Hostname: page-component-848d4c4894-ndmmz Total loading time: 0 Render date: 2024-06-10T23:52:09.091Z Has data issue: false hasContentIssue false

Corporate Political Ties and Firm Performance in a Transition Economy: A Replication and Extension of Peng and Luo (2000)

Published online by Cambridge University Press:  27 April 2023

Hai Guo
Affiliation:
Renmin University of China, China
Chao Wang*
Affiliation:
Capital University of Economics and Business, China
Zeyu Wang
Affiliation:
Chinese Academy of Social Sciences, China
Xiaoyu Li
Affiliation:
Renmin University of China, China
*
Corresponding author: Chao Wang (wangchaocueb@163.com)

Abstract

How do corporate political ties impact firm performance in a transition economy? This topic has attracted wide attention in the strategy field. Accordingly, our study replicates a highly influential study, ‘Managerial ties and firm performance in a transition economy: The nature of a micro-macro link’ (Peng & Luo, 2000). The original study found that managerial political ties greatly improve organizational performance, and that this ‘micro-macro’ link varies across ownership types, business sectors, firm sizes, and industry growth rates. This replication study offers a hierarchical view of political ties by extending it from the individual to the organizational level and explores the complex link between the two levels of corporate political ties and firm performance. The results of a staged quasi-replication exercise show some similarities with the original study in the mechanism of corporate political ties on firm performance but, more importantly, reveal some key differences in the effect size and contingent effects. Furthermore, an extended test shows that corporate political ties are multilevel, and different levels of political ties vary in their mechanisms and effects on firm performance. The findings reveal temporal and contextual sensitivities of political ties studies in transition economies.

摘要:

在转型经济体中,政治关联如何影响企业绩效?这一话题在战略管理领域引起了广泛关注。我们在本文中试图复制一项极具影响力的研究,即“转型经济中的管理层关系与企业绩效:一个‘微观——宏观’关系的本质”(Peng & Luo, 2000)。原研究发现,高管政治关联显著提高了组织绩效,而且这一“微观——宏观”关系因企业所有权性质、所属产业部门、企业规模及所处行业增长率不同而变化。本复制研究通过将政治关联从微观个体层面扩展到组织层面,引入政治关联的多层性观点,并全面检验两个层面的政治关联与企业绩效之间的关系。分阶段的准复制实证结果显示,虽然政治关联对企业绩效的影响机制与原始研究类似,但是这两项研究在关于政治关联效应大小和权变效应上存在关键差异。此外,进一步的拓展研究表明,企业政治关联是多层次的,不同层次的政治关联对企业绩效的作用机制和效应大小也存在显著差异。研究结果揭示了转型经济体中企业政治关联研究的时间和情境敏感性。

Type
Article
Copyright
Copyright © The Author(s), 2023. Published by Cambridge University Press on behalf of The International Association for Chinese Management Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

