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1 – 10 of over 7000Di Fan and Chengyong Xiao
Uncertainties caused by political risks can drastically affect global supply chains. However, the supply chain management literature has thus far developed rather limited…
Abstract
Purpose
Uncertainties caused by political risks can drastically affect global supply chains. However, the supply chain management literature has thus far developed rather limited knowledge on firms' perception of and reactions to increased political risks. This study has two main purposes: to explore the relationship between extant risk exposure and perceived firm-specific political risk and to understand the impact of firm-specific political risk on firms' vertical integration and diversification strategies.
Design/methodology/approach
The authors developed a unique dataset for testing our hypotheses. Specifically, the authors sampled manufacturers (SIC20-39) listed in the United States from 2002 to 2019. The authors collected financial and diversification data from Compustat, vertical integration data from the Frésard-Hoberg-Phillips Vertical Relatedness Data Library and political risk data from the Economic Policy Uncertainty database. This data collection process yielded 1,287 firms (8,329 observations) with available data for analysis.
Findings
A two-way fixed-effect regression analysis of panel data revealed that firms tend to be more sensitive to political risk when faced with income stream uncertainty or strategic risk. By contrast, exposure to stock returns uncertainty does not significantly influence firms' sensitivity toward political risk. Moreover, firm-specific political risk is positively associated with vertical integration and product diversification. However, firm-specific political risk does not result in higher levels of geographical diversification.
Originality/value
This study joins the literature that systematically explores the antecedents and implications of firm-specific political risk, thus broadening the scope of supply chain risk management.
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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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Ana Botella-Andreu, Cristina Villar, José Pla-Barber and Ulf Andersson
This study aims to investigate the drivers of political embeddedness and the possible outcome in terms of autonomy and subsidiary unique competences.
Abstract
Purpose
This study aims to investigate the drivers of political embeddedness and the possible outcome in terms of autonomy and subsidiary unique competences.
Design/methodology/approach
This study draws on resource dependence theory and applies structural equation modeling on a sample of 193 subsidiaries.
Findings
Political embeddedness is confirmed as a source of potential autonomy and the development of competences and is usually boosted by previous existing networks at the internal and external levels.
Originality/value
The authors investigate and discuss how multinational corporations can leverage political resources in host-country political arenas, extending their understanding of the interplay between political activities and market strategies.
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Jenni Kantola, Kirsi Lehto and Riitta Viitala
This study explores municipal leaders' perceptions on strategic human resource management in their local government organization. Previous studies on companies demonstrate that…
Abstract
Purpose
This study explores municipal leaders' perceptions on strategic human resource management in their local government organization. Previous studies on companies demonstrate that the top manager's perceptions of the importance of human resource management (HRM) for the organization are reflected in the quality of human resource management and its strategic role. The authors are interested in how leaders in municipalities perceive HRM.
Design/methodology/approach
The authors interviewed 30 leaders of Finnish municipalities for this qualitative study focused on municipal leaders' perceptions of HRM. The authors applied a discourse analytical approach in the analysis.
Findings
The authors recognized four discourses that frame perceptions of HRM: HRM as a strategic weapon, HRM as an underperformer, HRM as a matter of formality and HRM as a cost generator. In addition, the authors recognized that the discourses reflected leaders' self-positioning in relation to the power to impact issues related to HRM. Shifting between distinct roles demonstrated that municipal leaders' emphasis on HRM and its strategic alignment reflects the power relations in the municipality and the attitudes to the importance of HRM.
Originality/value
This study contributes to the academic discussions on HRM in municipalities and provides views on the municipal leader's role and impact on valuing and investing in HRM. From a practical point of view, the study will increase municipal leaders' knowledge of HRM's impact on the performance of the organization and also of the possible means of HRM.
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Yanyan Li, Shanxing Gao and Ron Chi-Wai Kwok
The purpose of this study is to explore the relationship between nonmarket strategy and innovation performance, as well as the boundary factors that influence this relationship in…
Abstract
Purpose
The purpose of this study is to explore the relationship between nonmarket strategy and innovation performance, as well as the boundary factors that influence this relationship in the context of the pharmaceutical industry in emerging markets.
Design/methodology/approach
This study analyzed matched data of 227 Chinese pharmaceutical firms and two secondary databases with SPSS to examine the hypotheses.
