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Political rotations and cross-province firm acquisitions in China

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Abstract

The underdeveloped institutional framework and trade barriers between China’s provinces make cross-province acquisitions challenging. We explore how Chinese firms can mitigate this problem. Drawing on social network theory we propose that cross-province rotation of political leaders—a key element of the promotion system of political cadres in China—is a mechanism enabling growth through cross-province acquisitions. We conceptualize rotated leaders as brokers between two geographically dispersed networks. We contribute to the literature on the characteristics of Chinese social networks, the effect of political connections on firm strategy, and the impact of political rotations on firm growth in China’s provinces.

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Authors and Affiliations

  1. Department of Management, School of Business and Social Sciences, Aarhus University, Aarhus, Denmark

    Yulia Muratova & Jakob Arnoldi

  2. Sino-Danish Centre for Education and Research (SDC), Aarhus, Denmark

    Yulia Muratova & Jakob Arnoldi

  3. Shanghai Advanced Institute of Finance, Shanghai Jiao Tong University, Office 708, 211 West Huaihai Road, Shanghai, 200030, China

    Xin Chen

  4. School of Economics, Yunnan University, Kunming, Yunnan, China

    Xin Chen

  5. School of Economics and Business, Norwegian University of Life Sciences, Ås, Norway

    Joachim Scholderer

  6. Department of Economics and Business Economics, Aarhus University, Aarhus, Denmark

    Joachim Scholderer

  7. Department of Informatics, University of Zurich, Zurich, Switzerland

    Joachim Scholderer

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  1. Yulia Muratova
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  2. Jakob Arnoldi
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  3. Xin Chen
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  4. Joachim Scholderer
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Correspondence to Xin Chen.

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Muratova, Y., Arnoldi, J., Chen, X. et al. Political rotations and cross-province firm acquisitions in China. Asian Bus Manage 17, 37–58 (2018). https://doi.org/10.1057/s41291-018-0029-7

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