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Political Connections and Business Strategy: The Impact of Types and Destinations of Political Ties on Business Diversification in Closed and Open Political Economic

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  • Chung, Chi-Nien
  • Mahmood, Ishtiaq
  • Mitchell, Will

Abstract

This paper studies how different types and destinations of connections between business leaders and political actors create strategic benefits in closed and open political economic systems. The analysis examines how political ties facilitate diversification by business groups in Taiwan between 1986 and 1998, before and after the country underwent extensive political and economic liberalization that led to changes in diffusion of power, tie accountability, and public scrutiny. We show that formal position interlocks with the dominant party or senior government officials provide the greatest strategic benefits in a closed political economic system, while informal social ties to a wider range of political actors provide greater strategic benefits when a political economic system becomes more open.

Suggested Citation

  • Chung, Chi-Nien & Mahmood, Ishtiaq & Mitchell, Will, 2009. "Political Connections and Business Strategy: The Impact of Types and Destinations of Political Ties on Business Diversification in Closed and Open Political Economic," CEI Working Paper Series 2008-24, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2008-24
    Note: November 2, 2007
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/29299/WP2008-24.pdf
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