Online from: 2007
Subject Area: Regional Management Studies
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|Title:||The impact of managerial political connections and quality on government subsidies: Evidence from Chinese listed firms|
|Author(s):||Jianfeng Wu, (Business School, The University of International Business and Economics, Beijing, People's Republic of China), Menita Liu Cheng, (Guanghua School of Management, Peking University, Beijing, People's Republic of China)|
|Citation:||Jianfeng Wu, Menita Liu Cheng, (2011) "The impact of managerial political connections and quality on government subsidies: Evidence from Chinese listed firms", Chinese Management Studies, Vol. 5 Iss: 2, pp.207 - 226|
|Keywords:||China, Company performance, Government subsidy, Managerial political connections, Managerial reputation, Managers, Politics, Public companies, Subsidies|
|Article type:||Research paper|
|DOI:||10.1108/17506141111142834 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||This research was supported by the Social Science Foundation of the Ministry of Education of China (10YJC630278), the National Social Science Foundation of China (10AZD014), and the Program for Innovative Research Team at UIBE. The authors would like to thank Sali Li, Dean Xu, and Xinmin Zhang for their helpful comments.|
Purpose – The purpose of this paper is to adopt a contingency perspective and examine the impact of managerial political connections on access to a specific external resource – government subsidies – in China.
Design/methodology/approach – This study proposes that managerial political connections help firms gain access to government subsidies; in addition, firms must signal their managerial quality through managerial reputation and/or past firm performance to address government officials' concerns with job safety and future career development. These cues, in turn, ensure and increase confidence on government officials' resource allocation decisions in favor of the firm. The authors test the contingency hypothesis by using archival data collected from 212 Chinese firms that went public between 2002 and 2004.
Findings – This study finds that managerial political connections play a significant positive impact on obtaining government subsidies only when managerial reputation is high, and/or when firm past performance is superior
Originality/value – This study contributes to the existing literature in two ways. First, it enlarges the research scope of political connections by examining their impact on government subsidies instead of financial performance. Second, and more importantly, it posits that the role of political connections is contingent on other moderating factors such as managerial reputation and past firm performance.
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