Political Ties of Listed Chinese Companies, Performance Effects, and Moderating Institutional Factors

Abstract

Although development in China is quite heterogeneous across regions, little research has explored how the value of Chinese firms’ political ties is contingent on the institutional and economic development of firms’ regional environment. This article explores some of the factors that moderate the benefit of political ties, differentiating between ties to central and local government. The study investigates how benefits of ties to central and local government are moderated by regional market and economic development, respectively. The study is based on a quantitative analysis of 858 listed Chinese firms. The results suggest that firms enjoy a positive effect of political ties but mainly ties to central government. The analysis, furthermore, finds these ties to be less valuable in economically well-developed regions. Market development, on the other hand, does not moderate the effects of local or central government ties.

Impact of Political Connection Strength on the Internationalization Outcome of Chinese Firms: Perspectives from Market Exploration and Technology Acquisition

“…If at least one of the firm's major shareholders or top managers is a member of parliament, a minister, or is closely related to top politicians or a political party, the firm is identified as having political ties [33]. Existing literature focusing on the political connections of Chinese firms investigated whether the firm's chairperson or general manager is currently a government official, a National People's Congress (NPC) representative, or a Chinese People's Political Consultative Conference (CPPCC) member (e.g., [55,56]). However, the strength of the relationships between the firms and the government may differ between firms and may lead to different consequences, and the above measurement barely accounts for this fact.…”

“…Besides the political connections of firms' chairpersons and general managers, we also accounted for the firms' ownership (central firms, state-owned firms, and private firms), because the former two firm types are believed to have stronger political connections than the latter [55].…”

Integrating nonmarket and market resources, strategy and performance in Chinese enterprises: a review of the field and a resource-based empirical study

“…Many see government influence as still highly visible there (eg. Child and Tse 2001;Warner 2014;Arnoldi and Villadsen 2015). Finally, we conclude with a discussion of our data analysis, the theoretical and practical implications, as well as comments on the limitations of the research.…”

Analysis on the Enterprises’ Innovation Quality Based on the Patent Value: A Comparison between Public and Private Enterprises in China

“…The dependence, learning closeness, and innovation capability viciously interact with each other within public enterprises [1,2]. By comparison, because of a high reliance upon indigenous innovation capability, private enterprises have overcome this vicious circle embedded in public enterprises, which leads to the significant difference in their innovation capability [3][4][5][6][7]. However, other literature holds the opposite attitude.…”