Purpose – The purpose of this paper is to examine how a clustered foreign firm’s network ties of social capital and government relationship may affect its institutional legitimacy and performance for clustered firms in emerging economies. To accomplish this task, the authors identify network ties (e.g. bridging ties and strong ties) and show, for each, the direct effects on institutional legitimacy and organizational performance. The findings show that bridging ties, strong ties, and government relationship directly and significantly impact organizational performance. Design/methodology/approach – This study used the two-step approach suggested by Anderson and Gerbing (1988). The first step uses confirmatory factor analysis to validate the psychometric properties of the measurement scales. The second step then uses structural equation modeling to examine the proposed hypotheses. The statistical software LISREL 8.80 was used for the data analysis. Findings – This paper finds that industrial clusters serve an important legitimizing function for clustered firms. The corporate ties (both bridging and strong ties), institutional legitimacy, and governmental relationships all play a positive role in organizational performance in emerging economies. The government relationships are also found to have a positive effect on institutional legitimacy. The institutional legitimacy can develop from industrial clustering. The foreign enterprises within a cluster should pay attention to their vertical and horizontal relationships. Research limitations/implications – First, the questionnaires cannot be verified if these instructions were followed in each instance (because the responses were simply returned by mail). Second, this study grouped all foreign firms into one cluster. Other foreign firms may find that culture has different effects on their organizational performances in emerging economies. Third, the relationships and impacts of various factors were not investigated within the theoretical framework proposed in this study. Fourth, the study did not address the heterogeneity of domestic and foreign firms. Fifth, the study only focusses on the textile industry. Practical implications – The institutional legitimacy can develop from industrial clustering. In order to make a good impression on the local government, clustered firms should adhere to government policy, hire more local workers and buy local raw materials. The foreign enterprises in emerging economies should recognize that, being inside of an industrial cluster, it is important to have strong ties with other cluster members and to interact frequently and honestly with the relevant government agencies and organizations. To enrich resource-utilizing and reduce their liability of foreignness, foreign firms within clusters should seek to increase their firms’ network ties and establish good relationships with local governments to obtain competitive advantage. Social implications – This study aims at filling that gap by using the concepts of strong ties, bridging ties of social capital, institutional legitimacy, and government relationship to understand how clustered firms influence institutionalization through corporate strategies. The analysis not only helps extend the literature on network ties configuration, but also expands the literature on institutionalization. The study explores how clustered firms actively built up their own advantageous positions and then combine these with their original passive interests to favorably enhance their competitiveness in rapidly changing and institutionally unstable emerging economies. Originality/value – First, connects existing theories to provide an integrated theoretical framework for understanding the roles of social capital and institutional legitimacy. Second, provides evidence to the literature by examining how network ties and government relationship may jointly influence the performance for clustered foreign firms in emerging economies, an area largely ignored in prior research. Third, provides one theoretical lens through which different outcomes of social capital and institutional issues can be analyzed. Fourth, the authors put forward a relationship capability and an institutional capability model to study how firms can avoid risk and obtain benefits by clustering in emerging economies.

Purpose: Investor sentiment, the willingness of market participants to invest, is a difficult concept to measure. Exploring the relationship between investor sentiment and stock returns can reveal how investor sentiment affects the operation of the stock market. Such an understanding can assist market participants in making more rational investment decisions based on market laws. Such an understanding can also assist regulators in their roles of supervision and policy making.Methodology: Although the E-GARCH model has the advantage of considering volatility clustering, it has not previously been used to investigate the impact of investor sentiment changes on the Shanghai Composite Index's market return. This research therefore applies the E-GARCH approach to data from 2015 to 2018, to explore the influence of investor sentiment on the return rate of the Shanghai Composite Index.Main Findings: There are three main findings. First, when the investor sentiment is increased by the same amount, the rate of return before a stock market crash will have a smaller increase than the rate of change after the crash, which is a new finding. Second, the rate of return on stocks is susceptible to emotional sentiment, rather than simply depending on stock price. Third, the tendency of retail investors to follow the crowd is less in periods of pessimism than it is in periods of optimism, which, in turn, can push up stock yields.Application: Based on these research results, this article can provide insights to understand how investors' subjective judgments on future earnings affect their investment behavior and how great the impact is on the market. At the same time, it can help investors make more rational investment decisions based on an understanding of market laws, and help regulators with guidance for their supervision and policy making.Originality/Value: This paper contributes to the theory of the investor sentiment index, improving the index construction method by adding two sentiment proxy indicators: investor activity ACT and stock market leverage level. After constructing the sentiment index and comparing it with the stock market index (Shanghai Composite Index), the fit is found to be improved.

In 2013, China's growing economic capacities motivated Beijing to launch a multilateral bank to advance its diplomatic agenda. Scholars are still debating precisely what Beijing seeks to accomplish through the Asian Infrastructure Investment Bank (AIIB). This article surveys the key literature on the AIIB, identifying twenty scholarly interpretations of Beijing's strategic goals. The purpose of this research is to understand Beijing's initial design for this bank and evaluate whether this new multilateral development bank can function as an effective instrument for Beijing's economic statecraft. Over its first five years, as an economic tool for Beijing, the AIIB has performed quite remarkably well. The bank not only operates smoothly, generating a reasonable amount in net income for its shareholders, but also serves Beijing's strategic purposes in expanding China's regional influence, enhancing its international status, and ascending toward global leadership.

PurposeDifferential leadership does not necessarily bring only negative effects, as it may also become an incentive management strategy. This study explores whether outsiders can actively become insiders through proactive personality traits, or whether they can actively approach resource controllers to remove obstacles at work and enhance their performance in a Chinese cultural setting.MethodologyA stratified random sampling method was used. The sample objects were medical staff from hospitals in the six urban districts of Beijing. In 2021, a total of 900 online questionnaires were distributed. 524 valid questionnaires were recovered.Main findingsThe results show that differential leadership, defined as favoritism towards insiders and prejudice against outsiders, can cause changes in employees’ sense of organizational justice and in-role performance. Meanwhile, by introducing ‘proactive personality’ as an independent variable that also acts as a moderator, our study confirms that, under differential leadership, employees with a proactive personality can actively improve situational barriers and have better work performance.Implications/applicationsOur research offers managers the following advice: First, it is better to look not only at relationships, but also to understand an employee’s personality characteristics, whether it has a superficial or deep role at work, in order to reduce the turnover rate and to raise productivity. Second, it is important to teach employees to serve customers with a sincere appreciation of their point of view, rather than focusing on presenting an outward appearance of friendliness.Novelty/originalityThis paper contributes to the theory of proactive personality, emotional labor, and differential leadership. Contrary to previous studies, our research has used ‘proactive personality’ as both a distractor and a predictor at the same time. Also, insiders favored by leaders are not found to perform better at work.

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