Social network, financial constraint, and corporate innovation

Drawing on resource dependence and social network theories, we explore the relationship between social networks, financial constraints, and corporate innovation. We employ a two-way fixed-effect panel model based on Chinese A-share listed corporations from 2008 to 2020. We find that financial constraints have a negative relationship with corporate innovation, social networks promote corporate innovation, and financial constraints mediate this relationship. In addition, our findings suggest that social networks have a significantly positive effect on exploratory innovation and a negative effect on exploitative innovation; financial constraints mediate these relationships. Moreover, our findings are heterogeneous for different regions (west, central, and east) and corporate sizes (large and small). Therefore, our findings improve the understanding of the impact of social networks and funds on corporate innovation, shed light on the approach to enhancing corporate innovation, and further expand resource dependence and social network theories.