Information Technology and Management

, Volume 17, Issue 3, pp 245–261 | Cite as

The effect of business ties and government ties on new IT venture growth: an empirical examination in China

  • Xueling Li
  • Jia ShenEmail author
  • Wenjie Ma
  • Weiyong Zhang


The advancement of information technology in the past three decades is tremendous, and much of the advancement can be attributed to numerous new IT ventures that invent and commercialize a variety of information technologies. But new IT venture growth has not been sufficiently addressed by IS/IT researchers. In this research, we synthesized the literature on entrepreneurship, strategy, and management to develop a model linking business ties and government ties to new IT venture growth, while considering the effect of two contextual factors, firm size and legitimacy. We then collected empirical data from new IT ventures in China (N = 457). Regression analyses showed that both business ties and government ties positively affect new IT venture growth, and their effect is moderated by firm size and legitimacy. These insights contribute to both the literature and practices.


New IT venture growth Information technology Business ties Government ties Firm size Legitimacy 



We appreciate the valuable comments from the editor and the anonymous reviewers. This research was supported by the National Natural Science Foundation of China (NSFC) under Grant Nos. 71472072 and 71232011; and supported by “Peak subjects (group)” of Jilin University.


  1. 1.
    Chen Y, Zhu J (2003) Measuring information technology’s indirect impact on firm performance. Inf Technol Manag 5(1–2):9–22Google Scholar
  2. 2.
    Tavana M, Khakbaz MH, Jafari-Songhori M (2009) Information technology’s impact on productivity in conventional power plants. Int J Bus Perform Manag 11(3):187–202CrossRefGoogle Scholar
  3. 3.
    Wong SY, Soh C, Neo BS, Goren G (2013) The role of information technology in Singapore’s new-venture development. J Small Bus Entrep 10(3):101–111CrossRefGoogle Scholar
  4. 4.
    Liu H, Ke W, Wei KK, Hua Z (2014) The impact of IT capabilities on firm performance: the mediating roles of absorptive capacity and supply chain agility. Soc Sci Electron Publ 54(3):1452–1462Google Scholar
  5. 5.
    Qiao YY, Guang-Wen LI, Chang YF, Jian J, Zhang Y (2010) A infrastructure management information system with GIS and IOT. Geomat World 5:17–21Google Scholar
  6. 6.
    Liu Y, Woywode M, Xing Y (2012) High technology start-up innovation and the role of guanxi: an explorative study in China from an institutional perspective. Prometheus  30(2):211–229CrossRefGoogle Scholar
  7. 7.
    Venkatesh V, Bala H (2008) Technology acceptance model 3 and a research agenda on Interventions. Decis Sci 39(2):273–315CrossRefGoogle Scholar
  8. 8.
    Lacity MC, Khan S, Yan A, Willcocks LP (2010) A review of the IT outsourcing empirical literature and future research directions. J Inf Technol 25(4):395–433CrossRefGoogle Scholar
  9. 9.
    Katz ML, Shapiro C (1985) Network externalities, competition, and compatibility. Am Econ Rev 75(3):424–440Google Scholar
  10. 10.
    Kauffman RJ, McAndrews J, Wang Y (2000) Opening the ‘black box’ of network externalities in network adoption. Inf Syst Res 11(1):61–82CrossRefGoogle Scholar
  11. 11.
    Chaganti RRS, Watts AD, Chaganti R, Zimmerman-Treichel M (2008) Ethnic-immigrants in founding teams: effects on prospector strategy and performance in new Internet venture. J Bus Ventur 23(1):113–139CrossRefGoogle Scholar
  12. 12.
    Sheng S, Zhou KZ, Li JJ (2011) The effects of business and political ties on firm performance: evidence from China. J Mark 75(1):1–15CrossRefGoogle Scholar
  13. 13.
    Wang G, Jiang X, Yuan CH, Yi YQ (2013) Managerial ties and firm performance in an emerging economy: tests of the mediating and moderating effects. Asia Pac J Manag 30(2):537–559CrossRefGoogle Scholar
  14. 14.
