Political Directors and Eco‐Innovation: How Regional Development, Industry Sensitivity, and Reputational Pressure Matter

ABSTRACT In the face of escalating climate risks, eco‐innovation has emerged as a strategic imperative for firms seeking sustainable development and competitive advantage. While prior research highlights the role of corporate boards in fostering eco‐innovation, the specific influence of politically connected directors (PCDs) remains underexplored. Grounded in resource dependence and contingency theory, this study investigates the relationship between PCDs and eco‐innovation using a panel dataset of A‐share nonfinancial, nonstate‐owned firms listed on the Shanghai and Shenzhen stock exchanges from 2007 to 2022. The findings reveal that PCDs significantly enhance firms' eco‐innovation outcomes, particularly in environmentally sensitive industries, less developed regions, and firms with high public visibility. By identifying and empirically testing three key contingencies—regional development, industry environmental sensitivity, and firm visibility—this study offers a context‐sensitive understanding of when and how board‐level political connections contribute to environmental innovation.