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1 – 10 of over 50000Wu Wei, Yanping Li and Pengcheng Zhang
The purpose of this paper is to present a conceptual framework of corporate political performance (CPP) in corporate political activity. In fact, CPP refers to political benefits…
Abstract
Purpose
The purpose of this paper is to present a conceptual framework of corporate political performance (CPP) in corporate political activity. In fact, CPP refers to political benefits obtained by firms when they formulate and implement political strategies to influence the public policy process though the investment of political resources. This paper focuses on answering what is perhaps the most fundamental question to strategy researchers: “How do firms engage in political strategies to improve their performance?”
Design/methodology/approach
In building a theoretical framework, this paper, first, provides a historical analysis of political efficiency and effectiveness. Then, this paper attempts to illustrate conceptually our understanding of political performance process by a generalized and contingent approach. Finally, this paper discusses the framework, its theoretical contribution and practical implications for Chinese management, and comments on limitations for future research.
Findings
The paper presents a conceptual CPP model that integrates political efficiency and effectiveness approach. In the conceptual framework, three phases of CPP include sources of political advantage, political competitive advantage and political performance outcome, and three dimensions are identified as political efficiency, effectiveness and adaptiveness. CPP approach is not a “generalized” nature of political performance measurement, as the difference among firms and industries in this area may be significant, which reflects the effect of context, reaction and outcome factors.
Research limitations/implications
While it provides a strong theoretical foundation, this paper still has almost little empirical evidence concerning CPP process. However, how to measure CPP has increasingly begun to focus on an important research domain in corporate political strategy literature. This paper believes that this model has a need for future research to test its feasibility by using the measurement scales in Chinese context.
Originality/value
This paper is original in its attempt to measure CPP to help the business practice in corporate of political activity, and broaden corporate political strategy research in mainstream strategic management.
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Woon Leong Lin, Murali Sambasivan, Jo Ann Ho and Siong Hook Law
Although various studies have investigated the corporate political activity (CPA), however, there is no definite report which shows its effect on the public policy outcome or the…
Abstract
Although various studies have investigated the corporate political activity (CPA), however, there is no definite report which shows its effect on the public policy outcome or the organization’s performance. Hence, the political effects of the corporate social responsibility (CSR) have garnered a lot of recent interest since the CSR included activities which have an intended or an unintended effect on the CPA–corporate financial performance (CFP) link. We use data made available by the 1995 Lobbying Disclosure Act, while the CSR indices were gathered from the Fortune Magazine’s most admired companies from 2007 to 2016. We analyzed the relationship between the organization’s CPA and CFP, with the help of the dynamic panel data system generalized method of moment (GMM) estimation. Their results showed that the CPA did not improve the firm’s performance. Moreover, CPA and CSR are substitute in affecting financial performance, because they are essentially exclusive investments that require resources but do not have synergies.
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Xinming Deng, Zhilong Tian, Jianfeng Li and Muhammad Abrar
The purpose of this paper is to comprehensively investigate the combined influence of a firm's political connection and diversification on corporate performance, and to explore…
Abstract
Purpose
The purpose of this paper is to comprehensively investigate the combined influence of a firm's political connection and diversification on corporate performance, and to explore whether firm's political connection has an impact on the diversification effect, and whether this diversification effect would promote its performance significantly or not.
Design/methodology/approach
The research used a regression model to explore the correlation among political connection, diversification strategy, and corporate performance. The research subjects are the private enterprises listed on Shanghai and Shenzhen Stock Exchange in China for the period 2002‐2005.
Findings
The study found that: first, for those firms without political connections, the relationship between diversification strategy and corporate performance displayed an “inverted U” curve; for firms with political connection, the relationship was a “reverse L”. Second, firms with political connections are more likely to implement a diversification strategy, especially unrelated diversification. Third, when implementing an internationalization strategy, private enterprises with political connections are more likely to expand through unrelated diversification strategy. Fourth, the diversification of the enterprises with political connection are more likely to promote the short‐term accounting performance than those without political connection, but the unrelated diversification of politically connected enterprises would have a negative impact upon its future performance, that is to damage the company's market value.
Originality/value
The paper expands the literature on the relationship between diversification and firm performance. It contributes to the research about the influence of political connection upon corporate performance.
