| Regional diversification is an investment strategy adopted by enterprises to achieve their own development by expanding beyond the limits of space.Regional diversification is divided into international expansion and domestic off-site expansion according to whether it crosses national boundaries or not.In the process of domestic off-site expansion,enterprises can not only take advantage of their own resources and capabilities to occupy the domestic target market,forming economies of scale,but also obtain deficient or important resource elements from the target market to seek further development of enterprises and enhance their competitive advantages.China is a vast territory,and the differences in economic,natural,geographical and cultural conditions between different regions provide an opportunity for enterprises to implement the off-site expansion strategy.In recent years,the proportion of off-site subsidiaries of Chinese listed companies has been increasing year by year.Off-site expansion has become an important strategic behavior for enterprises to obtain competitive advantages,which has been highly concerned by the theoretical and practical circles.However,as China is currently in the period of economic transformation,there is an obvious market segmentation in the domestic market,which exactly causes obstacles for enterprises to implement the strategy of off-site expansion.In addition,due to the gradual economic transformation in China,the economic and political development of various regions is unbalanced,and the institutional environment of each region is significantly different.This is also a huge challenge for the enterprise to expand in different places.Based on this,enterprises are more inclined to mitigate the impact of market segmentation through political connections;At the same time,political connections,as informal alternative mechanism of market mechanism,can also increase the market recognition of enterprises,and it is easier to obtain legal support and government-controlled resources in regions with imperfect institutional environment,so as to promote the off-site expansion of enterprises.It is also crucial for enterprises to choose the right investment entry mode when formulating the strategy of off-site expansion.The entry mode is an institutional arrangement to transfer an enterprise's products,industrial technology,human skills and management experience to the target market.At present,there are no systematic explanations to have been provided for the choice of the off-site entry mode selected by enterprises,and the influence of the political connections that can promote the expansion of enterprises in different places on the choice of entry mode,as well as the boundary conditions of the influence,which provides an opportunity for the research of this paper.Based on the above discussion,this paper attempts to explore the factors influencing the entry mode of enterprises' off-site subsidiaries from the perspective of political connections and by using normative analysis method and empirical research method.This paper further investigates the boundary conditions of the influence of political connections on the entry mode of enterprises' off-site subsidiaries.To be specific,this paper integrates the resource-based theory and institutional theory to construct the theoretical model of the relationship between political connections and the entry mode of enterprises' off-site subsidiaries.In addition,three variables regulating the relationship between political connections and the entry mode of enterprises' off-site subsidiaries are further studied: enterprise nature,off-site investment experience and institutional distance.There are three main contents discussed in this paper:The first part: based on the special institutional environment in China,this paper studies the influence of political connections on the entry mode selection of the off-site subsidiaries from the perspective of the micro characteristics of enterprises.This paper studies how the political connections affect the off-site subsidiaries' establishment and ownership mode,and tries to reveal the law of the off-site investment.The second part: this paper discusses the moderating effect of enterprise nature on the relationship between political connections and entry mode of the off-site subsidiaries.State-owned enterprises and the government have a natural close relationship,although they can obtain more resources from the local government and the central government,they are also heavily interfered by the government.Compared with state-owned enterprises,private enterprises often take the initiative to build political connections.They are more likely to choose the most beneficial entry mode for their own long-term development when choosing the entry mode of off-site expansion.The third part: this paper discusses the moderating effect of off-site investment experience and institutional distance on the relationship between political connections and the entry mode of off-site subsidiaries:(1)the experience of off-site investment is very important intangible resource for enterprises in the off-site expansion.Enterprises will know how to better carry out business activities in different regions with the accumulation of off-site investment experience,which will help enterprises consider the entry mode of off-site subsidiaries from the perspective of maximization of enterprise profits;(2)the institutional distance between regions is an important obstacle to the off-site expansion of enterprises.The institutional distance represents the degree of difference between the institutional environment in the place where the parent company is registered and the institutional environment in the place where the off-site subsidiary is registered.Scholars have agreed that institutional distance is an important factor influencing the entry mode of enterprises' off-site expansion.However,this paper argues that the experience of off-site investment and institutional distance not only have the direct impact on the entry mode of off-site expansion,but also have the indirect impact on the entry mode of off-site expansion.In the case of politically related enterprises,how the experience of off-site investment and institutional distance will affect(strengthen or weaken)the relationship between political connections and the entry mode of off-site subsidiaries still needs the specific theoretical deduction.Specifically,this