IDEAS home Printed from https://ideas.repec.org/a/eee/jbrese/v67y2014i2p116-127.html
   My bibliography  Save this article

Managerial political ties and firm performance during institutional transitions: An analysis of mediating mechanisms

Author

Listed:
  • Guo, Hai
  • Xu, Erming
  • Jacobs, Mark

Abstract

This study examines the role of mediating mechanisms impacting the relationship between managers' political ties and firm performance, with a focus on institutional transitions in China. Relying on both resource dependence and institutional theories, the analysis posits that three factors: organizational regulatory legitimacy building, institutional support, and institutional entrepreneurial opportunity recognition, mediate the relationship between managerial political ties and firm performance. Using survey data collected from 195 Chinese firms, the study concludes that institutional support and institutional entrepreneurial opportunity recognition represent two significant mediating mechanisms by which managerial political ties can result in improved firm performance. But, though a reliance on political utilization enhances organizational regulatory legitimacy, the results show that regulatory legitimacy does not directly contribute to firm performance. This study also discusses theoretical contributions, implications for managers, study limitations, and suggestions for future research.

Suggested Citation

  • Guo, Hai & Xu, Erming & Jacobs, Mark, 2014. "Managerial political ties and firm performance during institutional transitions: An analysis of mediating mechanisms," Journal of Business Research, Elsevier, vol. 67(2), pages 116-127.
    • Handle: RePEc:eee:jbrese:v:67:y:2014:i:2:p:116-127
    DOI: 10.1016/j.jbusres.2012.11.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0148296312003190
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusres.2012.11.009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Ilya Okhmatovskiy, 2010. "Performance Implications of Ties to the Government and SOEs: A Political Embeddedness Perspective," Journal of Management Studies, Wiley Blackwell, vol. 47(6), pages 1020-1047, September.
    2. Ardichvili, Alexander & Cardozo, Richard & Ray, Sourav, 2003. "A theory of entrepreneurial opportunity identification and development," Journal of Business Venturing, Elsevier, vol. 18(1), pages 105-123, January.
    3. Seung Ho Park & Yadong Luo, 2001. "Guanxi and organizational dynamics: organizational networking in Chinese firms," Strategic Management Journal, Wiley Blackwell, vol. 22(5), pages 455-477, May.
    4. Haiyang Li & Yan Zhang, 2007. "The role of managers' political networking and functional experience in new venture performance: Evidence from China's transition economy," Strategic Management Journal, Wiley Blackwell, vol. 28(8), pages 791-804, August.
    5. MOR editorial team, 2006. "Contextualization in Chinese Management Research," Management and Organization Review, International Association of Chinese Management Research, vol. 2(1), pages 1-13, March.
    6. Xiao-Ping Chen & Chao C. Chen, 2004. "On the Intricacies of the Chinese Guanxi: A Process Model of Guanxi Development," Asia Pacific Journal of Management, Springer, vol. 21(3), pages 305-324, September.
    7. Ahlstrom, David & Bruton, Garry D. & Yeh, Kuang S., 2008. "Private firms in China: Building legitimacy in an emerging economy," Journal of World Business, Elsevier, vol. 43(4), pages 385-399, October.
    8. Shujun Zhang & Xinchun Li, 2008. "Managerial ties, firm resources, and performance of cluster firms," Asia Pacific Journal of Management, Springer, vol. 25(4), pages 615-633, December.
    9. Sun, Pei & Wright, Mike & Mellahi, Kamel, 2010. "Is Entrepreneur–Politician Alliance Sustainable During Transition? The Case of Management Buyouts in China," Management and Organization Review, Cambridge University Press, vol. 6(1), pages 101-121, March.
    10. Shanxing Gao & Kai Xu & Jianjun Yang, 2008. "Managerial ties, absorptive capacity, and innovation," Asia Pacific Journal of Management, Springer, vol. 25(3), pages 395-412, September.
    11. Ilídio Barreto & Charles Baden‐Fuller, 2006. "To Conform or To Perform? Mimetic Behaviour, Legitimacy‐Based Groups and Performance Consequences," Journal of Management Studies, Wiley Blackwell, vol. 43(7), pages 1559-1581, November.
    12. Garry D. Bruton & David Ahlstrom & Han–Lin Li, 2010. "Institutional Theory and Entrepreneurship: Where Are We Now and Where Do We Need to Move in the Future?," Entrepreneurship Theory and Practice, , vol. 34(3), pages 421-440, May.