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The purpose of this paper is to examine and explain the complex interrelationships which influence the performance of politically connected firms to create value for their…
Abstract
Purpose
The purpose of this paper is to examine and explain the complex interrelationships which influence the performance of politically connected firms to create value for their providers of finance and other stakeholders. In doing so, it examines the interrelationships between efficiency and delivering on corporate performance of a firm with political ties.
Design/methodology/approach
The authors gathered the literature from the Scopus website. They reviewed the literature of 58 manuscripts about the efficiency and performance of politically connected firms.
Findings
The research finds that the better quality of efficiency of politically connected firms is positively related to the corporate performance of politically connected firms. The authors’ theoretical findings corroborate the political theory, agency theory, stakeholder theory, resource dependency theory and stewardship theory. These theories prove that political connections have an impact on firm performance as a politician reinforces the efficacy. To better understand the effect of political connections on solid performance due to efficiency, this study classifies various efficiencies and links them with political ties.
Research limitations/implications
Several avenues of research are suggested to examine further the interrelationships identified.
Practical implications
The authors’ conceptual findings are valuable for institutional investors, policymakers and stakeholders. To sum up, all theoretical shreds of evidence prove that politically connected firms can enhance performance via efficiency.
Originality/value
The paper conceptualizes the efficiency and performance interrelationships of politically connected firms. The extant literature comparison allows an assessment of the extent to which different efficiency contexts lead to differences in performance.
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Lee-Lee Chong, Hway-Boon Ong and Siow-Hooi Tan
This paper aims to examine how board composition, political connections and sustainability practices affect risk-taking and performance of firms.
Abstract
Purpose
This paper aims to examine how board composition, political connections and sustainability practices affect risk-taking and performance of firms.
Design/methodology/approach
This paper used secondary data and regression technique to analyse the relationship. A sample consisting of 290 firm-year observations was applied in the analysis.
Findings
The findings show that a larger board size contributes to greater financial risk; however, this risk can be reduced with more independent directors in the boardroom. An optimal board size with appropriate number of independent directors is desired, as a large board size can be harmful to firm performance. Politically connected firms also generate lower risk-taking and performance, and the double-edged sword effect of political connections needs to be considered. In terms of sustainability practices, firms have to engage in sustainable development to maximise the firms’ value, not ignoring the vital role of women in strategising business performance. However, the effect of sustainability practices on firms’ risk-taking is still not noticeable.
Research limitations/implications
Even though the sample size is not large because of the limited availability of data, the findings, to a certain extent, could be generalised to emerging markets, as most emerging markets do have similar financial and economic developments.
Practical implications
The findings from this paper can be used to support the implementation of sustainability practices, especially in those countries where sustainability initiatives are yet to be widely accepted.
Originality/value
This is one of the first few studies that examined the effect of non-financial information on risk-taking and performance of firms. This study concludes the positive effect of sustainability practices on firm performance.
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Redhwan Aldhamari, Mohamad Naimi Mohamad Nor, Mourad Boudiab and Abdulsalam Mas'ud
This study aims to examine the association between the effectiveness of risk committee (RC) and firms’ performance in Malaysian context. It also explores whether political…
Abstract
Purpose
This study aims to examine the association between the effectiveness of risk committee (RC) and firms’ performance in Malaysian context. It also explores whether political connection has an impact on the relationship.
Design/methodology/approach
This study, using a principle components analysis, derives a factor score for RC attributes to proxy the effectiveness of RC. It also uses both accounting and market performance to measure the company performance.
Findings
Using a sample of financial firms from 2004 to 2018, this study finds that both accounting and market performance are higher for firms with an effective RC. It also finds that the effectiveness of RC in monitoring and management of risks is more pronounced for politically connected firms (PCFs). In further tests, the paper finds that RC attributes (i.e. RC independence, qualification and gender) are positively and significantly associated with accounting performance, while those of RC existence and overlap are positively and significantly related to market performance. The study also finds that RC size (RC diligence) has a positive (negative) impact on financial firms accounting and market performance. The further analysis also shows that PCFs with a separate as well as larger RCs experience both higher accounting and market performance. This study’s results are robust for concerns of endogeneity.
Practical implications
The findings of this study resolve the ongoing debates surrounding political connection by suggesting financial firms not to have politically connected board members as doing so may deteriorate their performance. This study’s results are also useful for investors, regulators and policymakers.