    Park SH, Luo Y (2001) Guanxi and organizational dynamics: organizational networking in Chinese firms. Strateg Manag J 22(5):455–477CrossRefGoogle Scholar
  15. 15.
    Hoang H, Antoncic B (2003) Network-based research in entrepreneurship: a critical review. J Bus Ventur 18(2):165–187CrossRefGoogle Scholar
  16. 16.
    Carlisle E, Flynn D (2005) Small business survival in China: guanxi, legitimacy, and social capital. J Dev Entrep 10(01):79–96CrossRefGoogle Scholar
  17. 17.
    Peng MW, Luo Y (2000) Managerial ties and firm performance in a transition economy: the nature of a micro-macro link. Acad Manag J 43(3):486–501CrossRefGoogle Scholar
  18. 18.
    Batjargal B (2003) Social capital and entrepreneurial performance in Russia: a longitudinal study. Organ Stud 24(4):535–556CrossRefGoogle Scholar
  19. 19.
    Boisot M, Child J (1996) From fiefs to clans and network capitalism: explaining China’s emerging economic order. Adm Sci Q 41(4):600–628CrossRefGoogle Scholar
  20. 20.
    Tsang EW (1998) Can guanxi be a source of sustained competitive advantage for doing business in China? Acad Manag Exec 12(2):64–73Google Scholar
  21. 21.
    Chen X-P, Chen CC (2004) On the intricacies of the Chinese guanxi: a process model of guanxi development. Asia Pac J Manag 21(3):305–324CrossRefGoogle Scholar
  22. 22.
    Luo Y, Huang Y, Wang SL (2012) Guanxi and organizational performance: a meta-analysis. Manag Organ Rev 8(1):139–172CrossRefGoogle Scholar
  23. 23.
    Barney JB, Zhang S (2009) The future of Chinese management research: a theory of Chinese management versus a Chinese theory of management. Manag Organ Rev 5(1):15–28Google Scholar
  24. 24.
    Shane S, Cable D (2002) Network ties, reputation, and the financing of new ventures. Manage Sci 48(3):364–381CrossRefGoogle Scholar
  25. 25.
    Li H, Zhang Y (2007) The role of managers’ political networking and functional experience in new venture performance: evidence from China’s transition economy. Strateg Manag J 28(8):791–804CrossRefGoogle Scholar
  26. 26.
    Li H, Atuahene-Gima K (2001) Product innovation strategy and the performance of new technology ventures in China. Acad Manag J 44(6):1123–1134CrossRefGoogle Scholar
  27. 27.
    Bates T (1994) Social resources generated by group support networks may not be beneficial to Asian immigrant-owned small businesses. Soc Forces 72(3):671–689CrossRefGoogle Scholar
  28. 28.
    Siegel J (2007) Contingent political capital and international alliances: evidence from South Korea. Adm Sci Q 52(4):621–666CrossRefGoogle Scholar
  29. 29.
    Bruton GD, Ahlstrom D, Obloj K (2008) Entrepreneurship in emerging economies: where are we today and where should the research go in the future. Entrep Theory Pract 32(1):1–14CrossRefGoogle Scholar
  30. 30.
    Aldrich HE, Fiol CM (1994) Fools rush in? The institutional context of industry creation. Acad Manag Rev 19(4):645–670Google Scholar
  31. 31.
    Shan B, Cai L, Hatfield DE, Tang S (2014) The relationship between resources and capabilities of new ventures in emerging economies. Inf Technol Manag 15(2):99–108Google Scholar
  32. 32.
    Teece DJ (2007) Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance. Strateg Manag J 28(13):1319–1350CrossRefGoogle Scholar
  33. 33.
    Barney J (1991) Firm resources and sustained competitive advantage. J Manag 17(1):99–120Google Scholar
  34. 34.
    Rindova VP, Fombrun CJ (1999) Constructing competitive advantage: the role of firm–constituent interactions. Strateg Manag J 20(8):691–710CrossRefGoogle Scholar
  35. 35.
    Shepherd DA, Zacharakis A (2003) A new venture’s cognitive legitimacy: an assessment by customers. J Small Bus Manag 41(2):148–167CrossRefGoogle Scholar
  36. 36.
    Donaldson L (2001) The contingency theory of organizations. Sage, Thousand OaksCrossRefGoogle Scholar
  37. 37.
    Freeman JH (1999) Venture capital as an economy of time. In: Leenders R, Gabbay S (eds) Corporate social capital. Kluwer Academic Publishers, BostonGoogle Scholar