ACCEPTED BY Senior Editor Jian Liang

References

REFERENCES

Arnoldi, J., & Villadsen, A. R. 2015. Political ties of listed Chinese companies, performance effects, and moderating institutional factors. Management and Organization Review, 11(2): 120.CrossRefGoogle Scholar
Bettis, R. A. 2012. The search for asterisks: Compromised statistical tests and flawed theories. Strategic Management Journal, 33(1): 108113.CrossRefGoogle Scholar
Bettis, R. A., Helfat, C. E., & Shaver, J. M. 2016. The necessity, logic, and forms of replication. Strategic Management Journal, 37(11): 21932203.CrossRefGoogle Scholar
Blackwell, M., Iacus, S., King, G., & Porro, G. 2009. CEM: Coarsened exact matching in Stata. Stata Journal, 9(8): 524546.CrossRefGoogle Scholar
Bortolotti, B., & Faccio, M. 2009. Government control of privatized firms. Review of Financial Studies, 22(8): 29072939.CrossRefGoogle Scholar
Boyd, B. K. 1995. CEO duality and firm performance: a contingency model. Strategic Management Journal, 16(4): 301312.CrossRefGoogle Scholar
Brass, D. J., Galaskiewicz, J., Greve, H. R., & Tsai, W. 2004. Taking stock of networks and organizations: A multilevel perspective. Academy of Management Journal, 47(6): 795817.CrossRefGoogle Scholar
Brockman, P., Rui, O. M., & Zou, H. 2013. Institutions and the performance of politically connected M&As. Journal of International Business Studies, 44(8): 833852.CrossRefGoogle Scholar
Burt, R. S., & Opper, S. 2020. Political connection and disconnection: Still a success factor for Chinese entrepreneurs. Entrepreneurship Theory and Practice, 44(6): 11991228.CrossRefGoogle Scholar
Chakrabarti, S. 2003. Mining the web: Discovering knowledge from hypertext data. San Francisco: Morgan Kaufmann.Google Scholar
Chen, C., Chen, X., & Huang, S. 2013. Chinese guanxi: An integrative review and new directions for future research. Management and Organization Review, 9(1): 167207.CrossRefGoogle Scholar
Clogg, C. C., Petkova, E., & Haritou, A. 1995. Statistical methods for comparing regression coefficients between models. American Journal of Sociology, 100(5): 12611293.CrossRefGoogle Scholar
Dess, G., & Beard, D. 1984. Dimensions of organizational task environments. Administrative Science Quarterly, 29(1): 5273.CrossRefGoogle Scholar
Dong, M. C., Li, C. B., & Tse, D. K. 2013. Do business and political ties differ in cultivating marketing channels for foreign and local firms in China? Journal of International Marketing, 21(1): 3956.CrossRefGoogle Scholar
Durand, R., Grant, R. M., Madsen, T. L., Dorobantu, S., Kaul, A., & Zelner, B. 2017. Nonmarket strategy research through the lens of new institutional economics: An integrative review and future directions. Strategic Management Journal, 38(1): 114140.Google Scholar
Eden, D. 2002. From the editors: replication, meta-analysis, scientific progress, and AMJ's publication policy. Academy of Management Journal, 45(5): 841846.CrossRefGoogle Scholar
Faccio, M. 2006. Politically connected firms. American Economic Review, 96(1): 369386.CrossRefGoogle Scholar
Faccio, M., Masulis, R. W., & McConnell, J. J. 2006. Political connections and corporate bailouts. Journal of Finance, 61(6): 25972635.CrossRefGoogle Scholar
Fan, G., Ma, G., & Wang, X. 2019. Institutional reform and economic growth of China: 40-year progress toward marketization. Acta Oeconomica, 69(s1): 720.CrossRefGoogle Scholar
Fang, C., & Kim, J. 2018. The power and limits of modularity: A replication and reconciliation. Strategic Management Journal, 39(8): 25472565.CrossRefGoogle Scholar
Fang, R., Chi, L., Chen, M., & Baron, R. 2015. Bringing political skill into social networks: Findings from a field study of entrepreneurs. Journal of Management Studies, 52(2): 175212.CrossRefGoogle Scholar
Freeman, L. C. 1979. Centrality in social networks conceptual clarification. Social Networks, 1(3): 215239.CrossRefGoogle Scholar
Ge, J., Carney, M., & Kellermanns, F. 2019. Who fills institutional voids? Entrepreneurs’ utilization of political and family ties in emerging markets. Entrepreneurship Theory and Practice, 43(6): 11241147.CrossRefGoogle Scholar
Goldfarb, B., & King, A. A. 2016. Scientific apothecia in strategic management research: Significance tests & mistaken inference. Strategic Management Journal, 37(1): 167176.CrossRefGoogle Scholar
Goldfarb, B., Zavyalova, A., & Pillai, S. 2018. Did victories in certification contests affect the survival of organizations in the American automobile industry during 1895-1912? A replication study. Strategic Management Journal, 39(8): 23352361.CrossRefGoogle Scholar
