Behind the Political Connections Under Emerging Democracies

Abstract

In light of inconclusive findings on the effect of political connections, this study explores conditions that affect the effectiveness of political connections on firm performance in democratic systems. First, using a resource dependence rationale, this study stresses the importance of variation in political connections and classifies direct and indirect political connections based on sources of power and the mechanisms for developing connections. Second, this study recognizes that influencing political outcomes is an entire political process in which political power matters. Furthermore, as power is central to the resource dependence rationale unlike exchange in transaction cost economics, this study explores how the effectiveness of political connections is contingent on the dynamics of de jure political power. We find that the effect of direct political connections is susceptible to changes in de jure political power due to its dyadic relationship with de jure power, while indirect political connections are more robust to such changes due to their connections with informal networks holding de facto political power. Further, the positive effects of political connections on firm performance are mediated by operational capability.

Expatriates’ Embeddedness and Host Country Withdrawal Intention: A Social Exchange Perspective

“…The implications of our research also extend beyond the context of the UAE to other transforming economies, such as China, India, and Brazil. Like the UAE, many transforming economies are often characterized by lack of institutional transparency, certain prejudice toward foreign employees, and cultural idiosyncrasies (Ulziisukh & Wei, 2022). These factors can push many SIEs ending up living in ‘expatriate ghettoes’, which are formed when expatriates choose to live in the same area as other expatriates and where they spend their leisure time with other expatriates (see Hutchings, Michailova, & Harrison, 2013).…”

“…The implications of our research also extend beyond the context of the UAE to other transforming economies, such as, for example, China, India, and Brazil. Like the UAE, many transforming economies are often characterized by lack of institutional transparency, certain prejudice toward foreign employees, and cultural idiosyncrasies (Ulziisukh & Wei, 2022).…”

Toward an institution-based paradigm

“…In the context of emerging economies, there is substantial research on informal institutions embodied by interpersonal networks and social capital (Burt & Burzynska, 2017;Lebedev et al, 2021;Ledeneva, 2018;Li et al, 2008;Peng, 2003). From an initial focus on China (Burt & Batjargal, 2019;Haveman et al, 2017;Li & Qian, 2013;Mutlu et al, 2018;Opper et al, 2017;Peng & Luo, 2000), such research has been extended to Ghana (Acquaah, 2007), Indonesia (Fisman, 2001), Mongolia (Ulziisukh & Wei, 2022), Russia (Puffer et al, 2010), and South Korea (Horak & Klein, 2016).…”