  38. 38.
    Hoang H, Young N (2000) Social embeddedness and entrepreneurial opportunity recognition: (more) evidence of embeddedness. Frontiers of Entrepreneurship Research, Babson College, Wellesley, MAGoogle Scholar
  39. 39.
    Davidsson P, Honig B (2003) The role of social and human capital among nascent entrepreneurs. J Bus Ventur 18(3):301–331CrossRefGoogle Scholar
  40. 40.
    James C (1990) Foundations of social theory. Belknap, CambridgeGoogle Scholar
  41. 41.
    Zaheer A, McEvily B (1999) Bridging ties: a source of firm heterogeneity in competitive capabilities. Strateg Manag J 20(12):1133CrossRefGoogle Scholar
  42. 42.
    Uzzi B (1997) Social structure and competition in interfirm networks: the paradox of embeddedness. Adm Sci 42(1):35–67CrossRefGoogle Scholar
  43. 43.
    Fie X (2006) Rural China. Shanghai People’s Publishing House, ShanghaiGoogle Scholar
  44. 44.
    Triandis HC (1995) Individualism and collectivism. Westview, Boulder, COGoogle Scholar
  45. 45.
    Wong YH, Chan YK (1999) Relationship marketing in China: guanxi, favouritism and adaptation. J Bus Ethics 22(2):107–118CrossRefGoogle Scholar
  46. 46.
    Bian Y (2006) Born out of network: a sociological analysis of the startup. Sociol Stud 6:74–88Google Scholar
  47. 47.
    Bao G, Yu H (2005) A study on the interactive mechanism for relational network and entrepreneurship. R&D Manag 17(3):46–51Google Scholar
  48. 48.
    Chen X, Wu J (2011) Do different guanxi types affect capability building differently? A contingency view. Ind Mark Manag 40(4):581–592CrossRefGoogle Scholar
  49. 49.
    Fine CH (1998) Clockspeed: winning industry control in the age of temporary advantage. Perseus Books, ReadingGoogle Scholar
  50. 50.
    DiMaggio PJ, Powell WW (1991) The new institutionalism in organizational analysis, vol 17. University of Chicago Press, ChicagoGoogle Scholar
  51. 51.
    Li H, Meng L, Wang Q, Zhou L-A (2008) Political connections, financing and firm performance: evidence from Chinese private firms. J Dev Econ 87(2):283–299CrossRefGoogle Scholar
  52. 52.
    Brüderl J, Preisendörfer P (1998) Network support and the success of newly founded business. Small Bus Econ 10(3):213–225CrossRefGoogle Scholar
  53. 53.
    Stuart TE, Hoang H, Hybels RC (1999) Interorganizational endorsements and the performance of entrepreneurial ventures. Adm Sci Q 44(2):315–349CrossRefGoogle Scholar
  54. 54.
    McMillan J, Woodruff C (1999) Interfirm relationships and informal credit in Vietnam. Q J Econ 114(4):1285–1320CrossRefGoogle Scholar
  55. 55.
    Hillman AJ, Hitt MA (1999) Corporate political strategy formulation: a model of approach, participation, and strategy decisions. Acad Manag Rev 24(4):825–842Google Scholar
  56. 56.
    Schuler DA (1996) Corporate political strategy and foreign competition: the case of the steel industry. Acad Manag J 39(3):720–737CrossRefGoogle Scholar
  57. 57.
    Wei W (2006) Corporate political resources, political strategy and political performance in China. Manag World 2:95–109Google Scholar
  58. 58.
    Li SX, Yao X, Sue-Chan C, Xi Y (2011) Where do social ties come from: institutional framework and governmental tie distribution among Chinese managers. Manag Organ Rev 7(1):97–124CrossRefGoogle Scholar
  59. 59.
    Faccio M (2006) Politically connected firms. Am Econ Rev 96(1):369–386CrossRefGoogle Scholar
  60. 60.
    Masters MF, Keim GD (1985) Determinants of PAC participation among large corporations. J Polit 47(4):1158–1173CrossRefGoogle Scholar
  61. 61.
    Boddewyn JJ, Brewer TL (1994) International-business political behavior: new theoretical directions. Acad Manag Rev 19(1):119–143Google Scholar
  62. 62.
    Gu FF, Hung K, Tse DK (2008) When does guanxi matter? Issues of capitalization and its dark sides. J Mark 72(4):12–28CrossRefGoogle Scholar
  63. 63.
