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We construct a new large\u2010scale data set for the period 1993\u20132014, on the universe of firms, workers, and politicians, complemented with corporate financial statements, patent data, and election data, so as to define connected firms as those employing local politicians. We identify a leadership paradox: market leaders are much more likely to be politically connected, but much less likely to innovate. Political connections relate to a higher rate of survival, as well as growth in employment and revenues, but not in productivity\u2014a result that we also confirm using the regression discontinuity design. At the aggregate level, gains from political connections do not offset losses stemming from lower reallocation and growth.<\/jats:p>","DOI":"10.3982\/ecta18338","type":"journal-article","created":{"date-parts":[[2023,3,13]],"date-time":"2023-03-13T07:48:34Z","timestamp":1678693714000},"page":"529-564","source":"Crossref","is-referenced-by-count":123,"title":["Connecting to Power: Political Connections, Innovation, and Firm Dynamics"],"prefix":"10.3982","volume":"91","author":[{"given":"Ufuk","family":"Akcigit","sequence":"first","affiliation":[{"name":"Department of Economics, University of Chicago"},{"name":"NBER"},{"name":"CEPR"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Salom\u00e9","family":"Baslandze","sequence":"additional","affiliation":[{"name":"Federal Reserve Bank of Atlanta"},{"name":"CEPR"}],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Francesca","family":"Lotti","sequence":"additional","affiliation":[{"name":"Bank of Italy"}],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"2359","published-online":{"date-parts":[[2023]]},"reference":[{"issue":"4","key":"ecta200525-bib-0001","doi-asserted-by":"crossref","first-page":"781","DOI":"10.1111\/1467-937X.00226","volume":"69","author":"Acemoglu","year":"2002","journal-title":"The Review of Economic Studies"},{"issue":"11","key":"ecta200525-bib-0002","doi-asserted-by":"crossref","first-page":"3450","DOI":"10.1257\/aer.20130470","volume":"108","author":"Acemoglu","year":"2018","journal-title":"American Economic Review"},{"issue":"1","key":"ecta200525-bib-0003","doi-asserted-by":"crossref","first-page":"1","DOI":"10.1093\/rfs\/hhx086","volume":"31","author":"Acemoglu","year":"2017","journal-title":"Review of Financial Studies"},{"key":"ecta200525-bib-0004","doi-asserted-by":"publisher","DOI":"10.1016\/j.jfineco.2014.07.004"},{"issue":"2","key":"ecta200525-bib-0005","doi-asserted-by":"crossref","first-page":"323","DOI":"10.2307\/2951599","volume":"60","author":"Aghion","year":"1992","journal-title":"Econometrica"},{"key":"ecta200525-bib-0006","first-page":"515","volume-title":"Handbook of Economic Growth","volume":"2","author":"Aghion","year":"2014"},{"key":"ecta200525-bib-0007","doi-asserted-by":"crossref","unstructured":"Aghion, Philippe, Antonin Bergeaud, Timo Boppart, Peter J. 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