Research On The Relationship Among Political Capital,Social Capital And Corporate Performance Of Private Enterprises

With the continued deepening of the Reform and Opening and economic growth,China�s private-owned enterprise currently showing a good momentum of rapid development,its economy expanding significantly,corporate governance and business management are still improve.However,compared with the large State-owned enterprises,private enterprises in financing,entering into national monopolies and other areas still face strong restrictions.As a country with transition economy,the government still controls crucial information and resources which used for national economy development.Enterprises want to get economic resources for development must be approved by the government,enterprises have to deal with the relationship with the government.Thus,in order to maximize own benefits,private-owned enterprises will seek political connections with the government sector.Different from the previous literatures,this paper studies the effect of non-controlled state ownership in private-owned enterprises as a political connection mechanism.The results show that non-controlled state ownership can help private-owned enterprises to acquire credit resources and development opportunities owing to its natural connection with the government,which works as a guarantee for the reputation of private-owned enterprises in management.Meanwhile,these economic resources further improve the firms� performances.The conclusion suggests that non-controlled state ownership in private-owned enterprises can be treated as an efficient alternative mechanism in avoiding operation risks,accessing to resources and improving firms� performances.We also show that political participation of entrepreneurs,a personal-level political connection becomes less valuable when a private-owned enterprise has certain state ownership in the area of economic resources acquisition and firm performance improvement.This indicates that the political effect of state ownership was built on systematical level,its role should more valuable than entrepreneurs� political participation.At the same time,we extend the evidence by introducing another dimension of social network capital,background of entrepreneurs in private-owned companies.Using a dataset of private-owned listed firms in China,this paper empirically investigates the effects of background of entrepreneurs in these companies on firm resources.We find that background of entrepreneurs in private-owned listed companies has distinct advantage to obtain economic resources and development spaces.We also show that political participation of entrepreneurs becomes less valuable when a private-controlled listed firm has certain background of entrepreneurs.In fact,the social network capital of the company is more important than political participation of entrepreneurs in obtaining scarce resources due to the Chinese social and cultural history.According to China�s national conditions,this study divides enterprise�s legal environment into different categories,and inspects the connected effect of state ownership under the different legal environment by groups.In the areas with good legal conditions,enterprises enter the high barrier industries mainly based on their own quality,while in those areas with poor legal conditions,state ownership plays an important role.We also empirical test entrepreneur�s implicit political capital how impact on firms� performances under the different institutional environment.Our study shows an entrepreneur who has government working background can help enterprise to obtain more resources to improve firm�s performance,and the entrepreneur�s working experience in the public sector can improve firm�s performance.This study also find that some area with imperfect legal environment,undeveloped financial market and strong government intervention,entrepreneur�s implicit political capital can play more positive role in improving firm�s performance.The conclusion of this study has profound policy implications.Private-owned enterprises have rapid development currently,however by comparing with state-owned enterprises,private-owned enterprises still unable to get rid of discrimination in its ownership.Outstanding performance in the areas such as financing constraints and high barrier industries,these problems severely restricted the benign development of private-owned enterprises.In order to overcome these difficulties,in the case of current system doesn�t work properly,private entrepreneurs would have to seek alternative mechanism to solve.In China�s private-owned enterprises,Guanxi and state ownership can be used as effective political connection mechanisms,these can play a important role for private-owned enterprises in the areas of financing and entry into high barrier industries.This role is rooted in the Chinese culture,can partially counteract discrimination in ownership for private-owned enterprises.Therefore,the future direction of enterprise reforms for the government,should eliminate the "chains" on private-owned enterprises at the institutional level,giving the same growing environment for private-owned enterprises as state-owned enterprises,rather than encouraging private entrepreneurs looking for some alternative mechanism outside of the formal system to exchange for the development space.At present,the State has promulgated mixed enterprise ownership reform policies,these policies provide some systematical assurance for private-owned enterprises in long-term development.But discriminations against private enterprise will not disappear completely in the short-term,because such discriminations are deeply rooted in the society,financial institutions and government departments.In order to completely eliminate these discriminations in ownership,we must thoroughly change in social concepts.