Corporate political analysis, state ownership of enterprises and firm performance in China

Abstract

This paper investigates the impact of corporate political analysis (CPA) on firm performance among Chinese firms, distinguishing between privately-owned firms (non-SOEs) and state-owned enterprises (SOEs). Uncertainty about the competitive environment was a key driver of CPA among non-SOEs firms, but not among SOEs. Differentiation was a significant performance driver for non-SOEs, but not SOEs. However, CPA had significant, negative performance implications for SOEs. Overall, the results of the multi-group analysis suggest two prominent "paths" to performance. Non-SOEs in the study perceived more considerable environmental uncertainty and pursued differentiation, whereas SOEs emphasised CPA. Implications for Chinese managers and future research are addressed.