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The effect of political and business ties on firm performance: The mediating role of product innovation

Parinaz Sami (Institute for Management and Planning Studies, Tehran, Iran)
Farajollah Rahnavard (Department of Public Management, Institute for Management and Planning Studies, Tehran, Iran)
Alireza Alavi Tabar (College of Environment, Alborz, Iran)

Management Research Review

ISSN: 2040-8269

Article publication date: 15 July 2019

Abstract

Purpose

The purpose of this study is to investigate the mediator role of product innovation in the relationship between political and business ties (independent variables) and firm performance (dependent variable).

Design/methodology/approach

In this study, research hypotheses were tested using the structural equation modeling method.

Findings

The findings from 267 manufacturing companies in Iran show that business ties have an effect on firm performance through product innovation, while the role of innovation is not proved as a mediating variable in the relationships between political ties and firm performance. In addition, business ties have an effect on product innovation and firm performance, whereas political ties have no such effect.

Practical implications

These results provide useful points for developing economies, theoretically and practically.

Originality/value

Despite the increasing attention to the role of managerial ties (political and business ties) in improving product innovation and firm performance, there is no study conducted on the mediating role of product innovation in the relationship between managerial ties and firm performance.

Keywords

Acknowledgements

The authors are grateful for the support provided by Dr Jay Janney (the editor of Management Research Review), and two anonymous reviewers, who were helpful in revising this paper.

Citation

Sami, P., Rahnavard, F. and Alavi Tabar, A. (2019), "The effect of political and business ties on firm performance: The mediating role of product innovation", Management Research Review, Vol. 42 No. 7, pp. 778-796. https://doi.org/10.1108/MRR-12-2017-0439

Publisher

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Emerald Publishing Limited

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