Political Connection,Diversification Strategy And Enterprise Crowth

Since the reform and open policy, China has entered into the transformation period, from Planned economy to Market economy, with governmental function changing gradually. However, the political system here makes China a Strong government, and it plays quite an important part in resource allocation. As Non-market system has been proved inefficiency and inequality, enterprise always seek to build political connection with the government to obtain more resource and avoid risk that from environmental uncertainty during the transformation period. In China, political connection is common. Recently, entrepreneurs are positive for political position, such as NPC member, CPPCC Members, etc. (Chen et al,2005; Hu,2006) or hire someone with government background. Meanwhile, it is common for government officials to set up enterprise, or be appointed as corporate executives. It is thus clear that political position has an important impact in the development of enterprise under our special institutional environment. In Academia, political position, as an emerging field, is far from perfect, and many research need to be done, especially in China's institutional environment. The current study pays much attention to the relationship between political position and enterprise performance improvement. Nevertheless, due to the limitation of study angle and method, there is not a consensus. In addition, study on the effect mechanism between political position and enterprise performance are deficiency, and existing research hasn't place political position in Chinese institutional environment. Therefore, related issues need to be further studied.This dissertation discussed the relevance between political connection and enterprise growth, studied the influence of political connection on enterprise static management ability and enterprise dynamic growth ability. We divide political connection into two dimensions, administrative level and administrative authority, analyze the effect of each dimension on enterprise growth separately. Furthermore, it combined with the strategic choices and institutional environment theory, brought in diversification strategy and marketization, expand the research from internal function mechanism and external environment condition. Specifically, this dissertation discussed the following questions:①Will political connection have an influence on enterprise growth? And will different dimensions of political connection produce significant effect on enterprise growth?②How will the internal function mechanism, political connection to enterprise growth, realize? And is there indirect effects step by step?③Whether dose the institutional environment regulate the influence of political connection on enterprise growth, and how?Based on literature review, we build integrated analysis framework, under diversification strategy perspective, for the relationship between political connection and enterprise growth. Through multiple cases exploratory analysis and large sample empirical analysis, we analyze the internal mechanism and correlation about political connection, diversification strategy, marketization and enterprise growth. Under the framework of resource-strategy-performance, we systematically studied the relationship between political connection and enterprise growth.After theoretical analysis and empirical confirmation, this research mainly reaches the following conclusion:first, both the longitudinal and horizontal dimensions of political connection play a positive role on enterprise growth, with different affection degree. And the effect that political connection on enterprise growth ability is much better than enterprise management ability. Secondly, diversification strategy plays as intervening variable in the internal mechanism of political connection to enterprise growth. Political connection can improve enterprise's ability of resource acquisition, which made the enterprise resourceful, then using diversification strategy allocated resource to enhance enterprise growth. Thirdly, the influence that political connection affects on enterprise growth is direct and indirect. The direct way is like political connection-enterprise growth, and the indirect way is connection-diversification strategy-enterprise growth. With improving enterprise's ability of resource acquisition and decision making quality of operation, political connection double support enterprise growth. Finally, marketization plays a negative role in the relationship between political connection and enterprise growth. The less marketization the area is, the stronger the effect that political connection on enterprise growth is.The conclusions above deepen the understanding of the influence that political connection on enterprise growth, make a great exploration in the related research area. The innovations of this dissertation reflects in the following five aspects:①Discussed the influence that political connection on enterprise dynamic development ability, analyze the intrinsic value of political connection, and made a valuable complement in this research area.②Creatively divided the political connection into two dimensions, longitudinal dimension and horizontal dimension, studied the effects that each dimension has on enterprise growth separately, and improved the measurement system of political connection.③Build and proved two analysis models, political connection-enterprise growth and connection-diversification strategy-enterprise growth, pointed out that the influence that political connection on enterprise growth is both direct and indirect, and concluded the mechanism that political connection on enterprise growth.④Exposited that political connection place different effects on enterprise growth under different marketization, which may provide an inspiration or reference for both enterprise and government.⑤specifically explained the influence mechanism that political connection on diversification strategy, studied the relationship between top manager and diversification strategy in the perspective of upper echelons theory and social capital theory, expanded the study field of motivation theory in diversification.Of course, regardless of some academic attainments, the study still remains many Shortcomings.In the last part of this dissertaion, the author presents the limitations of this study and several issues that need to be studied in the future.