Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top
Asia Pacific Journal of Management
Published in: Asia Pacific Journal of Management 3/2012

01-09-2012

Political connections and corporate diversification in emerging economies: Evidence from China

Authors: Weiwen Li, Ai He, Hailin Lan, Daphne Yiu

Published in: Asia Pacific Journal of Management | Issue 3/2012

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

Drawing upon the resource-based view, this study examines how political connections affect corporate diversification in an emerging economy. Data from a sample of 1,280 Chinese public firms over 2002–2005 show a strong positive relationship between political connections and corporate diversification. We also find that the positive relationship between political connections and corporate diversification is moderated by the level of state ownership in firms and the level of regional institutional development. Theoretical and managerial implications are discussed.
previous article Diversification and diffusion: A social networks and institutional perspective
next article Technological innovation of firms in China: Past, present, and future

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

inform now
Literature
Barney, J. 1991. Firm resources and sustained competitive advantage. Journal of Management, 17: 99–120.CrossRef
Chan, C., Makino, S., & Isobe, T. 2010. Does sub-national region matter? Foreign affiliate performance in the U.S. and China. Strategic Management Journal, 31: 1226–1243.CrossRef
Chan, C. M., Isobe, T., & Makino, S. 2008. Which country matters? Institutional development and foreign affiliate performance. Strategic Management Journal, 29: 1179–1205.CrossRef
Chang, S. J. 1996. An evolutionary perspective on diversification and corporate restructuring: Entry, exit and economic performance, 1981–89. Strategic Management Journal, 17: 587–611.CrossRef
Chatterjee, S., & Wernerfelt, B. 1991. The link between resource and type of diversification: Theory and evidence. Strategic Management Journal, 12: 33–48.CrossRef
Fan, G., & Wang, X. L. 2006. NERI index of marketization of China’s provinces. Economic Science Press (In Chinese).
Fan, J. P., Wong, T. J., & Zhang, T. 2007. Politically connected CEOs, corporate governance, and post-IPO performance of China’s newly partially privatized firms. Journal of Financial Economics, 84: 330–357.CrossRef
Fan, J. P. H., Huang, J., Morck, R., & Yeung, B. 2009. Vertical integration, institutional determinants and impact: Evidence from China. Working paper, Chinese University of Hong Kong, Hong Kong.
Farjoun, M. 1994. Beyond industry boundaries: Human expertise, diversification and resource-related industry groups. Organization Science, 5: 185–199.CrossRef
Gao, G. Y., Murray, J. Y., Kotabe, M., & Lu, J. 2010. A “strategic tripod” perspective on export behaviors: Evidence from domestic and foreign firms based in an emerging economy. Journal of International Business Studies, 41: 377–396.CrossRef
Guillen, M. F. 2000. Business groups in emerging economies: A resource-based view. Academy of Management Journal, 43: 362–380.CrossRef
Hoskisson, R. E., & Hitt, M. A. 1990. Antecedents and performance outcomes of diversification: A review and critique of theoretical perspectives. Journal of Management, 16: 461–509.CrossRef
Jacquemin, A. P., & Berry, C. H. 1979. Entropy measure of diversification and corporate growth. Journal of Industrial Economics, 27: 359–369.CrossRef
Jensen, M., & Zajac, E. J. 2004. Corporate elites and corporate strategy: How demographic preference and structure positoin shape the scope of the firm. Strategic Management Journal, 25: 507–524.CrossRef
Khanna, T., & Palepu, K. 1997. Why focused strategies may be wrong for emerging markets. Harvard Business Review, 75: 41–51.
Khanna, T., & Rivkin, J. 2001. Estimating the performance of business groups in emerging markets. Strategic Management Journal, 22: 45–74.CrossRef
Khurana, R. 2002. Market triads: A theoretical and empirical analysis of market intermediation. Journal for the Theory of Social Behavior, 32: 239–262.CrossRef
Kor, Y. Y., & Leblebici, H. 2005. How do interdependencies among human-capital deployment, development, and diversification strategies affect firms’ financial performance. Strategic Management Journal, 26: 967–985.CrossRef
Li, H., Meng, L., Wang, Q., & Zhou, L. 2008a. Political connections, financing and firm performance: Evidence from Chinese private firms. Journal of Development Economics, 87: 283–299.CrossRef
Li, H., Meng, L., & Zhang, J. 2006. Why do entrepreneurs enter politics? Evidence from China. Economic Inquiry, 44: 559–578.CrossRef
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: 791–804.CrossRef
Li, J. J., Poppo, L., & Zhou, K. Z. 2008b. Do managerial ties in China always produce value? Competition, uncertainty, and domestic vs. foreign firms. Strategic Management Journal, 29: 383–400.CrossRef
Li, J. J., Zhou, K. Z., & Shao, A. T. 2009. Competitive position, managerial ties, and profitability of foreign firms in China: An interactive perspective. Journal of Internatoinal Business Studies, 40: 339–352.CrossRef
