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Political rotations and cross-province firm acquisitions in China

Author

Listed:
  • Yulia Muratova

    (Aarhus University
    Sino-Danish Centre for Education and Research (SDC))

  • Jakob Arnoldi

    (Aarhus University
    Sino-Danish Centre for Education and Research (SDC))

  • Xin Chen

    (Shanghai Jiao Tong University
    Yunnan University)

  • Joachim Scholderer

    (Norwegian University of Life Sciences
    Aarhus University
    University of Zurich)

Abstract

The underdeveloped institutional framework and trade barriers between China’s provinces make cross-province acquisitions challenging. We explore how Chinese firms can mitigate this problem. Drawing on social network theory we propose that cross-province rotation of political leaders—a key element of the promotion system of political cadres in China—is a mechanism enabling growth through cross-province acquisitions. We conceptualize rotated leaders as brokers between two geographically dispersed networks. We contribute to the literature on the characteristics of Chinese social networks, the effect of political connections on firm strategy, and the impact of political rotations on firm growth in China’s provinces.

Suggested Citation

  • Yulia Muratova & Jakob Arnoldi & Xin Chen & Joachim Scholderer, 2018. "Political rotations and cross-province firm acquisitions in China," Asian Business & Management, Palgrave Macmillan, vol. 17(1), pages 37-58, February.
    • Handle: RePEc:pal:abaman:v:17:y:2018:i:1:d:10.1057_s41291-018-0029-7
    DOI: 10.1057/s41291-018-0029-7
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