Study On The Relationship Between The Political Connection Of Listed Family Business And Business Performance

Since the reform and opening policy in 1978, Chinese privately-run economy has developed rapidly. Private enterprises which mainly composed of the family business have become an important driving force for China’s economic development. With the economic globalization and rapid development of China’s economy the competition getting more intensifies of enterprises, family business continue to tap their own potential meanwhile began to pay more attention to the outside environment to seek a competitive advantage for the survival and development, political connections is the area of research focus recently. As a global universal phenomenon, political connection has been gradually explored by scholars and introduced into the family business performance studies. With the special social and economic systems background, combined with the status and development trend of China’s private enterprises, the study of political connection of family businesses is very important. Start from the family business executives’ political background, subject of the paper is to explore the relationship between political connection and business performance in family business.To start with, this paper has an overview and definition of family business after reading and analyzing the domestic and abroad related literatures and theories. Secondly, this paper gives a brief introduction about the development of domestic and abroad family business. Lastly, this paper discusses the theory of political connection and corporate performance; make a clear about the definition of them. Based on the analysis above, this paper puts forward in the variables and hypothesis and builds an empirical model of political connection of family business and business performance. And then draw the conclusion.This research adopts 150 family businesses listed in Shenzhen and Shanghai A-share stock market during 2009-2012 in China as sample, builds the regression model with the four control variables: company, business growth, ownership structure and financial leverage, and using SPSS18.0 to empirically study. The study shows that political connection of family business is positively correlated with business performance. Compared with local political connection, the central political connection has greater influence on business performance. The political connection degree of family business is positively correlated with business performance. The higher level of the local intervention, the greater effect of political connection on corporate performance is. Results of this study will provide a theoretical basis for the family business to build an effective political network.