| The relationship between government and enterprises is the major issues in the economic reform and development, and Political Connection(PC) is the embodiment of the relationship between government and enterprises (Zhang M et.al.,2010).PC behavior is common in countries all around the world (Faccio,2006), which was born within the enterprise institutional environment. Formal institutional system presents the characteristics of liquidity, not continuity, fuzziness and imperfect etc. in China during the period of transition (Luo D L, Tang Q Q,2009). It has an important role in the allocation of resources at all levels of the government. Especially the officials’promotion tournament which based on GDP assessment often makes the local government officials in different degrees of intervention in the local economy and micro enterprise development. Above all these things lead to the pattern of resource allocation by government and social network instead of market resources allocation(Li S M,Zhou X C,2007), thus forming a different resource allocation system which is different from the planned economy market or the standardized market (Gao W, Li Y L, Zhao D L,2011).Therefore, to formulate the political strategy is more important than the market strategy in some cases according to strategic researchers (Zhang J J, Zhang Z X,2005).Entrepreneurs as government posts, employing current and former officials and establishing personal relationships with government officials are the important channels of PC. It can help the enterprises require "scarce" resources for direct access to enterprise development(Peng, Luo, 2000), and obtain policy resources through influencing government policy making Indirectly.Therefore, PC has played an important role in accelerating the development of enterprises and promotes economic growth. In the early stage of the transformation, quite a number of private enterprises by means of PC, seized market opportunities, overcome the market and institution blank, so that achieved profit growth and became the main driving force to promote the growth of our economy under the condition under the condition less market competitive advantage. opportunity-driven growth is still the main strategic orientation of many private enterprises in China(Chen Z Y, Wu X B,2006). But as the change of the institutional environment, PC plays a more complicated role in the development of enterprises. It will bring too much system pressure, social costs, and even produce "rent-seeking" and corruption. In addition, the performance of political connected enterprises with a lot of resources from the government is not always higher than that of non-political connected enterprises, it means that PC may cause the waste of social resources, in turn, will affect the quality of economic development. Under the new normal economic background, the society will not only concern with economic growth, but also pay attention to economic quality. Therefore, to study the effect of PC on enterprise performance based on Chinese situation is beneficial clarifying the boundaries between government and enterprises and improving quality of economy.Existing literature focus mainly on what the PC has brought to the enterprise, meaning that the benefits or costs of PC for the enterprises. Little literature involved the constraint of the mechanism about pc affecting enterprise performance, meaning that what and how impact the relationship between PC and corporate performance, but this is precisely what the key issues in related research.PC is a concept of highly contextual, the transformational economy and emerging economy are the key context. In the economic transformation with gradual, decentralization and empirical formula character, the Chinese government at all levels took turns driving the economic reform through different Rules and different preferential protection policy respectively in enterprises with different ownership and different strength in different industries and areas (Lan H L,2014).This kind of behavior promoted the economic growth on the one hand, on the other hand caused another imbalance, performance level of enterprises exists significant differences with different ownership, and in different industries and regions. All above factors, therefore, can affect the moti (?)ation of PC behavior and economic consequences.As a result, the paper will select Chinese private enterprises as the research sample, exploring the mechanism of action of PC of enterprise performance in Chinese context.The relationship between PC and corporate performance is the main line of the study, this paper integrate the perspective of regional diversity, industry heterogeneity in order to mine the deep mechanism of PC affecting enterprise performance.This paper intends to solve the following questions::(1) Whether the PC affected enterprise performance? (2) Whether different intensity of PC has different impact on enterprise performance? (3) Based on the perspective of regional diversity and industry heterogeneity, to explore how PC with different intensity affect enterprise performance? Meaning that researching the adjust action and secondary regulation from regional diversity (including the degree of government intervention, legal system environment, and the level of financial development) and industry heterogeneity (including industry admittance, industry capital structure and industry research and development intensity) to the relationship between PC and corporate performance. On the basis of the above analysis, we aim to determine PC under the condition of which played a positive role, under the condition of which has a negative effect? So as to clear that in what fields the government should extend the hand of support or reduce the hand of plunder, so as to clarify the relationship between government and market and make the market playing a decisive role in the allocation of resources, providing reference for the government decisions.In this paper, the main research conclusions are as follows:(1) PC is one of the major factors which influence firm’s performance. The relationship between government and enterprises linked by PC will impact the possibility of the evolution and symbiosis of firms’return and risk (Li, et.al). Generally, performance of firms with PC is better than those with none. And the effect of strength characteristics of PC on corporate performance is significant with different effect direction. Breadth of PC negatively influences performance while depth of PC positively, and with the higher significant level.