A Research On Establishment Of Firm's Political Connection And The Relationship Among Political Connection, Social Responsible Investment And Employee Turnover Rate

Government policy and regulation are the major forces of external business environment. Most research indicates that firm specific benefits may result from their political connection. Political connection has been considered has great effect on firms' performance and competitive status. Compare with state-owned firms, private firms are often faced with limited resources. So private firms need to adapt more aggressively to the regulatory environment and engage more actively with bureaucrats and officials to overcome the regulatory and institutional uncertainties. Research on the influence of political connection on private firms'operation is meaningful for their growth.Based on previous studies on political connection, this research explores the establishment of firms'political connection from entrepreneurs'characteristics and the relationship among political connection, social responsible investment and employee turnover rate. More specifically, this research includes 4 parts as follows.(1) The study 1 discusses the dynamics process that how the political connection is used by entrepreneurs to derive some competitive advantages over the different lifecycle (emergence, growth and stabilization). The results show that the political connection can help firms to achieve the legitimization at their emergence stage, and can promotes the execution of marketing strategies at their growth stage. In stabilization stage, political connection can help firms to prevent market crisis. This study explains how the political connection matches with mission at different lifecycle phase of firms, and provide a longitudinal and dynamic guidance for competitive strategy making for entrepreneurs.(2) Drawing upon the Resource Dependency Theory, the study 2 examines that how entrepreneurs'socioeconomic status and political gene impact the political connection establishment of firms under the different degree of innovation and internationalization. Using a questionnaire survey about 2297 private firms in china, this study finds that entrepreneurs' socioeconomic status and political gene are positively related to political connection establishment of firms. And the positive relationship between entrepreneurs' socioeconomic status and political connection establishment will be weaker when firms have higher degree of innovation and the positive relationship between entrepreneurs' political gene and political connection establishment will be stronger when firms have higher degree of internationalization. The findings will be helpful for decision making of entrepreneurs on market and non-market strategy choice.(3) Based on the social exchange theory, the study 3 explores the relationship between firms' political connection and social responsible investment. This research argues that the over-investments in CSR serve as a form of "gifts" that exchange for the political legitimacy these firms obtain through political connection. Using a sample of Chinese private firms, the result shows that political connection incentives private firms to make over-investments in CSR. Meanwhile, Regional competition for governmental resources strengthens the relationship between political connection and over-investments in CSR. This study reveals double sides of the role of political connection in firms operation, which provides an objective reference for firms in CSR investment.(4) Based on the recognition theory, study 4 discusses the relationship between firms' political connection and employee turnover rate. Meanwhile, this research explores the moderating effect of social responsible investment and the mediating effect of employee salary in this relationship. Using a questionnaire survey about 2056 private firms in china, this research suggests that firms' political connection is negatively related employee turnover rate, social responsible investment mediate this relationship, and the negative relationship between political connection and employee turnover rate will be stronger when employee can get a higher salary. This study provides guidance for firms' decision making in social responsible investment and employee salary.