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Political connections and corporate diversification in emerging economies: Evidence from China

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Abstract

Drawing upon the resource-based view, this study examines how political connections affect corporate diversification in an emerging economy. Data from a sample of 1,280 Chinese public firms over 2002–2005 show a strong positive relationship between political connections and corporate diversification. We also find that the positive relationship between political connections and corporate diversification is moderated by the level of state ownership in firms and the level of regional institutional development. Theoretical and managerial implications are discussed.

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Author information

Authors and Affiliations

  1. Department of Business Administration, Sun Yat-Sen Business School, Guangzhou, China

    Weiwen Li

  2. School of Economics and Commerce, South China University of Technology, Guangzhou, China

    Ai He

  3. School of Business Administration, South China University of Technology, Guangzhou, China

    Hailin Lan

  4. Department of Management, The Chinese University of Hong Kong, Hong Kong, Hong Kong

    Daphne Yiu

Authors
  1. Weiwen Li
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  2. Ai He
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  3. Hailin Lan
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  4. Daphne Yiu
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Corresponding author

Correspondence to Ai He.

Additional information

We would like to thank the Senior Editor Kevin Zhou and the two anonymous reviewers for their insightful and constructive comments. This research was supported by the Key Program of National Science Foundation of China (Grant code: 70832003) and a Grant of the 985 Project (innovation base for Chinese family business research) from Sun Yat-sen University.

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Li, W., He, A., Lan, H. et al. Political connections and corporate diversification in emerging economies: Evidence from China. Asia Pac J Manag 29, 799–818 (2012). https://doi.org/10.1007/s10490-011-9265-5

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