paper is divided into six chapters to systematically expounding the relationship between political connections and the entry mode of enterprises' off-site subsidiaries:The first chapter is the introduction of this paper,including the research background,research significance,research methods,research content,research framework and the innovation of this paper.The second chapter is the literature review.This paper summarizes the shortcomings of existing researches by sorting out the related researches on the existing political connections,entry mode and institutional distance,and finds that it is of great theoretical significance and practical guiding value to study the influence of political connections on the entry mode of off-site subsidiaries.The existing researches mainly have three shortcomings.Firstly,entry mode has always been a hot topic in the field of international business research,and the research of Chinese enterprises' cross-regional market entry mode(off-site expansion entry mode)are relatively limited,so it is necessary to carry out researches on the off-site expansion entry mode from more perspectives.Secondly,the existing literatures mostly discuss the impact of environmental variables on the entry mode,such as institutional environment,institutional distance and cultural distance,but rarely study from the microscopic perspective of the enterprise's own characteristics.In particular,there is less literature on the relationship between political connections and entry mode.Thirdly,the existing research is not enough to discuss the boundary conditions of the factors affecting the entry mode of enterprises' off-site expansion.The property right nature of the enterprise,the off-site investment experience and the difference of the institutional environment between different places,namely the institutional distance,all affect the relationship between the political connections and the entry mode of the off-site subsidiary.Therefore,based on the special institutional environment in China,it is necessary to explore the boundary conditions of the relationship between the political connections and the entry mode of off-site subsidiaries from the enterprise level and the environmental level,so as to better reveal the influence of the political connections on the entry mode of off-site subsidiaries.The third chapter is mainly theoretical basis and hypothesis.Firstly,the theory part introduces the definition of resource-based theory and institutional theory used in this paper,as well as the application in the choice of entry mode.In this study,the entry mode is considered from the establishment mode and the ownership mode.Secondly,the hypothesis part proposes 8 hypotheses by integrating the resource-based theory and institutional theory,and based on the relationship between variables and the support of relevant literatures:(1)if the enterprise has political connections,the possibility of the off-site subsidiary choosing the new establishment mode is higher;(2)if the enterprise has political connections,the possibility of the off-site subsidiary choosing the wholly-owned ownership mode is higher;(3)it is more likely for politically related private enterprises to choose the new establishment mode for their off-site subsidiaries;(4)it is more likely for politically related private enterprises to choose the wholly-owned ownership mode for their off-site subsidiaries;(5)the off-site investment experience positively moderates the positive relationship between political connections and the new establishment mode of off-site subsidiary;(6)the off-site investment experience positively moderates the positive relationship between political connections and the wholly-owned ownership mode of off-site subsidiary;(7)the institutional distance negatively moderates the positive relationship between political connections and the new establishment mode of off-site subsidiary;(8)the institutional distance positively moderates the positive relationship between political connections and the wholly-owned ownership mode of off-site subsidiary.Based on this,this paper constructs a theoretical model of the relationship between political connections and the entry mode of the off-site subsidiaries of enterprises and the corresponding boundary conditions.The fourth chapter is empirical research design,including three parts.Firstly,the samples and data used in this paper are introduced.In this paper,the new off-site subsidiaries of A-share manufacturing companies listed on the Shanghai and Shenzhen stock markets during 2009-2018 are taken as samples to test the proposed hypothesis.Then,this paper introduces the source of data and the collection of data,and describes the distribution of the provinces where the parent company and subsidiaries are registered,the distribution of the off-site subsidiaries,the number of the off-site subsidiaries and their proportion in the total number of subsidiaries in each year from 2009 to 2018.In order to prevent reverse causality,all variables except the dependent variables are treated with a lag.Secondly,all the variables in the theoretical model are measured by combining with the existing literature.The independent variables are political connections,the dependent variable is the entry mode(establishment mode and ownership mode),and the moderator variables are enterprise nature,off-site investment experience and institutional distance.Control variables include enterprise size,listing age,profitability,debt paying ability,development ability,proportion of independent directors,ownership concentration,regional economic level,regional institutional environment and geographical distance.Thirdly,the econometric model of this study is constructed.The fifth chapter is the empirical research results of the political connections and the entry mode of the off-site subsidiary,including four parts.Firstly,descriptive statistical analysis and correlation analysis of each variable are listed.Secondly,Logit regression model is used to empirically test the two main effect hypotheses proposed in chapter 3 to verify the influence of political connections on the establishment mode and ownership mode of off-site subsidiaries.Thirdly,the Logit regression model is used to empirically test the six moderating effect hypotheses proposed in chapter 3.Fourthly,in order to prove the reliability of the research conclusion,the robustness test is carried out.The sixth chapter is the