Originality/value
To the best of the authors’ knowledge, this study, for the first time, introduces on the interaction term between the effectiveness of RCs and political connection to empirically explore how an effective RC may reduce the potential risk of political ties. As such, this study adds to the literature and sheds light on an aspect of risk (i.e. risk stems from establishing close link with the government) that is growing in importance.
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David E. Cavazos, Karen D.W. Patterson and Mathew A. Rutherford
This study aims to examine conditions in which firm political market performance is associated with firm efforts to influence regulatory outcomes. Applying measures of political…
Abstract
Purpose
This study aims to examine conditions in which firm political market performance is associated with firm efforts to influence regulatory outcomes. Applying measures of political market performance based on firm performance in government enforcement actions and a firm’s ability to obtain favorable political outcomes, the authors make the case that political market performance is a key part of competitive political markets, which is associated with particular types of firm efforts to influence policy.
Design/methodology/approach
Longitudinal examination of nine automobile manufacturers during National Highway Traffic and Safety Administration crash tests reveals that firm performance in government enforcement activities is associated with greater efforts to cooperate with political suppliers, while declining firm performance in efforts to influence political outcomes is associated with increased firm opposition to political supplier actions.
Findings
Firm performance in government enforcement activities is associated with greater efforts to cooperate with political suppliers, while declining firm performance in efforts to influence political outcomes is associated with increased firm opposition to political supplier actions.
Research limitations/implications
Performance in regulatory enforcement results in increased firm actions to engage regulators in the policy-making process, while performance in obtaining desired policy outcomes is associated with a greater focus on opposition to proposed standards. These results suggest that political demanders can take deliberate actions to either engage or oppose supplier actions based on political market performance.
Originality/value
The primary contribution of this research is to begin to examine the implications of performance dynamics within political markets. Adding the construct of political market performance to the political markets framework reveals that variations in political market performance can be associated with specific types of corporate political activity.
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Maria Elisabete Neves, Rui Guedes, Catarina Proença and Belen Lozano
The purpose of this paper is to analyse the impact of political connections and gender diversity on the performance of Iberian companies as a singular market and considering…
Abstract
Purpose
The purpose of this paper is to analyse the impact of political connections and gender diversity on the performance of Iberian companies as a singular market and considering Portugal and Spain separately.
Design/methodology/approach
The authors used panel data methodology, specifically GMM system estimation model by Arellano and Bond (1991) for the period from 2015 to 2020.
Findings
Results show that the performance of listed Iberian companies is influenced by political connections, by gender diversity and that gender diversity has a mitigating effect on the effects of political connections in each country. The mitigating effect of women is evident in both Portugal and Spain, as they are more cautious and principled, which is valued by short-term investors interested in an immediate investment. However, considering the Iberian Peninsula as a whole, the results indicate that – in the long term – women's political relationships can benefit performance through a better reputation and image, which can lead to better social and economic results in the long term.
Originality/value
To the best of the authors’ knowledge, this paper is original and covers an important gap in the literature when considering political connections and women's impact on these connections as determinants of the performance of Iberian companies.
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Xiaoyu Yang, Longzhu Dong and Abraham Nahm
This study aims to examine how business executives' political connections are associated with government subsidies and strategic change, and how they, in turn, influence firm…
Abstract
Purpose
This study aims to examine how business executives' political connections are associated with government subsidies and strategic change, and how they, in turn, influence firm performance, measured by return on assets (ROA) and market share.
Design/methodology/approach
Hypotheses were tested using the large firm-level dataset provided by the National Bureau of Statistics (NBS) of China for the period 2003–2013. This is one of the most comprehensive datasets of Chinese manufacturing companies and includes 321,722 firms on average per year, which spans over 37 industries.
Findings
The authors found that political connections, measured by senior executives' membership in the National People's Congress of China (NPC), were positively associated with government subsidies but were not associated with strategic change. Also, government subsidies, as the underlying mechanism, mediated the relationships between NPC membership and firm performance but strategic change did not.
Research limitations/implications
By examining the possible mediators between corporate political strategies and firm performance, the authors confirmed the thought that the impact of political connections on firm performance is a complex phenomenon and goes beyond a simple direct effect. However, future research could explore other mediators in this relationship.
Originality/value
While the direct relationship between political connections and firm performance has been examined in management literature, the results are mixed. For the first time, the authors addressed the gap and opened the “black box” – the underlying mechanisms of this relationship. This study's findings contribute to the literature on corporate political activity, strategic change, and their influences on firm performance.
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