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Political connections and firms: network dimensions

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  • Maurizio Bussolo
  • Simon Commander
  • Stavros Poupakis

Abstract

Business and politician interaction is commonplace. Most research has classified firms as either connected to a politician or not: a binary approach. Yet, there are almost always strong network dimensions to these connections. This article builds a unique data set to document a network of connections between politically exposed persons (PEPs), political parties, and firms in seven economies. With this novel dataset, the article examines the association between the characteristics and performance of firms and the firms’ connections with PEP, taking into account the network nature of these connections. The originality of our analysis is to identify how participation and location in a network, including the extent of links, as well as having a strategic location or centrality, is correlated with firm scale and performance. In a binary approach, such network characteristics are omitted. One consequence is that the intensity and consequences of politically connected business may be significantly mis/under-estimated.

Suggested Citation

  • Maurizio Bussolo & Simon Commander & Stavros Poupakis, 2023. "Political connections and firms: network dimensions," Oxford Economic Papers, Oxford University Press, vol. 75(1), pages 256-280.
    • Handle: RePEc:oup:oxecpp:v:75:y:2023:i:1:p:256-280.
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    File URL: http://hdl.handle.net/10.1093/oep/gpac017
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    Cited by:

    1. Commander, Simon & Poupakis, Stavros, 2020. "Political Networks across the Globe," IZA Discussion Papers 13103, Institute of Labor Economics (IZA).
    2. Bussolo, Maurizio & de Nicola, Francesca & Panizza, Ugo & Varghese, Richard, 2022. "Politically connected firms and privileged access to credit: Evidence from Central and Eastern Europe," European Journal of Political Economy, Elsevier, vol. 71(C).
    3. Panizza, Ugo & Bussolo, Maurizio & de Nicola, Francesca & Varghese, Richard, 2019. "Political Connections and Financial Constraints: Evidence from Central and Eastern Europe," CEPR Discussion Papers 14126, C.E.P.R. Discussion Papers.

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    More about this item

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • P26 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Property Rights

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