Crime and corporate innovation: insights from sense of security

Social security plays a vital role in socio-economic development. This study examines whether social security influences corporate innovation. Using local crime data and Chinese A-share listed firms from 2015 to 2020, we find that the local crime rate is negatively associated with corporate innovation, especially lower innovation efficiency and the outflow of inventors. The results reveal that social security fulfils a basic environmental role, offers employees with a sense of security and thus guarantees corporate innovation activities. Additionally, greater police presence and stronger organizational support can enhance perceived security and partly offset the negative impacts of high local crime rates. Overall, this study provides evidence that social security functions as an important environment for corporate innovation activities.