Guo, H., Shen, R., & Su, Z. 2019. The impact of organizational legitimacy on product innovation: A comparison between new ventures and established firms. IEEE Transactions on Engineering Management, 66(1): 7383.CrossRefGoogle Scholar
Guo, H., Tang, J., & Wei, Z. 2020. How managerial ties impact opportunity discovery in a transition economy? Evidence from China. Management Decision, 58(2): 344361.CrossRefGoogle Scholar
Guo, H., Xu, E., & Jacobs, M. 2014. Managerial political ties and firm performance during institutional transitions: An analysis of mediating mechanisms. Journal of Business Research, 67(2): 116127.CrossRefGoogle Scholar
Gupta, V. K., Mortal, S. C., & Guo, X. 2018. Revisiting the gender gap in CEO compensation: Replication and extension of Hill, Upadhyay, and Beekun's (2015) work on CEO gender pay gap. Strategic Management Journal, 39(8): 20362050.CrossRefGoogle Scholar
Henderson, A. D., Miller, D., & Hambrick, D. C. 2006. How quickly do CEOs become obsolete? Industry dynamism, CEO tenure, and company performance. Strategic Management Journal, 27(5): 447460.CrossRefGoogle Scholar
Hornstein, A. S., & Zhao, M. 2018. Reaching through the fog: Institutional environment and cross-border giving of corporate foundations. Strategic Management Journal, 39(10): 26662690.CrossRefGoogle Scholar
Hox, J. J., Moerbeek, M., & Schoot, R. v. d. 2017. Multilevel analysis: Techniques and applications, (3rd ed.). New York: Routledge.CrossRefGoogle Scholar
Iacus, S., King, G., & Porro, G. 2012. Causal inference without balance checking: Coarsened exact matching. Political Analysis, 20(1): 124.CrossRefGoogle Scholar
Inoue, C., Lazzarini, S. G., & Musacchio, A. 2013. Leviathan as a minority shareholder: Firm-level implications for equity purchases by the state. Academy of Management Journal, 56(6): 17751801.CrossRefGoogle Scholar
Jia, M., Yi, X., & Zhang, Z. 2019. Indirect reciprocity and corporate philanthropic giving: How visiting officials influence investment in privately owned Chinese firms. Journal of Management Studies, 56(2): 372407.CrossRefGoogle Scholar
Jiang, F., Guo, H., Wei, Z., & Wang, D. 2018. The fit between managerial ties and resource bundling capabilities: Implications for performance in manufacturing firms. IEEE Transactions on Engineering Management, 65(2): 216226.CrossRefGoogle Scholar
Li, H., & Zhang, Y. 2007. The role of managers’ political networking and functional experience in new venture performance: Evidence from China's transition economy. Strategic Management Journal, 28(8): 791804.CrossRefGoogle Scholar
Li, J. J., Poppo, L., & Zhou, K. Z. 2010a. Do managerial ties in China always produce value? Competition, uncertainty, and domestic vs. foreign firms. Strategic Management Journal, 29(4): 383400.CrossRefGoogle Scholar
Li, Y., Guo, H., Yi, Y., & Liu, Y. 2010b. Ownership concentration and product innovation in Chinese firms: The mediating role of learning orientation. Management & Organization Review, 6(1): 77100.CrossRefGoogle Scholar
Liedong, T. A., & Rajwani, T. 2018. The impact of managerial political ties on corporate governance and debt financing: Evidence from Ghana. Long Range Planning, 51(5): 666679.CrossRefGoogle Scholar
Liu, F., Lin, H., & Wu, H. 2018. Political connections and firm value in China: An event study. Journal of Business Ethics, 152(2): 551571.CrossRefGoogle Scholar
Luo, Y. 1997. Guanxi: Principles, philosophies, and implications. Human Systems Management, 16: 4352.CrossRefGoogle Scholar
Marquis, C., & Qian, C. 2014. Corporate social responsibility reporting in China: Symbol or substance? Organization Science, 25(1): 127148.CrossRefGoogle Scholar
McDonnell, M.-H., & Werner, T. 2016. Blacklisted businesses: Social activists’ challenges and the disruption of corporate political activity. Administrative Science Quarterly, 61(4): 584620.CrossRefGoogle Scholar
Mueller-Langerab, F., Fechercd, B., Harhoffb, G., & Wagner, B. 2019. Replication studies in economics: How many and which papers are chosen for replication, and why? Research Policy, 48: 6283.CrossRefGoogle Scholar
Oehme, M., & Bort, S. 2015. SME internationalization modes in the German biotechnology industry: The influence of imitation, network position, and international experience. Journal of International Business Studies, 46(6): 629655.CrossRefGoogle Scholar
Okhmatovskiy, I. 2010. Performance implications of ties to the government and SOEs: A political embeddedness perspective. Journal of Management Studies, 47(6): 10201047.CrossRefGoogle Scholar
