scholarly journals Political Connections, Home Formal Institutions, and Internationalization: Evidence from China

2016 ◽  
Vol 12 (01) ◽  
pp. 103-133 ◽  
Author(s):  
Xingqiang Du ◽  
Jin-hui Luo
Keyword(s):  
Local Governments ◽  
Resource Dependence ◽  
Emerging Market ◽  
Institutional Development ◽  
Resource Dependence Theory ◽  
Foreign Firms ◽  
Political Connections ◽  
Formal Institutions ◽  
Emerging Market Firms ◽  
At Home

ABSTRACTThis study draws on the resource dependence theory and institution-based view to examine political connections in the home market and home formal institutions for their impact on the internationalization of emerging market firms in the context of China. The results suggest that political connections at home may prevent emerging market firms from implementing internationalization strategies by reducing the dependence constraints imposed by local governments and foreign firms, whereas home formal institutional development may promote the strategy transition of emerging market firms from building political connections to international expansion and also reduce the negative impact of political connections. Overall, our findings indicate that political connections and formal institutions at home play an important role in shaping emerging market firms’ strategies of outward internationalization.

The effect of supplier globalization on firm innovation: a resource dependence theory perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yibo Wang ◽  
Bai Liu
Keyword(s):  
Resource Dependence ◽  
Positive Impact ◽  
Market Competition ◽  
Effective Means ◽  
Resource Dependence Theory ◽  
Institutional Distance ◽  
Foreign Firms ◽  
Firm Innovation ◽  
Content Type ◽  
Dependence Theory

PurposeEither buying or making is predicted by the existing literature for firms to reduce dependence. However, firms in the rapid globalization are found to adopt a pattern of buying and making. Specially, they critically rely on foreign firms for needed materials and goods, and invest in innovation against the uncertainty of potential supply disruptions simultaneously. Therefore, this paper seeks to investigate how the depth and width of supplier globalization shape firm innovation together. Moreover, the moderating effects of institutional distance and market competition are also examined in the paper.Design/methodology/approachGrounded on the resource dependence theory, this paper develops a theoretical framework and tests the proposed hypotheses by Poisson model using secondary data from 502 Chinese listed firms with foreign suppliers.FindingsThe depth of supplier globalization has a positive impact on firm innovation, while the width of supplier globalization weakens firm innovation. The depth and width of supplier globalization further interact negatively to influence firm innovation. Moreover, this relationship is enhanced when firms establish relationships with foreign firms with greater institutional distance and is weakened when firms face fiercer product competition.Originality/valueThe authors contribute to the literature by evidencing that the existence of foreign suppliers results in firms' enhancement of innovation to secure their operations and showing that diversifying the country origins of foreign suppliers is an effective means to reduce firms' uncertainty about supply disruption. We also advance the understanding regarding the contextual factors in which firms are more likely or less likely to manage the uncertainty about supplier globalization.

scholarly journals Abnormal Related Party Transactions, Political Connection, and Firm Value: Evidence from Indonesian Firms

2021 ◽  
Vol 22 (1) ◽  
pp. 461-478
Author(s):  
Supatmi Supatmi ◽  
Sutrisno Sutrisno ◽  
Erwin Saraswati ◽  
Bambang Purnomosidhi
Keyword(s):  
Firm Value ◽  
Resource Dependence ◽  
Stock Exchange ◽  
Resource Dependence Theory ◽  
Political Connections ◽  
Political Connection ◽  
Related Party Transactions ◽  
Panel Data Regression ◽  
Data Regression ◽  
Better Than

This study aims to examine the effect of abnormal related party transactions (RPTs) on firm value and to investigate political connections as a moderator of the causal relationship. Our sample is 450 Indonesian firms listed at the Indonesia Stock Exchange during the period of 2014–2017 with a total of 1,724 firm-year observations. Based on the panel data regression test, our results demonstrate that abnormal RPTs, especially account receivables-related RPTs and account payables-related RPTs, decrease firm value. Further, the results empirically show that political connections negatively affect firm value. Political connections strengthen the effects of abnormal non-account receivable RPT assets and abnormal non-account payable RPT liabilities on firm value. Our findings imply that agency theory explains the impacts of political connections of Indonesian firms better than resource dependence theory.

scholarly journals How much state ownership do hybrid firms need for better performance?

2021 ◽  
Author(s):  
Bach Nguyen ◽  
Hoa Do ◽  
Chau Le
Keyword(s):  
Firm Performance ◽  
Small Businesses ◽  
Emerging Market ◽  
Resource Dependence Theory ◽  
State Ownership ◽  
The State ◽  
Strategic Decision ◽  
Political Connections ◽  
Business Ownership ◽  
Adequate Level