(2) Based on the perspective of regional diversity, results show that a).the degree of the local government intervention has a positive moderating effect on the relationship between the existence of PC and firms’performance and on the relationship between depth of PC and performance, while the moderating effect on the breadth of PC is not significant. b). the local legal system environment plays a negative moderating role on the relationship between the existence of PC and firms’performance, and it can strengthen the negative relationship between breadth of PC and performance, while the moderating role on the depth of PC is not significant. c). the level of financial development has a negative moderating effect on the relationship between the existence of PC and firms’performance and on the relationship between depth of PC and performance, while the moderating effect on the breadth of PC can strengthen the negative relationship between breadth of PC and performance.(3) Based on the perspective of industry heterogeneity, we find that a). The threshold of industry access has a positive moderating effect on the relationship between the existence of PC and firms’performance and on the relationship between depth of PC and performance, while the moderating effect on the breadth of PC can strengthen the negative relationship between breadth of PC and performance. b).the intensity of industry R&D plays a positive moderating effect on the relationship between the existence of PC and firms’ performance and on the relationship between depth of PC and performance, while the moderating effect on the breadth of PC can weaken the negative relationship between breadth of PC and performance, c). the liability ratio of industry asset has a positive moderating effect on the relationship between depth of PC and performance, while the moderating effect on the existence of PC and the breadth of PC is insignificant.(4)Based on the integrating view, we find regional diversity can moderate the moderating effect of industry heterogeneity and influence the relationship between the depth of PC and performance. Specifically as follows,The second moderating role of the local government intervention:a). it can weaken the positive moderating effect of the threshold of industry access on the relationship between the strength of PC (depth and breadth) and performance. In other words, in a higher level region, firms with higher strength PC in a higher threshold will have a worse performance. b). it can weaken the moderating effect of the intensity of industry R&D on the relationship between the strength of PC and performance. That is to say, in a higher level region, firms with higher strength of PC will have a worse performance. c). it can weaken the moderating effect of the liability ratio of industry asset on the relationship between the strength of PC and performance. Namely, in a higher level region, firms with higher strength of PC will have a worse performance.The second moderating role of the local legal system environment: a). it can weaken the moderating effect of the threshold of industry access on the relationship between the strength of PC (depth and breadth) and performance. In other words, in a higher level region, firms with higher strength PC in a higher threshold will have a worse performance. b). it can strengthen the moderating effect of the intensity of industry R&D on the relationship between the strength of PC and performance. That is to say, in a higher level region, firms with higher strength of PC will have a better performance. c). it can strengthen the moderating effect of the liability ratio of industry asset on the relationship between the strength of PC and performance. Namely, in a higher level region, firms with higher strength of PC will have a better performance.The second moderating role of the level of financial development:a). it can weaken the positive moderating effect of the threshold of industry access on the relationship between the strength of PC (depth and breadth) and performance. In other words, in a higher level region, firms with higher strength PC in a higher threshold will have a worse performance. b). it can strengthen the moderating effect of the intensity of industry R&D on the relationship between the strength of PC and performance. That is to say, in a higher level region, firms with higher strength of PC will have a better performance. c). it can weaken the moderating effect of the liability ratio of industry asset on the relationship between the strength of PC and performance. Namely, in a higher level region, firms with higher strength of PC will have a worse performance.The innovation of this article is mainly manifested in the following three aspects:First, this article fully considers context factors which influence PC, including regional diversity and industry heterogeneity in the research field of vision to research the impact of PC on performance panoramically which tend to overcome the deficiencies of Decontextualized and contextless problems in some existing literatures. This paper studies the influence factors and motivation of PC from the macro, meso and micro level, which can contribute to exploring the mechanism of PC affecting enterprise performance deeply.Second, this article not only pays attention to the presence of PC, but also concern about the intensity of PC. After analyzing the motivation and channels of PC, this paper describes the characteristics of intensity from two dimensions(including breadth and depth), hoping to further clarify the boundary of the strong PC and the weak PC, so as to seek reasonable support experience and make the results more explanatory power.Third, this paper integrates the theoretical research of institutional view and resource view, hoping to further expand the related research. This paper argues that PC can improve enterprise performance by dual constraints of resources and institution. On the one hand, the strength of the political association can show the difference of social capital and resources in a company and determine its resistance to pressure and the ability to influence policy. On the other hand, politically connected enterprises with the characteristics of regional diversity and industry heterogeneity face multiple institutional pressures from various interest groups. Therefore, if only from a single aspect to explain the relationship between PC and corporate performance, the argument is not persuasive. PC can be regarded as a kind of enterprise social capital between the government and enterprises; it can also be seen as a kind of institutional arrangement. In the process of the enterprises obtaining additional economic benefits, the government also realizes the regime stability and the informal governance on the economy through the network.On the basis of the theory of resource view and institutional review, the article studies the influence of political association of enterprise performance mechanism which integrated the characteristics of regional diversity and industry heterogeneity, hoping to provide the reference of resources allocation, industry policy and decentralization for the government.
|
PDF Full Text Request