Is it purely instrumental? The dual-role model of Chinese entrepreneurs’ political connections in advanced stage of institutional transition

Abstract

Purpose

This study mainly aims to examine whether entrepreneurs’ utilization of political connections is purely egoistic. Addressing this issue could shed light on traditional debate which concerns whether political connections still have strategic value at advanced stage of institutional transition today in China. Here, at the background of Chinese economic transformation, the utilization of political connections is studied, and a double-role model of the pro-self-mechanism and the pro-social mechanism between political connections and performance in China is put forward.

Design/methodology/approach

This study uses survey of questionnaires randomly from 363 entrepreneurs in Jiangsu, Anhui and Shandong Provinces of China and adopts the first stage and direct moderation model in examination.

Findings

The results show that there exists mediated mechanism of both pro-self and pro-social mechanism in the relationship between political connections and firm performance. The authors conclude that utilization of political connections is not only purely egoistic but also altruistic. So, both dark-side and bright-side mechanisms of political connections in China are of equal importance. In addition, the authors take into consideration of the contingency effects of institution, industry and firm-level factors of this moderation model. The pro-self and pro-social mechanisms have differences in terms of moderator-within and moderator-between comparisons of these three contingency effects. Among these comparisons, the pro-self-mediating mechanism is most sensitive to changes of institutional quality, whereas the pro-social mediating mechanism is most sensitive to the uncertainty of industry competition.

Research limitations/implications

This evidence furthermore verifies that the process of institutional transition is nonlinear and political connections still have strategic value in advanced stage of institutional transition today.

Originality/value

This study combines the dual perspectives of “give” and “take.” The former implies the pro-social motivation, while the latter implies the pro-self-motivation. Based on the framework of “resource-conduct-performance,” this study explores how these two mechanisms mediate the relationship between political ties and firm performance. In addition, the authors adopt the framework of “Strategy Tripod,” which was proposed by Peng et al. (2009) and examine the difference between pro-self and pro-social motivation at different level of institution environment improvement, industry dynamics and firm absorptive capacity.

Citation

Liu, H., Shi, S. and Zhang, M. (2018), "Is it purely instrumental? The dual-role model of Chinese entrepreneurs’ political connections in advanced stage of institutional transition", Nankai Business Review International, Vol. 9 No. 4, pp. 540-568. https://doi.org/10.1108/NBRI-01-2018-0004