    13. Yuan Lu & Lianxi Zhou & Garry Bruton & Weiwen Li, 2010. "Capabilities as a mediator linking resources and the international performance of entrepreneurial firms in an emerging economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(3), pages 419-436, April.
    14. Delmar, Frederic & Shane, Scott, 2004. "Legitimating first: organizing activities and the survival of new ventures," Journal of Business Venturing, Elsevier, vol. 19(3), pages 385-410, May.
    15. Eric W. K. Tsang, 1996. "In Search of Legitimacy: The Private Entrepreneur in China," Entrepreneurship Theory and Practice, , vol. 21(1), pages 21-30, October.
    16. Amy J. Hillman & Asghar Zardkoohi & Leonard Bierman, 1999. "Corporate political strategies and firm performance: indications of firm‐specific benefits from personal service in the U.S. government," Strategic Management Journal, Wiley Blackwell, vol. 20(1), pages 67-81, January.
    17. David L. Deephouse & Suzanne M. Carter, 2005. "An Examination of Differences Between Organizational Legitimacy and Organizational Reputation," Journal of Management Studies, Wiley Blackwell, vol. 42(2), pages 329-360, March.
    18. Bruton, Garry D. & Ahlstrom, David, 2003. "An institutional view of China's venture capital industry: Explaining the differences between China and the West," Journal of Business Venturing, Elsevier, vol. 18(2), pages 233-259, March.
    19. Tsui, Anne S., 2006. "Contextualization in Chinese Management Research," Management and Organization Review, Cambridge University Press, vol. 2(01), pages 1-13, March.
    20. Mike Wright & Igor Filatotchev & Robert E. Hoskisson & Mike W. Peng, 2005. "Strategy Research in Emerging Economies: Challenging the Conventional Wisdom," Journal of Management Studies, Wiley Blackwell, vol. 42(1), pages 1-33, January.
    21. Li, Julie Juan & Zhou, Kevin Zheng, 2010. "How foreign firms achieve competitive advantage in the Chinese emerging economy: Managerial ties and market orientation," Journal of Business Research, Elsevier, vol. 63(8), pages 856-862, August.
    22. Johnson, Simon & Mitton, Todd, 2003. "Cronyism and capital controls: evidence from Malaysia," Journal of Financial Economics, Elsevier, vol. 67(2), pages 351-382, February.
    23. Blake E. Ashforth & Barrie W. Gibbs, 1990. "The Double-Edge of Organizational Legitimation," Organization Science, INFORMS, vol. 1(2), pages 177-194, May.
    24. Jing Yang & Jiatao Li, 2008. "The development of entrepreneurship in China," Asia Pacific Journal of Management, Springer, vol. 25(2), pages 335-359, June.
    25. Yadong Luo, 2003. "Industrial dynamics and managerial networking in an emerging market: the case of China," Strategic Management Journal, Wiley Blackwell, vol. 24(13), pages 1315-1327, December.
    26. Julie Juan Li & Kevin Zheng Zhou & Alan T Shao, 2009. "Competitive position, managerial ties, and profitability of foreign firms in China: an interactive perspective," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(2), pages 339-352, February.
    27. Julie Juan Li & Laura Poppo & Kevin Zheng Zhou, 2008. "Do managerial ties in China always produce value? Competition, uncertainty, and domestic vs. foreign firms," Strategic Management Journal, Wiley Blackwell, vol. 29(4), pages 383-400, April.
    28. Pei Sun & Mike Wright & Kamel Mellahi, 2010. "Is Entrepreneur–Politician Alliance Sustainable During Transition? The Case of Management Buyouts in China," Management and Organization Review, The International Association for Chinese Management Research, vol. 6(1), pages 101-121, March.
    29. Klaus E. Meyer & Saul Estrin & Sumon Kumar Bhaumik & Mike W. Peng, 2009. "Institutions, resources, and entry strategies in emerging economies," Strategic Management Journal, Wiley Blackwell, vol. 30(1), pages 61-80, January.
    30. Pei Sun & Kamel Mellahi & Eric Thun, 2010. "The dynamic value of MNE political embeddedness: The case of the Chinese automobile industry," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(7), pages 1161-1182, September.
    31. Raymond Fisman, 2001. "Estimating the Value of Political Connections," American Economic Review, American Economic Association, vol. 91(4), pages 1095-1102, September.
    32. Moses Acquaah, 2007. "Managerial social capital, strategic orientation, and organizational performance in an emerging economy," Strategic Management Journal, Wiley Blackwell, vol. 28(12), pages 1235-1255, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zhao, Hongxin & Lu, Jiangyong, 2016. "Contingent value of political capital in bank loan acquisition: Evidence from founder-controlled private enterprises in China," Journal of Business Venturing, Elsevier, vol. 31(2), pages 153-174.
    2. Jianghua Zhou & Rui Wu & Jizhen Li, 2019. "More ties the merrier? Different social ties and firm innovation performance," Asia Pacific Journal of Management, Springer, vol. 36(2), pages 445-471, June.
