprises to legislators from Control Yuan,
Yuan, using them as a proxy for political activism. We also compile patent and patent
using them as a proxy for political activism. We also compile patent and patent citation
citation data from the M-Trends Patent search and analysis system, and utilize the
data from the M-Trends Patent search and analysis system, and utilize the number of
number of patents held and cited by Taiwanese firms at the United States Patent and
patents held and cited by Taiwanese firms at the United States Patent and Trademark Office
Trademark Office (USPTO) as proxies for corporate innovation capabilities
(USPTO) as proxies for corporate innovation capabilities (Hagedoorn and Cloodt, 2003).
(Hagedoorn and Cloodt, 2003). The results reveal a significant negative relationship
The results reveal a significant negative relationship between corporate political activism
24
and innovation capabilities, suggesting that engaging in political donations may create a

political resource curse, which hinders resource allocation (Hou, Hu, and Yuan, 2017; Li,
2020). Moreover, the results indicate that when firms in the electronics industry participate
in political activism, this negative relationship may be strengthened. These findings
suggest that electronics firms typically have high demands for advanced equipment and
skills, rely heavily on sufficient funding and government policy support (Su et al., 2019),
and are more vulnerable to government intervention. Consequently, electronics firms
involved in political connections may sacrifice innovation efforts for political gains (Zhong
and Zheng, 2025), leading to a misallocation of resources and budgets and contributing to
a political resource curse that diminishes their innovation capabilities.
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