Findings
Nonmarket strategy promotes the innovation performance. High level of firm internal knowledge utilization ability and strategic flexibility strengthens the effect of nonmarket strategy in promoting innovation performance, while information technology (IT) environment weakens the effect of nonmarket strategy in promoting innovation performance.
Originality/value
The research studies the positive impact of nonmarket strategy on innovation performance in the specific context of Chinese pharmaceutical industry, and it introduces the internal capabilities and external IT environment of the firm as moderators of the relationship between nonmarket strategy and innovation performance. More importantly, this research echoes the call for research on moderator of nonmarket strategy and identifies important boundary conditions. To the best of the authors’ knowledge, it also explores the impact of the IT environment on the implementation of nonmarket strategy for the first time, which deepens the research on nonmarket strategy’s effect on innovation.
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Ping Lv, Jakob Arnoldi and Anders Ryom Villadsen
This study aims to investigate whether and why multinational corporations (MNCs) seek to reduce institutional costs of foreign direct investments (FDIs) by aligning with…
Abstract
Purpose
This study aims to investigate whether and why multinational corporations (MNCs) seek to reduce institutional costs of foreign direct investments (FDIs) by aligning with transnational political frameworks.
Design/methodology/approach
This study uses the Chinese Belt and Road Initiative (BRI) to test whether MNCs’ subsidiaries in China increase FDI into BRI-affiliated countries after the BRI’s launch. This study compares FDIs by Chinese subsidiaries of foreign MNCs in the year before and two years after the BRI’s announcement. Hypotheses are tested for two explanations of why foreign MNCs seek to exploit the BRI.
Findings
Investments into BRI-affiliated countries increased after the announcement of the BRI, and this increase is positively moderated by institutional distance between the MNC home country and the BRI-affiliated target country. This shows that the greater the institutional costs of investing in a BRI-affiliated country, the more responsive the MNCs’ Chinese subsidiary will be to the BRI.
Research limitations/implications
This study demonstrates that MNCs respond to transnational political frameworks. This study only studies the immediate response because the BRI is an infrastructure project. Better infrastructure will, over time, lead to more investments; however, the immediate response is due not to infrastructure but political structure.
Originality/value
The results show how MNCs use transnational political frameworks. The idea that MNCs can channel FDI through existing subsidiaries for this purpose has not previously been discussed in the literature.
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Andrei Panibratov, Olga Garanina, Abdul-Kadir Ameyaw and Amit Anand
The authors revisit the traditional OLI paradigm with the objective to allocate politics within the set of internationalization advantages by building on the political strategy…
Abstract
Purpose
The authors revisit the traditional OLI paradigm with the objective to allocate politics within the set of internationalization advantages by building on the political strategy literature. The authors outline the specific role of political advantage that facilitates and propels the international expansion of state-owned multinational enterprises (SOMNEs) from emerging markets.
Design/methodology/approach
A conceptual paper which explains the role of political advantage in the internationalization of SOMNEs. The authors expand the scope of the OLI to capture the impact of firms' home governments' policies and relationships with host countries which are leveraged by SOMNEs in their internationalization.
Findings
The authors define political advantage as a new type of advantage which depends on and is sourced from external actors. The authors argue that P-advantage is a multifaceted and unstable part of POLI composition, which is contingent on political shifts and may be leveraged by various firms. The authors also assert that political capabilities have limitations in sustaining political advantage, which may be compensated via enhancing the political activity of firms.
Originality/value
The authors conceptualize the POLI-advantages paradigm for the internationalization of SOMNEs by proposing that in addition to the traditional ownership, location, and internalization advantages, firms can capitalize on their political advantage to enter markets where internationalization might have been difficult without their political connections.
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Ying Teng, Eli Gimmon, Sibylle Heilbrunn and Shenyi Song
This study explored the mediating effect of political embeddedness on the relationship between gender and performance of private enterprises in the emerging economy of China…
Abstract
Purpose
This study explored the mediating effect of political embeddedness on the relationship between gender and performance of private enterprises in the emerging economy of China. Political embeddedness is examined in terms of personal characteristics of owners and their firm.
