Religion and Corporate Innovation

Abstract

Innovation ability is an important factor to measure firms’ strength and is vital to the long-term development of the enterprises, previous studies have shown that financial position and corporate governance can have effects on corporate innovation, but put little attention on the informal system which may influence on innovation. This article selects religion as one of the informal system and tries to explore the impact of religion on the innovation input and output of enterprises. Using the data of A-sh are listed companies from 2008 to 2015, the empirical results show that there is a significantly positive correlation between religion and innovation inputs and outputs, and this positive correlation between religion and innovation is negatively regulated by the politics and marketization index. The results prove that politics and marketization index are substitution of religion on corporate innovation. In further analysis, the religion is divided into eastern and western parts, the results show that both eastern and western religions can promote corporate innovation, but the promotion effect of western religions is stronger. Negative moderating effect of political and marketization index on the positive correlation between religion and innovation still exists, and basically showing a more forceful inhibitory effect made by western religions on corporate innovation.