    Zimmerman MA, Zeitz GJ (2002) Beyond survival: achieving new venture growth by building legitimacy. Acad Manag Rev 27(3):414–431Google Scholar
  64. 64.
    Tornikoski ET, Newbert SL (2007) Exploring the determinants of organizational emergence: a legitimacy perspective. J Bus Ventur 22(2):311–335CrossRefGoogle Scholar
  65. 65.
    Du Y, Ren B, Chen Z, Zhang Y (2008) First mover, legalization and the growth of small and medium-sized enterprises: a mediator model. Manag World 12:126–138Google Scholar
  66. 66.
    Shen J, Li X, Ma W (2013) Study on relationship strength and performance of new enterprises in different stages of development. Sci Res Manag 34(8):115–122Google Scholar
  67. 67.
    Luo Y, Xue Q, Han B (2010) How emerging market governments promote outward FDI: experience from China. Journal of World Business 45(1):68–79CrossRefGoogle Scholar
  68. 68.
    Rungtusanatham M, Ng CH, Zhao X, Lee TS (2008) Pooling data across transparently different groups of key informants: measurement equivalence and survey research. Decis Sci 39(1):115–145. doi: 10.1111/j.1540-5915.2008.00184.x CrossRefGoogle Scholar
  69. 69.
    Adler PS, Kwon S-W (2002) Social capital: prospects for a new concept. Acad Manag Rev 27(1):17–40Google Scholar
  70. 70.
    Smith JB (1998) Buyer–seller relationships: similarity, relationship management, and quality. Psychol Mark 15(1):3–21CrossRefGoogle Scholar
  71. 71.
    Dorsch MJ, Swanson SR, Kelley SW (1998) The role of relationship quality in the stratification of vendors as perceived by customers. J Acad Mark Sci 26(2):128–142CrossRefGoogle Scholar
  72. 72.
    Garbarino E, Johnson MS (1999) The different roles of satisfaction, trust, and commitment in customer relationships. J Mark 63(2):70–87CrossRefGoogle Scholar
  73. 73.
    Li X, Ma W, Liu Z, Dong B (2011) Entrepreneurial orientation and new venture growth in the view of legitimacy: empirical tests based on Chinese new ventures. Chin Ind Econ 8:99–108Google Scholar
  74. 74.
    Liu J (2013) Political connection of state-owned-enterprises: an analysis based on the listed companies of Shanghai and Shenzhen stock markets. In: The 19th international conference on industrial engineering and engineering management. Springer, pp 1009–1018Google Scholar
  75. 75.
    Lumpkin GT, Dess GG (2001) Linking two dimensions of entrepreneurial orientation to firm performance: the moderating role of environment and industry life cycle. J Bus Ventur 16(5):429–451CrossRefGoogle Scholar
  76. 76.
    Daft RL (2001) Organization theory and design, 7th edn. Southwestern College Publishing/Thomson Learning, CincinnatiGoogle Scholar
  77. 77.
    Neter J, Kutner MH, Nachtsheim CJ, Wasserman W (1996) Applied linear statistical models, 4th edn. WCB/McGraw-Hill, BostonGoogle Scholar
  78. 78.
    Boiral O (2003) ISO 9000: outside the iron cage. Organ Sci 14(6):720–737CrossRefGoogle Scholar
  79. 79.
    Zhang S (2012) China’s rising cost. China Business Review
  80. 80.
    Tsikriktsis N (2005) A review of techniques for treating missing data in OM survey research. J Oper Manag 24(1):53–62CrossRefGoogle Scholar
  81. 81.
    Hair JF (1995) Multivariate data analysis with readings, 4th edn. Prentice Hall, Englewood CliffsGoogle Scholar
  82. 82.
    Aiken LS, West G (1991) Multiple regression: testing and interpreting interactions. Sage, Newbury Park, CAGoogle Scholar
  83. 83.
    Cohen J, Cohen P, West SG, Aiken LS (2003) Applied multiple regression/correlation analysis for the behavioral sciences, 3rd edn. L. Erlbaum Associates, MahwahGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  • Xueling Li
    • 1
  • Jia Shen
    • 1
    Email author
  • Wenjie Ma
    • 2
  • Weiyong Zhang
    • 3
  1. 1.School of ManagementJilin UniversityChangchun CityChina
  2. 2.School of ManagementFudan UniversityShanghaiChina
  3. 3.Department of Information Technology and Decision Sciences, Strome College of BusinessOld Dominion UniversityNorfolkUSA

Personalised recommendations