conclusion and prospect of this paper,including research conclusions,practical implications,research deficiencies and research prospects.The main conclusions of this paper are as follows:Firstly,political connection is an important factor that affects the implementation of enterprises' off-site expansion strategy.It not only affects whether enterprises will enter the target market,but also affects the entry mode of the off-site subsidiaries.It is more likely that the off-site subsidiaries of politically related enterprises choose the new establishment mode and the wholly-owned ownership mode.Secondly,the influence of political connections on the entry mode of off-site subsidiaries varies with the nature of the enterprise.Politically related private enterprises are more likely to choose the new establishment mode and the wholly-owned ownership mode.Although state-owned enterprises have a natural close relationship with the government,if the chairman or CEO of state-owned enterprises has a government background,the political connections of state-owned enterprises are more heavily influenced by the government and the policy burden of state-owned enterprises is heavier.Compared with state-owned enterprises,private enterprises often take the initiative to build political connections and seek their own long-term development through political connections.Therefore,state-owned enterprises and private enterprises may make different decisions when politically related enterprises choose the entry mode of off-site subsidiaries.Thirdly,the influence of political connections on the entry mode of the off-site subsidiaries of enterprises varies with different off-site investment experience and institutional distance.It indicates that the choice of the entry mode of the off-site subsidiary is the optimal decision made by the enterprise after considering the internal resources and external environmental factors.First of all,the accumulated off-site investment experience strengthens the positive influence of political connections on the new establishment mode and wholly-owned ownership mode of the off-site subsidiaries.The experience accumulated in the practice of off-site expansion has an important impact on the entry mode of the off-site subsidiaries,which can play the role of political connections to a certain extent.The more experience the politically related enterprises have in off-site expansion,the more familiar they are with how to carry out business activities in different places,and the more likely they are to be recognized by the stakeholders of the target market.Secondly,the increase of institutional distance strengthens the positive influence of political connections on the wholly-owned ownership mode of off-site subsidiaries.It is verified that under the effect of institutional distance,the politically related enterprises pay more attention to the supervision and control of the offsite subsidiaries.However,the negative moderating effect of institutional distance on the positive relationship between political connections and the new establishment mode of off-site subsidiaries is not statistically significant.This may be mainly because politically related enterprises are not sensitive to the size of institutional distance when they choose the establish mode of their off-site subsidiaries.No matter how far away the institutional distance is,due to the existence of political connections,the politically related enterprises can overcome the restrictions brought by the differences in the institutional environment to a large extent.Secondly,the differences of formal institutional environment between regions are gradually narrowing with the progress of China's regional economic integration.Compared with the existing research,this paper may have the following innovations:Firstly,this paper expands the research on the outcome variables of political connections from the perspective of corporate strategy.This study discusses the relationship between political connections and the entry mode of off-site subsidiaries,and its essence is to explore the influence of political connections on enterprises' strategy.Most of the existing literatures on political connections study the relationship between corporate political connections and executive compensation and corporate performance.Although some literatures have discussed the relationship between political connections and enterprise investment,few scholars have deeply discussed the important influence of political connections on the entry mode of off-site expansion in the context of the widespread establishment of political connections among Chinese companies.This paper discusses the influence of political connections on the entry mode of enterprises' off-site subsidiaries,enriches the study on the outcome variables of political connections,and provides empirical evidence of Chinese enterprises.Secondly,this paper provides a new perspective for the study of entry mode.At present,most researches on the entry mode focus on the international market entry mode,especially the FDI entry mode of emerging economies.In China with a vast territory,and in the practice background of the rapid development of Chinese enterprises' off-site expansion activities,this paper introduces the theoretical research results of the international market entry mode into the entry mode of domestic off-site expansion,takes enterprise groups as the research object,reveals the rules of the entry mode of Chinese enterprises' off-site subsidiaries and further enriches the research on the entry mode.Thirdly,this study discusses the differences in the choice of entry modes of the off-site subsidiaries between politically related state-owned enterprises and politically related private enterprises.At the same time,this paper discusses the moderating effect of the off-site investment experience and institutional distance on the relationship between political connections and the entry mode of the off-site subsidiaries,which further improves the research on the relationship between political connections and the entry mode of the off-site subsidiaries of enterprises,so as to form a better understanding of the influence of political connections on the entry mode of the off-site subsidiaries,providing useful insights for the literatures on the nature of enterprises,the off-site investment experience and the institutional distance. |
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