Political Connections and Allocative Distortions

Schoenherr, David

doi:10.1111/jofi.12751

Cited by 209 publications

(105 citation statements)

References 77 publications

(65 reference statements)

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“…In addition, the model included the size of annual budget expenditure to control for the amount of resources available to each agency. It is possible that the incoming president may have viewed agencies with greater financial resources as being more important, if he or she wanted to control these resources (Schoenherr ). We also added the amount of vertical transfer from central governments, which is a proxy for the degree to which agencies are resource dependent on central governments.…”

Section: Methods and Datamentioning

confidence: 99%

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Loyalty or Competence: Political Use of Performance Information and Negativity Bias

Hong

Kim

2019

Public Administration Review

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This article explores how political principals weigh loyalty and competence in public personnel decisions. Exploiting the abrupt shift in political leadership following the impeachment of President Park Geun-hye of Korea, the authors examine how the newly elected president made the decision to retain or dismiss 118 agency heads appointed by the previous administration. The evidence shows the importance of loyalty in managerial survival: those who had a political patronage relationship with the ousted president were less likely to survive in the new administration. However, the authors also demonstrate the relevance of competence, as measured by the outcomes of agency performance evaluation. Further, the article shows the existence of negativity bias: the punishment for low performance is greater than the reward for high performance. Finally, the authors provide support for the idea that political principals reward loyalists, but only if they show acceptable levels of competence. Evidence for Practice• This study explores how political principals weigh loyalty and competence in public personnel decisions. • Political principals' punishment for low performance is greater than their rewards for good performance. • Political principals reward loyalists, but only if they show acceptable levels of competence.• The availability of performance information may protect bureaucratic expertise from political opportunism.

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Section: Methods and Datamentioning

confidence: 99%

“…Because of their critical importance in allocating public resources, the profile of the agency heads has often been the focus of media attention. Previous studies have reported that presidents have often appointed close allies as the executives of these organizations (e.g., Schoenherr ).…”

Section: Institutional Background and Empirical Strategymentioning

confidence: 99%

Loyalty or Competence: Political Use of Performance Information and Negativity Bias

Hong

Kim

2019

Public Administration Review

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“…The full set of results are available upon request. of 1 for contracts awarded after a placebo reform on January 1, 2010 32 and include the interaction term Contribute Placebo in my preferred speci cation of equation (1). The coef cient on Contribute Ban remains stable (point estimate of -0.056, a standard error of 0.022), whereas the coef cient on Contribute Placebo is positive, small and not signi cant (point estimate of 0.021, a standard error of 0.029).…”

Section: Empirical Analysismentioning

confidence: 99%

“…Coulomb and Sangnier, 2014), access to credit (Khwaja and Mian, 2005), or procurement contracts' allocation (Goldman et al, 2013;Straub, 2014;Brogaard et al, 2016;Mironov and Zhuravskaya, 2016;Schoenherr, 2018). Even though this literature has established that political connections bene t rms, little is known about how these connections are created and whether they are policy-sensitive.…”

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confidence: 99%

Political Contributions and Public Procurement: Evidence from Lithuania

Baltrunaite

2019

Journal of the European Economic Association

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This paper studies whether firms trade political contributions for public procurement contracts. Combining data on Lithuanian government tenders, corporate donors, and firm characteristics, I examine how a ban on corporate contributions affects the awarding of procurement contracts to companies that donated in the past. Consistent with political favoritism, donors’ probability of winning falls by five percentage points as compared to that of nondonor firms after the ban. Evidence on bidding and victory margins suggests that corporate donors may receive auction-relevant information affecting procurement outcomes in their favor.

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“…For example, Goldman et al think that if board members of a company have political background, then the company is considered politically connected [31]. Schoenherr believes that a company is considered to have political connections if its CEO is either a graduate from Korea University Business Administration where the then President of South Korea Lee Myung Bak used to study or a former executive of Hyundai Engineering and Construction where Lee used to work [32]. Whereas, Xu et al summarize political connections as the relationship between companies and the government [33].…”

Section: Political Connectionsmentioning

confidence: 99%

Study of the Relationship between Political Connections and Corporate Re-Entrepreneurial Performance

Zhao

Liu

2019

Sustainability

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Based on both resource-based theory and institution-based theory, this study places political connections, acquisition of entrepreneurial resources, institutional environment, and corporate re-entrepreneurial performance into the same research framework. Using data from 223 real estate companies in China as a sample and with the help of the statistical tools SPSS 22.0 and Mplus 7.0, the study examines the internal influence mechanism of political connections on corporate re-entrepreneurial performance as well as the mediating effect of acquisition of entrepreneurial resources and the moderating effect of institutional environment. The empirical results show that both explicit political connections and implicit ones have positive impacts on corporate re-entrepreneurial performance through the mediating effect of acquisition of entrepreneurial knowledge resources and entrepreneurial asset resources. Meanwhile, institutional environment positively regulates the relationship between political connections and corporate re-entrepreneurial performance. The results of the study suggest that political connections have positive impacts on corporate re-entrepreneurial performance under the circumstances of China’s transitional economy, but the impacts are restricted by institutional environment to a large extent.

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Political Connections and Allocative Distortions

Cited by 209 publications

References 77 publications

Loyalty or Competence: Political Use of Performance Information and Negativity Bias

Loyalty or Competence: Political Use of Performance Information and Negativity Bias

Political Contributions and Public Procurement: Evidence from Lithuania

Study of the Relationship between Political Connections and Corporate Re-Entrepreneurial Performance

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