Liang, K., & Zenger, S. 1986. Longitudinal data analysis using generalized linear models. Biometrika, 73: 13–22.CrossRef
Mahoney, J., & Pandian, J. 1992. The resource-based view within the conversation of strategic management. Strategic Management Journal, 13: 363–380.CrossRef
Markides, C. C., & Williamson, P. J. 1996. Corporate diversification and organizational structure: A resource-based view. Academy of Management Journal, 39: 340–367.CrossRef
Meyer, K., & Nguyen, H. V. 2005. Foreign investment strategies and subnational institutions in emerging markets: Evidence from Vietnam. Journal of Management Studies, 42: 63–93.CrossRef
Montgomery, C. A., & Wernerfelt, B. 1988. Diversification, Ricardian rents, and Tobin’s q. Rand Journal, 623–632.
Nee, V. 1992. Organizational dynamics of market transition: Hybrid forms, property rights, and mixed economy in China. Administrative Science Quarterly, 37: 1–27.CrossRef
Palepu, K. 1985. Diversification strategy, profit performance and the entropy measure. Strategic Management Journal, 6: 239–255.CrossRef
Peng, M. 2003. Institutional transitions and strategic choices. Academy of Management Review, 28: 275–296.
Peng, M. W., Lee, S. H., & Wang, D. Y. 2005. What determines the scope of the firm over time? A focus on institutional relatedness. Academy of Management Review, 30: 622–633.
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: 486–501.CrossRef
Penrose, E. T. 1959. The theory of the growth of the firm. New York: Oxford University Press.
Peteraf, M. A. 1993. The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14: 179–191.CrossRef
Polanyi, M. 1967. The tacit dimension. Garden City, NY: Double-day Anchor.
Priem, R. L., & Butler, J. E. 2001. Is the resource-based ‘view’ a useful perspective for strategic management research?. Academy of Management Review, 26: 22–40.
Qian, Y., & Weingast, B. R. 1997. Federalism as a commitment to preserving market incentives. Journal of Economic Perspectives, 11: 83–92.CrossRef
Rumelt, R. P. 1982. Diversification strategy and profitability. Strategic Management Journal, 3: 359–369.CrossRef
Scott, W. R. 2008. Institutions and Organizations: Ideas and Interests. Thousand Oaks, CA: Sage Publications.
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: 1–15.CrossRef
Teece, D. J. 1982. Toward an economic theory of the multiproduct firm. Journal of Economic Behavior and Organization, 3: 39–63.CrossRef
Tsang, E. W. K. 1998. Can guanxi be a source of sustained competitive advantage for doing business in China?. Academy of Management Executive, 12: 64–73.
Wan, W. P. 2005a. Country resource environments, firm capabilities, and corporate diversification strategies. Journal Management Studies, 42: 161–182.CrossRef
Wan, W. P. 2005b. Country resource environments, corporate diversification strategies. Journal of Management Studies, 42: 161–182.CrossRef
Wan, W. P., & Hoskisson, R. E. 2003. Home country environments, corporate diversification strategies, and firm performance. Academy of Management Journal, 46: 27–45.CrossRef
Wan, W. P., Hoskisson, R. E., Short, J. C., & Yiu, D. 2010. Resource-based theory and corporate diversification: Accomplishments and opportunities. Journal of Management. Forthcoming.
Wang, H., & Qian, C. 2010. Corporate philanthropy and corporate financial performance: The roles of stakeholders response and political access. Academy of Management Journal. Forthcoming.
Wierseman, M. F., & Bantel, K. A. 1992. Top management team demography and corporate strategy change. Academy of Management Journal, 35: 91–121.CrossRef
Xin, K. R., & Pearce, J. L. 1996. Guanxi: Connections as substitutes for formal institutional support. Academy of Management Journal, 39: 1641–1658.CrossRef
Yiu, D. W., Bruton, G., & Lu, Y. 2005. Understanding business group performance in an emerging economy: Acquiring resources and capabilities in order to prosper. Journal of Management Studies, 42: 183–206.CrossRef
Metadata
Title
Political connections and corporate diversification in emerging economies: Evidence from China
Authors
Weiwen Li
Ai He
Hailin Lan
Daphne Yiu
Publication date
01-09-2012
Publisher
Springer US
Published in
Asia Pacific Journal of Management / Issue 3/2012
Print ISSN: 0217-4561
Electronic ISSN: 1572-9958
DOI
https://doi.org/10.1007/s10490-011-9265-5

Other articles of this Issue 3/2012

Asia Pacific Journal of Management 3/2012 Go to the issue

OriginalPaper

Market design in Chinese market places

OriginalPaper

Legal form of the firm and overseas market choice in India’s software and IT industry

OriginalPaper

Environment, governance, controls, and radical innovation during institutional transitions

OriginalPaper

Diversification and diffusion: A social networks and institutional perspective

OriginalPaper

Longitudinal effects of job insecurity on employee outcomes: The moderating role of emotional intelligence and the leader-member exchange

OriginalPaper

Why do business groups continue to matter? A study of market failure and performance among Indian manufacturers