Analysis of Resource-Based Theory to Explain the Relationship between Employee Protection and Investment in Corporate Innovation Activities: The moderating role of political connections

Resource-based theory states that employees as a valuable human capital play a very important role in the company's innovative activities. In today's evolving world and with the increasing competition of organizations, employee protections are becoming more and more important. Therefore, the present study investigates the relationship between employee protection and corporate innovation and studies the moderating effect of political connections on this relationship.The research hypothesis was tested using a sample of 55 companies listed in Tehran Stock Exchange during the year's 2014 to 2018 using multivariate regression model based on panel data.The findings of the study indicate that employee protection improves company innovation. In addition, the results show that in companies with political connections, employee protection has a greater impact on company innovation. Also, the results of sensitivity analysis showed that the use of alternative proxy for measuring the employee protection does not affect the main results of the study, thereby confirming the robustness of our findings.