Oliver, C., & Holzinger, I. 2008. The effectiveness of strategic political management: A dynamic capabilities framework. Academy of Management Review, 33(2): 496520.CrossRefGoogle Scholar
Peng, M. W. 2003. Institutional transitions and strategic choices. Academy of Management Review, 28(2): 275296.CrossRefGoogle Scholar
Peng, M. W., & Heath, P. S. 1996. The growth of the firm in planned economies in transition: Institutions, organizations, and strategic choice. Academy of Management Review, 21(2): 492528.CrossRefGoogle Scholar
Peng, M. W., & Luo, Y. 2000. Managerial ties and firm performance in a transition economy: The nature of a micro-macro link. Academy of Management Journal, 43(3): 486501.CrossRefGoogle Scholar
Ridge, J. W., Hill, A. D., & Ingram, A. 2018. The signaling role of politician stock ownership: Effects on lobbying intensity. Journal of Management, 44(5): 21162141.CrossRefGoogle Scholar
Sheng, S., Zhou, K. Z., & Li, J. J. 2011. The effects of business and political ties on firm performance: Evidence from China. Journal of Marketing, 75(1): 115.CrossRefGoogle Scholar
Sun, P., Mellahi, K., & Thun, E. 2010. The dynamic value of MNE political embeddedness: The case of the Chinese automobile industry. Journal of International Business Studies, 41(7): 11611182.CrossRefGoogle Scholar
Sun, P., Mellahi, K., & Wright, M. 2012. The contingent value of corporate political ties. Academy of Management Perspectives, 26(3): 6882.CrossRefGoogle Scholar
Sun, P., Mellahi, K., Wright, M., & Xu, H. 2015. Political tie heterogeneity and the impact of adverse shocks on firm value. Journal of Management Studies, 52(8): 10361063.CrossRefGoogle Scholar
Sun, S. L., Peng, M. W., & Tan, W. 2017. Institutional relatedness behind product diversification and international diversification. Asia Pacific Journal of Management, 34(2): 339366.CrossRefGoogle Scholar
Tsang, E. W. K. 2002. Self-serving attributions in corporate annual reports: A replicated study. Journal of Management Studies, 39(1): 5165.CrossRefGoogle Scholar
Tsang, E. W. K., & Kwan, K.-M. 1999. Replication and theory development in organizational science: A critical realist perspective. Academy of Management Review, 24(4): 759780.CrossRefGoogle Scholar
Tsang, E. W. K., & Yamanoi, J. 2016. International expansion through start-up or acquisition: A replication. Strategic Management Journal, 37(11): 22912306.CrossRefGoogle Scholar
Uzzi, B. 1997. Social structure and competition in interfirm networks: The paradox of embeddedness. Administrative Science Quarterly, 42(1): 3567.CrossRefGoogle Scholar
Vaaler, P. M., & Schrage, B. N. 2009. Residual state ownership, policy stability and financial performance following strategic decisions by privatizing telecoms. Journal of International Business Studies, 40(4): 621641.CrossRefGoogle Scholar
Wang, X., Fan, G., & Yu, J. 2021. Marketization index of China's provinces: NERI report 2021. Beijing: Social Sciences Academic Press.Google Scholar
Wang, H., & Qian, C. 2011. Corporate philanthropy and corporate financial performance: The roles of stakeholder response and political access. Academy of Management Journal, 54(6): 11591181.CrossRefGoogle Scholar
Wu, W., Johan, S. A., & Rui, O. M. 2016. Institutional investors, political connections, and the incidence of regulatory enforcement against corporate fraud. Journal of Business Ethics, 134(4): 709726.CrossRefGoogle Scholar
Yu, F., Zhang, H., Tan, J., & Liang, Q. 2022. Non-market strategies and credit benefits: Unpacking heterogeneous political connections in response to government anti-corruption initiatives. Journal of Management Studies, 59: 349389.Google Scholar
Zaheer, A., Gozubuyuk, R., & Milanov, H. 2010. It's the connections: The network perspective in interorganizational research. Academy of Management Perspectives, 24(1): 6277.Google Scholar
Zheng, J. Y., & Jin, S. C. 2018. The contingent effects of political strategies on firm performance: A political network perspective. Strategic Management Journal, 39(8): 21522177.Google Scholar
Zheng, W., Singh, K., & Mitchell, W. 2015. Buffering and enabling: The impact of interlocking political ties on firm survival and sales growth. Strategic Management Journal, 36(11): 16151636.CrossRefGoogle Scholar
Zhou, W. 2014. Regional institutional development, political connections, and entrepreneurial performance in China's transition economy. Small Business Economics, 43(1): 161181.CrossRefGoogle Scholar