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4. Limitations

Our results have limitations and offer opportunities for future research. First, this
study uses data from the Control Yuan of Taiwan on political donations by profit-seeking

enterprises to legislators. However, due to restrictions under the Personal Data Protection
Act, detailed data on political donations made personally by corporate executives to
legislators is unavailable. Therefore, this study includes only data on profit-seeking
enterprises engaging in political activism through political contributions.

Second, although firms may make political donations through non-public subsidiaries,
parent companies, or holding companies, we identify the data on political contributions
from profit-seeking enterprises solely based on the “unified business number” for listed
firms in Taiwan. Future research could investigate political activism from a corporate

group perspective once complete data on the affiliated companies are available.
Lastly, this study examines only political donations made by firms to legislators
because legislators are more likely to influence relevant laws and regulations affecting
the firms’ industries. However, firms may also engage in political activism by donating to

politicians with executive power, such as the president or county and city mayors. Future
research could further explore the impact of corporate political activism on different types
of politicians.

5. Contributions

Our paper makes several contributions. First, the results of this study are inconsistent
with the findings of Ovtchinnikov et al. (2020), which indicate a positive relation between

political activism and corporate innovation. These differences arise not only from
variations in electoral systems and the methods and restrictions on political donations
across countries, but also because corporate political activism in Taiwan is influenced by
the four-year election cycle. Firms seek to build political connections with politicians,
which can entail political costs—particularly since industry upgrading and development

in Taiwan heavily depend on government support—potentially hindering the growth of
other capabilities (Li, 2020). Therefore, firms may experience government intervention
and crowding out of other resource allocations (Hou et al., 2017), sacrificing innovation

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