Does politician turnover affect foreign subsidiary performance? Evidence in China

Zhong, Weiguo; Lin, Ya; Gao, Danxue; Yang, Haibin

doi:10.1057/s41267-019-00229-5

Cited by 65 publications

(77 citation statements)

References 117 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Nevertheless, some officials may leave their positions earlier than expected because of unforeseen events such as corruption charges, promotion, or death (Xu et al, 2016;Zhong et al, 2019). This scenario is also supported by data collected from 2000-2015, indicating that more than half of politicians appointed were unable to complete their full terms.…”

Section: Hypothesis Developmentmentioning

confidence: 74%

“…A standard practice in China is that government officials are required to rotate their positions across different departments and geographic locations every 5 years (Xu et al, 2016;Zhong et al, 2019).…”

Section: Hypothesis Developmentmentioning

confidence: 99%

“…In terms of turnover type, we divided the turnover of local officials into expected turnover and unexpected turnover. Local officials are required to rotate in every 5 years and companies expect that, but unexpected turnover occurs when officials leave before completing 5 years of service because of a sudden promotion, death, or misconduct (Xu et al, 2016;Zhong et al, 2019). We expect the positive relationship between turnover of local officials and CP to be stronger when the turnover is unexpected.…”

Section: Introductionmentioning

confidence: 99%

“…However, because of the recent global increase in institutional instability, with emerging economies taking leading positions in the global economy, firms have been forced to make decisions under conditions of greater uncertainty and instability. This becomes even more relevant when studying CP in a country such as China, which is characterized by great political instability and an uneven distribution of institutional development across different regions (Chan et al, 2010;He et al, 2008;Wang and Luo, 2018;Zhong et al, 2019). Therefore, the existing knowledge regarding CP is limited and certainly not fully applicable to emerging economies if we continue to neglect the role of institutional instability (Chan and Feng, 2019;Lin et al, 2015).…”

Section: Introductionmentioning

confidence: 99%

“…Thus, their turnover will cause high levels of unpredictability in firms' business operations (Julio and Yook, 2016;Wang and Luo, 2018). This is why the turnover of local officials is considered a major source of institutional instability in China (Chan and Feng, 2019;Lin et al, 2015;Zhong et al, 2019). Despite this, the severity of such a phenomenon is evident in Figure 1, which shows that, from 2001-2015, the average annual rate of the turnover of local officials in China is 46%.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

How does the turnover of local officials make firms more charitable? A comprehensive analysis of corporate philanthropy in China

Liu

Sisto

2021

Emerging Markets Review

View full text Add to dashboard Cite

Section: Hypothesis Developmentmentioning

confidence: 74%

Section: Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

How does the turnover of local officials make firms more charitable? A comprehensive analysis of corporate philanthropy in China

Liu

Sisto

2021

Emerging Markets Review

View full text Add to dashboard Cite

Government policy, filial piety, and foreign direct investment

Cui

Dong

et al. 2022

Global Strategy Journal

View full text Add to dashboard Cite

Research SummaryThis study investigates formal institutional pressure from government policy, informal institutional pressure from filial piety, and their interaction effect on firms' internationalization strategy. We argue that, while influenced by independent policy and cultural effects, firms also exercise agency when responding to these competing institutional pressures. We find empirical support for the influence of policy and cultural effects on firms' foreign direct investment (FDI). We also find that, in making decisions about FDIs, state‐owned enterprises are more sensitive to government policy, whereas family businesses are more sensitive to filial piety.Managerial SummaryThis study reveals that firms' strategies in complex institutional environments are influenced by their needs for formal and informal institutional legitimacy. Managers can exercise agency by weighing the importance of formal and informal legitimacy differently and therefore vary in their responses to institutional pressures. However, managerial agency is bound by firm ownership type. Managers of state‐owned firms prioritize formal institutional legitimacy, while their family business counterparts attend more to informal institutional legitimacy. Policymakers should be aware of this important difference between types of firms, which allows them to address noncompliance in a culturally sensitive and ultimately more effective way.

show abstract

Inward FDI and local firms' political connections in emerging markets: Evidence from China

Dong,

Ma,

Cui

2024

Global Strategy Journal

View full text Add to dashboard Cite

Research SummaryResearch on the spillover effects of foreign direct investment (FDI) into emerging markets has primarily focused on local firms' productivity or innovation outcomes while overlooking their nonmarket strategies. Based on the resource dependence theory, we propose that inward FDI has a U‐shaped impact on local firms' political connections. This is because when FDI is at a low to medium level, its spillover benefits substitute for local firms' dependence on government resources. As FDI further increases, its competitive threats outweigh spillover benefits, driving local firms to a greater dependence on the government to neutralize the threats. This relationship is contingent on external and internal factors altering resource similarity between FDI and local government. Our analyses of Chinese listed firms support our predictions.Managerial SummaryThis study delves into how firms in emerging markets respond to inward FDI, particularly focusing on the role of political connections as a nonmarket strategy. Our findings offer valuable insights for both local firms and governments, providing a holistic view of the opportunities and challenges associated with inward FDI. We advise local firms to adopt a balanced approach by integrating both market and nonmarket strategies to maximize benefits, as relying solely on political connections may not be the most effective way to address the challenges posed by inward FDI. Additionally, our research emphasizes the importance of evaluating the resources provided by inward FDI against those provided by local governments, as the similarity of these resources alters the role of inward FDI as perceived by local firms.

show abstract

Does politician turnover affect foreign subsidiary performance? Evidence in China

Cited by 65 publications

References 117 publications

How does the turnover of local officials make firms more charitable? A comprehensive analysis of corporate philanthropy in China

How does the turnover of local officials make firms more charitable? A comprehensive analysis of corporate philanthropy in China

Government policy, filial piety, and foreign direct investment

Inward FDI and local firms' political connections in emerging markets: Evidence from China

Contact Info

Product

Resources

About