Rent Seekers in the Interest of Society? Civil Organizations and Regional Innovation in China

ABSTRACT What contributes to innovation quantity and quality in a given geographic space? This paper provides a novel perspective by exploring the effect of civil organizations. A straightforward framework is constructed to understand the institutional context of government behaviors in China. Using regional data from 2010 to 2022, this paper discovers that civil organizations positively correlated with innovation output. Notably, Olson organizations prove to be more predictive of patent output compared to Putnam organizations. Moreover, significant impacts are observed in the domain of low‐quality patents, such as utility models and design patents. Additionally, Olson organizations exhibit a positive impact on green innovation. With firm‐level data, this paper finds limited evidence supporting the role of local exchange of ideas and knowledge. The promoting effect of civil organizations on innovation appears to stem from the “favor exchange mechanism” rather than the “knowledge sharing mechanism.”