Informal intervention, information availability and innovation efficiency in state-owned enterprises

Innovation management studies have focused on improving innovation efficiency in state-owned enterprises (SOEs). Given the close relationship between government and SOEs, whether government intervention can impact firm innovation efficiency is an interesting question but underexplored. This study introduces a unique form of informal government intervention based on social connections between government leaders and firm managers and examines its impact on innovation efficiency using local SOEs innovation data during the 2008–2019 period. Our findings demonstrate that informal government intervention can enhance SOEs' innovation efficiency, mainly by improving SOEs' information availability. Moreover, the connection-based information availability has greater efficiency-enhancing impacts when the information providers (politicians) possess more external knowledge, and when the information receivers (SOE managers) belong to less technology-intensive industries . These findings illuminate how informal government intervention helps SOEs improve innovation efficiency by reducing agency risks. They also provide valuable policy insights for improving innovation efficiency in SOEs through strengthening institutional arrangements on information transparency. • Informal intervention can improve the innovation efficiency of state-owned enterprises • Informal intervention can impact the innovation efficiency through enhancing the information availability • Social connections are an important source of informal intervention • High knowledge externality and low technology intensity amplify the efficiency-enhancing effect of information availability