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In this study, we examine the relationship between political connections of private firms and the initial public offering process. Using registration statement information, we create a unique database of politically connected IPO firms. We find that political connections are substitutes to high-quality underwriters and big four auditors. Politically connected firms manage earnings more highly upward than non-connected firms prior to the public offering. Politically connected firms also exhibit less underpricing than non-connected firms. Finally, politically connected IPO firms have superior post-IPO returns relative to non-connected IPO firms.

This study examines the effect of employees' perceptions of political connections on performance measurement systems (PMS) design choice and firm performance. In addition, this study explores the moderating effect of social networking, a very common and widely used factor by domestic and foreign multinational firms operating in China, and its joint effect with political connections or PMS design choice on firm performance. We collected survey responses from a sample of 110 managers from manufacturing firms in China. Our results reveal that highly politically connected managers use nonfinancial measures, leading to improved firm performance. Our results suggest that social networking interacts significantly with political connections, and nonfinancial and financial measures on firm performance. The theoretical and practical implications of our findings are discussed.

Personal political connections with politicians have positive contribution to the abnormal returns of firms (Hillman, Zardkoohi, & Bierman, 1999; Chung, 2006; Dinc, 2005; Faccio, 2006; Morck, Wolfenzon, & Yeung, 2005; Imai, 2006). Business owners and executives have incentives to invest in political connections because such relationship may enable their firms to gain access to key information not available to the competitors. However, the impact of political connections on the behaviors of firms has only received scant interest in the literature (Hillman, Withers, & Collins, 2009).

The objective of this research is to examine the impact of formal and informal political connections on the scope of family business diversification. We focus on family business because of their unique access to family ties or family social capital to achieve business objectives (Sharma, 2004; Steier, 2003). We test our hypotheses using panel data from 35 Taiwan-based family business groups from 1988 to 2002. Our analysis shows that the informal political connections possessed by the parent generation owners of family business groups are better predictors of family business diversification than the informal political connections established by the children generations owners. This result complements the resource dependence theory by suggesting that durable and non-transferable political connections possessed by family leaders have a unique effect in the corporate decision to diversify. Additionally, the personal ties between politicians and parent generation family leaders are “sticky.” They cannot be easily succeeded by the younger generations.

There is a strong academic and professional interest in the changing business model of LCCs in Europe. Recently, even Ryanair which is often considered a European LCC role model has departed from the point-to-point paradigm by offering transfers within its own network. We first provide a general overview of recent changes in the business model of airlines that used to be categorized as LCCs. We then add to existing studies on LCC network strategies toward building connections. While we distinguish different approaches to accommodate transfer passengers, our analysis focuses on mesh networks as an airline network topology other than hub-and-spoke networks to provide online connections. A schedule analysis of Ryanair’s direct and indirect services at its base at Porto airport exemplifies that a mesh network might allow LCCs to go beyond stand-alone operations to become network carriers without requiring a complete transition of the generic LCC business strategy.

Individuals who spend a large percentage of their incomes on consumption are perceived to prefer risks. Since entrepreneurs are well recognized as risk-takers, this chapter investigates whether consumption propensity is associated with entrepreneurship. Using micro-level data from Chinese Household Income Project, we find that households with a higher income–consumption ratio on average have a higher preference for risk-seeking, while they have a lower probability to be entrepreneurs. However, households who have higher consumption–income ratio and are in the top 10% of the wealth distribution are more likely to embark on entrepreneurship. In addition, we find that in-system connection (relationship with government-related units) decreases the likelihood of starting new business, while out-system connection (relationship with market units) increases it. These findings suggest that in an imperfect financial market, start-up finance and connections play important roles for entrepreneurship.

This study constitutes an empirical investigation of how the political connections of corporate management influence the corporate performance. Connections can be established by the corporate executives through inheritance or active development. When the nature of political connections is not differentiated, the political connections of corporate CEOs and board chairs in general have statistically insignificant impacts on the firm performance in China, reflecting both the benefits and costs of connections. With differentiation, it is found, however, that developed connections are associated with an improvement in firm performance, while inherited ones are associated with a decline in firm performance.

Strategy scholars have long argued that breakthrough innovation is generated by recombining knowledge from distant domains. Even if firms have the ability to access and absorb knowledge from distant domains, however, they may fail to pay attention to such knowledge because it is seemingly irrelevant to their tasks. We draw attention to this problem of knowledge relevance and develop a theoretical model to illuminate how ideas from seemingly irrelevant (i.e., peripheral) domains can generate breakthrough innovation through the cognitive process of analogical reasoning, as well as the conditions under which this is more likely to occur. We situate our theoretical model in the context of teams in order to develop insight into the microfoundations of knowledge recombination within firms. Our model reveals paradoxical requirements for teams that help to explain why breakthrough innovation is so difficult.

The connectivity provided by full-service network carriers under the umbrella of airline alliances is increasingly challenged by the services of Middle Eastern airlines via their own hubs, and the rise of new passenger strategies like self-connectivity. While these two developments can potentially benefit consumers with more services and lower fares, the rise of Middle East carriers has been met with opposition by EU and US airlines that call for increased protectionism. In addition, only a few airports in the world actively support self-connections. In this context, this study aims to investigate (1) the markets in which Middle East carriers exert a stronger dominance in terms of the number of passenger connections, (2) whether EU, US, or Asian hubs provide a competitive quality of connectivity in terms of travel time, and (3) whether a significant potential for self-connections is hidden at major airports worldwide. To that end, several datasets of passenger bookings (MIDT), airline schedules, and minimum connecting times between 2012 and 2015 are combined in a connections-building methodology that delivers six market-specific airport connectivity indicators for our benchmarking exercise. Our findings show that although European and some Asian hubs have lost traffic in global markets, they remain competitive from a quality perspective. US hubs have maintained their market share and competitive position. Finally, we identify the airports and airlines with the highest potential to provide self-connecting travel options, which can become an attractive new source of revenue for the parties involved.