    3. Qingqing Tang & Longwei Wang & Hao Shen, 2021. "How do SOEs and FIEs affect POEs’ performance in emerging economies? Moderating effects of managerial ties," Asia Pacific Journal of Management, Springer, vol. 38(2), pages 767-788, June.
    4. Yuan Li & Haowen Chen & Yi Liu & Mike Peng, 2014. "Managerial ties, organizational learning, and opportunity capture: A social capital perspective," Asia Pacific Journal of Management, Springer, vol. 31(1), pages 271-291, March.
    5. Da Teng & Chengchun Li & Sailesh Tanna, 2022. "Foreign ownership and productivity in Chinese newly listed firms: the moderating roles of founder’s human capital and social ties," Asia Pacific Journal of Management, Springer, vol. 39(3), pages 1125-1159, September.
    6. Gao, Yu & Yang, Zhuoer & Huang, Kuo-Feng & Gao, Shanxing & Yang, Wei, 2018. "Addressing the cross-boundary missing link between corporate political activities and firm competencies: The mediating role of institutional capital," International Business Review, Elsevier, vol. 27(1), pages 259-268.
    7. Ebrahim Muhamed Endris & Zhou Xiaoyan, 2021. "Managerial Ties and MNCs’ Performance in Ethiopia: The Moderating Effect of Institutional support," International Journal of Science and Business, IJSAB International, vol. 5(7), pages 215-232.
    8. Lee, Tingko, 2019. "Management ties and firm performance: Influence of family governance," Journal of Family Business Strategy, Elsevier, vol. 10(2), pages 105-118.
    9. Tahiru Azaaviele Liedong & Daniel Aghanya & Tazeeb Rajwani, 2020. "Corporate Political Strategies in Weak Institutional Environments: A Break from Conventions," Journal of Business Ethics, Springer, vol. 161(4), pages 855-876, February.
    10. Ma, Xufei & Ding, Zhujun & Yuan, Lin, 2016. "Subnational institutions, political capital, and the internationalization of entrepreneurial firms in emerging economies," Journal of World Business, Elsevier, vol. 51(5), pages 843-854.
    11. Mbalyohere, Charles & Lawton, Thomas & Boojihawon, Roshan & Viney, Howard, 2017. "Corporate political activity and location-based advantage: MNE responses to institutional transformation in Uganda’s electricity industry," Journal of World Business, Elsevier, vol. 52(6), pages 743-759.
    12. Shirodkar, Vikrant & Mohr, Alexander T., 2015. "Explaining foreign firms’ approaches to corporate political activity in emerging economies: The effects of resource criticality, product diversification, inter-subsidiary integration, and business tie," International Business Review, Elsevier, vol. 24(4), pages 567-579.
    13. White, George O. & Boddewyn, Jean J. & Galang, Roberto Martin N., 2015. "Legal system contingencies as determinants of political tie intensity by wholly owned foreign subsidiaries: Insights from the Philippines," Journal of World Business, Elsevier, vol. 50(2), pages 342-356.
    14. Yang, Wei & Meyer, Klaus E., 2020. "How do local and foreign firms compete? Competitive actions in an emerging economy," International Business Review, Elsevier, vol. 29(3).
    15. Srivastava, Mohit & Moser, Roger & Hartmann, Evi, 2018. "The networking behavior of Indian executives under environmental uncertainty abroad: An exploratory analysis," Journal of Business Research, Elsevier, vol. 82(C), pages 230-245.
    16. Gang Wang & Xu Jiang & Chang-Hong Yuan & Ya-Qun Yi, 2013. "Managerial ties and firm performance in an emerging economy: Tests of the mediating and moderating effects," Asia Pacific Journal of Management, Springer, vol. 30(2), pages 537-559, June.
    17. Tahiru Azaaviele Liedong & Jedrzej George Frynas, 2018. "Investment Climate Constraints as Determinants of Political Tie Intensity in Emerging Countries: Evidence from Foreign Firms in Ghana," Management International Review, Springer, vol. 58(5), pages 675-703, October.
    18. Zhang, Hongjuan & Young, Michael N. & Tan, Justin & Sun, Weizheng, 2018. "How Chinese companies deal with a legitimacy imbalance when acquiring firms from developed economies," Journal of World Business, Elsevier, vol. 53(5), pages 752-767.
    19. Hongjuan Zhang & Rong Han & Liang Wang & Runhui Lin, 2021. "Social capital in China: a systematic literature review," Asian Business & Management, Palgrave Macmillan, vol. 20(1), pages 32-77, February.
    20. Hongjuan Zhang & Rong Han & Liang Wang & Runhui Lin, 0. "Social capital in China: a systematic literature review," Asian Business & Management, Palgrave Macmillan, vol. 0, pages 1-46.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbrese:v:67:y:2014:i:2:p:116-127. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusres .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.