The Dual Role Of Corporate Political Ties In China:a Moderated Mediation Model

The political ties of enterprises are a global matter and have received extensive attention by researchers. Researches on corporate political tactic behavior have been of huge importance in the field of management and other disciplines. Substantial methods combining theory and cases have been adopted to form rich research fruits. The ties between enterprises and governmental officials undoubtedly bring benefits for enterprises in terms of obtaining bank loans or government subsidies, breaking the restrictions of industrial policies and bringing the increase of corporate sales and net profit. This effect of corporate political ties is exceedingly apparent in the environment of economic transformation. In countries of economic transformation, such as China, Southeast Asia, Indonesia and Malaysia and so on, restrictions of the formal system, including laws and regulations, are weak. Especially noteworthy is that the market mechanism and infrastructure are not perfected. This brings many uncertainties for enterprises. In order to cope with this uncertainty, an enterprise has to rely on the non-official system and realize business transactions through ties with governmental officials. This non-official system can replace the support of the official system and can be viewed as a means of obtaining resources in a chaotic environment. For example, when an effective systematic environment for production element transaction is in lack, the close ties between an enterprise and government officials can help the enterprise obtain lands, capital and other rare resources. They can also help the enterprise protect its competition advantages by persuading the government (such as improving the industrial entry barrier).The systematic reform of China is not very complete and there is a lack of formal systems and a clear legal framework. As a result, the non-official system plays an important role in molding corporate behavior. It has been discovered in researches that the managers adopt the extensive non-official system arrangement, in which establishing political ties with governmental officials is the most popular and most effective approach. Through these political ties, an enterprise is able to reduce uncertainty, lower systematic cost and improve the speed and efficiency of allocating other corporate resources. Currently, the majority of the researches focus on the function of political ties as a tool, including obtaining bank loans or governmental subsidies, breaking industrial policy restrictions and bringing the increase of corporate sales and net profit.However, is the enterprises’ utility of political ties purely out of egoism? Based on the review of relevant literature, it is discovered that past researches put too much emphasis on the enterprises’ motivation of using political ties as a tool without making profound exploration of the unique mechanism of enterprises pursuing political ties in the background of Confucian culture. This thesis believes that the enterprises have dual motives for pursuing political ties, the proself motive and the prosocial motive. So, the behavior brought by these two kinds of motives also has a dual nature, proself behavior and prosocial behavior. As a result, this thesis is based on the special systematic background of the transformation economy and researches the use of political ties by Chinese enterprises. It puts forward the dual role model of the proself and prosocial mechanisms in using such ties. It adopts the statistics of the corporate questionnaires of 363 enterprises in Jiangsu, Anhui and Shandong and uses the First Stage & Direct Effect Moderation Model in the first stage in case tests. This thesis researches the two intermediary mechanisms, sorts out the existing research literature and explains the concepts, definitions, measurement methods, sample selection and leading conclusions of relevant concepts. The research result proves our assumption and indicates that the use of political ties of Chinese enterprises is not purely proself but also prosocial. It is of major importance to research both the dark side and the bright side of the tiess between enterprises and political personnel. An improved systematic environment is able to eradicate the opportunistic phenomenon of enterprises. But the fierce competition in the market has not turned enterprises into selfish monsters. Apart from that, this thesis adds the situational effect of the three layers, including the market, the system and the enterprise. It not only takes into consideration the corporate internal influencing factors but also the corporate external influencing factors including the market and the systematic environment and so on. Based on the situational effect of the three layers, these two behavioral mechanisms have moderator within differences and moderator between differences. Among the three situational effects, the proself behavioral mechanism of political ties is the most sensitive toward changes in the quality of the systematic environment. By comparison, prosocial behavioral mechanism is more sensitive to the uncertain changes in market competition. The research conclusion of this thesis is able to make Chinese enterprises and different social circles develop a clearer and more comprehensive understanding of corporate political ties.