Abstract Hybrid ownership—sharing partial business ownership with the state—is a new form of political connections that entrepreneurs in developing countries may employ to improve their access to key resources. This study investigates hybrid ownership as a strategic decision of entrepreneurs running small businesses in Vietnam—a transition economy. Utilising the resource dependence theory and legitimacy viewpoint, we propose and evidently show that increased state ownership in hybrid firms leads to improved performance. However, increasing state ownership beyond a minority share threshold harms firm performance due to the presence of agency costs. Also, the involvement of the state in firm governance reduces the benefits gained from having state ownership. Plain English Summary Is the more the better? How much state ownership really matters for hybrid firms to enhance their performance? More state ownership means more access to resources and privileges; but too much state ownership may reduce firm efficiency due to its poor governance. Analysing more than one million observations of small businesses in Vietnam, this study offers three insightful implications. First, for academics, institutional conditions should be considered when investigating political connections, especially in an emerging market context. Second, for practitioners, political connections in the form of hybrid ownership when being held at an adequate level can boost firm performance. However, an exceeding level of state ownership in hybrid firms may become harmful. Third, for policymakers, we suggest that forming hybrid business ownership with the private sector helps firms make use of state-owned resources. This collaboration is a win-win solution as long as the state ownership remains at an adequate level.

scholarly journals Resignation of officials as independent directors and firm performance

2020 ◽  
Vol 14 (1) ◽  
Author(s):  
Ting Ren ◽  
Youzhi Xiao ◽  
Xinguo Yu ◽  
Hongyan Yang ◽  
Jianmei Ge
Keyword(s):  
Firm Performance ◽  
Resource Dependence ◽  
Resource Dependence Theory ◽  
Social Capital Theory ◽  
Political Connections ◽  
Independent Directors ◽  
Chinese Government ◽  
Political Connection ◽  
Capital Theory ◽  
Negative Effect

Abstract In 2013, the Chinese government implemented Rule No. 18, which suspended the directorships of incumbent government officials and precluded those who retired within the past three years from serving as independent directors for listed firms. The surprise implementation of Rule No. 18 triggered a wave of resignations among official independent directors (OIDs). The event provided a unique opportunity to examine the impacts of the political connections of board members on firm performance. We applied a difference-in-difference technique to empirically investigate the effect of OID resignations on firm performance from the perspectives of resource dependence theory and social capital theory. The results indicate that the resignation of OIDs had a significantly negative effect on firm performance, as measured by Tobin’s Q and firm leverage. This also confirmed the importance of independent directors’ political connection on firm performance, as discovered in prior research. However, this influence varied across OIDs’ heterogeneity, external environment and firm ownership. The results indicate that political connections may not be necessary channels for firms to achieve success.

Subnational institutions and outward FDI by Chinese firms

2015 ◽  
Vol 23 (4) ◽  
pp. 254-276 ◽  
Author(s):  
Victor Zitian Chen ◽  
Jing Li ◽  
Daniel M. Shapiro
Keyword(s):  
Emerging Market ◽  
National Level ◽  
Chinese Firms ◽  
Data Set ◽  
Content Type ◽  
Specific Advantage ◽  
National Institutions ◽  
Overseas Investment ◽  
Emerging Market Firms ◽  
At Home

Purpose – The purpose of this study is to extend the classic country-specific advantage (CSA) – firm-specific advantage (FSA) framework by integrating an institution-based view of CSAs into the discussion of FSAs. In his classic CSA – FSA framework, Rugman suggests that successful multi-national enterprises (MNEs) are often built on the interaction between strong FSAs and strong CSAs at home. In the case of emerging market multi-nationals (EMNEs), he argued that strong CSAs were of particular importance in allowing EMNEs to develop FSAs. In particular, we examine CSAs at the sub-national level. Design/methodology/approach – The authors suggest that sub-national heterogeneity in market-supporting institutions is an important feature of emerging market economies, and that consideration of such heterogeneity contributes to our understanding of firm capabilities and overseas investment behavior of emerging market firms. The authors also identify explicitly the mechanisms through which sub-national institutions at home affect FSAs and, subsequently, the ability of emerging market firms’ entry into developed markets. Specifically, the authors argue that strong local institutions that support effective and well-functioning markets create the conditions that induce firms in that location to develop market-related capabilities in R & D and marketing, which, in turn, enable them to expand into developed countries. Findings – Using a unique data set on overseas investment by Chinese firms and causal mediation analysis, the authors find strong evidence in support of the view that strong sub-national institutions help emerging market firms develop the capabilities to enter developed country markets. Originality/value – This study extends the classic CSA–FSA framework by integrating an institution-based view of CSAs into the discussion of FSAs. In particular, the authors examine CSAs at the sub-national level.

scholarly journals Emerging-market firms’ dynamic capabilities and international performance: The moderating role of institutional development and distance

2019 ◽  
Vol 28 (6) ◽  
pp. 101593 ◽  
Author(s):  
Ismail Gölgeci ◽  
Shahin Assadinia ◽  
Olli Kuivalainen ◽  
Jorma Larimo
Keyword(s):  
Dynamic Capabilities ◽  
Emerging Market ◽  
Institutional Development ◽  
International Performance ◽  
Emerging Market Firms ◽  
Moderating Role

Outward foreign direct investment by emerging market firms: A resource dependence logic

2013 ◽  
Vol 35 (9) ◽  
pp. 1343-1363 ◽  
Author(s):  
Jun Xia ◽  
Xufei Ma ◽  
Jane W. Lu ◽  
Daphne W. Yiu
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Resource Dependence ◽  
Emerging Market ◽  
Outward Foreign Direct Investment ◽  
Dependence Logic ◽  
Emerging Market Firms
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