Design/methodology/approach
Secondary data were collected from the Chinese Private Enterprises Survey for the years 2002, 2006, 2014 and 2016 using responses to identical questions. Tobit models were implemented to examine hypotheses related to the gender gap. A bootstrapping approach was applied to examine hypotheses related to mediation through political embeddedness.
Findings
The gender effect on enterprise performance was found to be partially mediated by political embeddedness at the personal level and even more strongly by political embeddedness at the firm level, which is beyond the well-known mediation effect of bank loans.
Research limitations/implications
The Chinese sample, in which guanxi plays a significant role with respect to women-led firms, may limit the generalizability of the findings to other emerging economies.
Practical implications
Given the mediating effects on firm performance of political embeddedness at the personal and firm levels, women business owners in China should pursue political involvement, possibly with the support of policymakers and mentors.
Originality/value
The relationship between businesswomen and political embeddedness is underexplored. This study innovates by applying the gender lens to the notion of political embeddedness and extending the construct of personal political embeddedness to the firm level.
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This paper examines how firms respond to local government’s environment initiatives through textual analysis of government work reports (GWRs). This study aims to provide insights…
Abstract
Purpose
This paper examines how firms respond to local government’s environment initiatives through textual analysis of government work reports (GWRs). This study aims to provide insights into how firms strategically respond to government’s environmental initiatives through their disclosure and investment practices.
Design/methodology/approach
This study uses a textual analysis of GWRs from China’s provinces. The frequency and change rate of environmental keywords in these reports are used as a measure of the government’s environmental initiatives.
Findings
This study finds that environmental disclosure scores in environmental, social and governance (ESG) reports increase with the frequency or change rate of environmental keywords in provincial GWRs. This effect is more pronounced for non-state-owned enterprises, firms in highly marketized provinces or those listed in a single capital market. However, there is no significant relationship between firms’ environmental investments and government initiatives, except for cross-listed firms in provinces with consistently high frequency of environmental keywords in their GWRs.
Practical implications
The findings indicate that government environmental initiatives can shape firms’ disclosure behaviors, yet have limited influence on investment decisions, suggesting that environmental disclosure could potentially be opportunistic. This underscores the need for more effective strategies to stimulate firms’ environmental investments.
Originality/value
This study provides valuable insights into the differential impacts of government environmental initiatives on firms’ disclosure and investment behaviors, contributing to the understanding of corporate environmental responsibility in the context of government initiatives.
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Raul Beal Partyka, Jeferson Lana and Rosilene Marcon
This study aims to contribute to the corporate political activities (CPAs) field by suggesting the effect of campaign contributions on the time that firms wait for regulators’…
Abstract
Purpose
This study aims to contribute to the corporate political activities (CPAs) field by suggesting the effect of campaign contributions on the time that firms wait for regulators’ decisions.
Design/methodology/approach
This paper analyzes 358 mergers and acquisitions (M&A) from 2008 to 2017 in Brazil through ordinary least squares regression with robustness control and causal operationalization in a small vote margins treatment.
Findings
Campaign contributions speed up the M&A regulator’s decisions. Campaign contributions amounts proved to be effective in decreasing the waiting time for judgments of M&A deals. Besides, National Development Bank disbursements to companies in M&A deals, served as a moderator to help reduce the waiting time.
Research limitations/implications
The main implication of this paper to the antecedents of CPA research is the estimation of time as an output of the political efforts of firms. Previous research focuses on what firms could get. Here, the authors focus on when. As a limitation, this study analyzes CPA through campaign contributions, as the only reliable source of CPA publicly available. Firms use multiple mechanisms of CPA. It would be expected for new papers to test different CPA mechanisms, such as political connections and lobbying.
Practical implications
This study provides evidence of the use of CPA as a relevant mechanism for firms to avoid institutional risks by getting regulators’ decisions faster. This evidence is useful for firms to grant their competitive advantage in a highly volatile environment, such as an emerging market.
Social implications
What happens in the nonmarket environment interferes within markets. Businesses seek to finance political projects with which they are more aligned, and governments provide capital to businesses in exchange for political support. Whether to expand successfully may also depend on early entrants, who will have acquired enough leadership to dominate the market.
Originality/value
While most of the research on nonmarket strategy focuses on what firms can get as an output for CPA efforts, this study provides here evidence on when firms can get it. As one can cite, in business, time is money.
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