Effect Of Swale, Political Resource And Headquaters Relocation Of Private Enterprises In China

When entering the 21st century, with further in-depth economic transition and the changes of the international competition environment, China faces a new challenge. That is the institutional gaps and economic differences among regions within China have prominently resulted in headquarter relocation problems for those private firms who have outstanding performance but were born in small cities. This problem implies that obtaining institutional advantages and market advantages have become an important approach for firms to gain sustainable competitive advantages, and also become an organizational form and institutional arrangement for private firms to implement global strategy and arrange global competition. Based on previous studies, this paper conducts a profound reflection to the location advantage theory. Incorporating with the previous studies and the specific circumstance of Chinese institutional transition, this paper summarizes the important factors of headquarters relocation decision-making in private firms and categorizes them into two factors: the political resource and the lowland effect. The paper argues that: (1) the institutional gaps, caused by the gradual, decentralized and experimental economic transition, objectively make the private firms form an institution-based strategic thinking mode that they should pursuit political resources to gain political advantages. This thinking mode becomes a dominant idea of solving strategic problems. (2)The market differences, caused by the gradual, decentralization and experimental features of Chinese economic transition, objectively make the private firms form a resource-based strategic thinking mode that they should pursuit market resources to gain market advantages. Such thinking mode plays a fundamental role in the formulation and implementation of strategies. The choice between the lowland effects of small cities and the location advantages of central cities constitutes an important factor for Chinese private firms to decide headquarters location.Based on the theory of System Dynamics, this paper raises two driving forces of headquarters location decision-making: the promoting driver and the preventing driver. Further, the conceptual model is constructed. Based on the institution-based view and the resource-based view, this paper summarizes the two driving forces for headquarter location decision-making under the framework of institutional factors and market resources, analyses the influences of political resources and lowland effects on headquarter location decision-making in private firms in detail, and constructs the research framework.Given the specificity of the research questions, this paper adopts the case study approach. The methodology is guaranteed by the credibility of information, the matching extent of patterns, the rationality of hypotheses, the stringency of the research process and the reliability of testing. The research materials and data were obtained by three ways, including deep interview, reports and historical information. The credibility of the data is ensured by triangulation verification. The data are tested through construction validity, internal validity and reliability.Through deep analysis and discussion of eight cases in headquarters location decision-making, this paper got some findings as follows: (1) the specific political and economic environments of China during the economic transition have substantive impacts on headquarter location decision-making in private firms. Pursing lowland effects and political resources become an important way for private firms to deal with political and economic environments. (2) The specific environment of China's economic transition has created substantial differences in political resources owned by governments between different regions within China. Private firms have to consider headquarter location in order to get political resources. In fact, this consideration already becomes a thinking mode in Chinese private firms. (3) The specific environment of China during the economic transition has generated the lowland effects to private firms in their birthplaces. Private firms have to decide their headquarters location carefully under the strategic thinking mode of pursing market resources. (4) The business models turns out to have substantially different impacts on the usage of lowland effects and political resources, which reveals that the variable of business model, including the level of marketization, the dependence on political resource, and the optimization of political resources, are mediate variables between, lowland effects, as well as political resources, and the headquarter location decision-making. (5) The value of top managers plays a very important role in the headquarters location decision-making process. No matter whether it is political resource or lowland effect, as well as the mediated variable——business model, it is fully reflected through the values of top managers in the headquarters location decision-making process.The results show that, as far as the lowland effect is concerned, the level of marketization of the business model, the geographic location of the business model and entrepreneurs'motivation of pursuing lowland effects have significant impacts on headquarters location decision-making in private firms; As far as the political resource is concerned, the relevance of political resources of the business model, the optimization of political resources of business model, as well as the entrepreneurs'pursuit of political resources, have significant impacts on headquarters location decision-making in private firms.The research results indicate that, the headquarter location decision-making in Chinese private firms shows unique characteristics in the context of economic transition. That is, the pursuit of political resources and the trade-off of lowland effects. These characteristics reveal a specific law of headquarter location decision-making process in China, which also implies the status quo of China's economic transition process. Based on the understanding of the specific Chinese law of headquarter location decision-making process, our conclusions can not only provide a theoretical guidance for headquarter location decision-making in private firms, but also provide a theoretical proposal for further researches on China's economic transition.