The Power Of Exaggerated Language

Firms face high institutional transaction costs when acquiring critical resources in transition economies.While China has almost realized product marketization over the past forty years due to reform and opening-up policy,the development of the factor market lags behind obviously,which is evidenced by the fact that the allocation of factor resources,such as land-use rights and bank loans,is still suffered from serious government intervention.In this regard,focal firms have to compete with other firms in the political market to obtain these critical resources.But inexplicably,a large amount of land resources is preferentially allocated to some firms that verbally claim to strive to become world-class firms yet are industry followers in reality.This phenomenon seems to go against the long-standing “picking winners” logic of local governments.Similarly,through credit tightening and policy tightening in recent years,it is found that banks tend to provide substantial financial support to firms that make catch-up commitments.The question is: Why are firms with exaggerated catch-up missions more likely to access critical resources,and what kind of institutional logic behind these phenomena? This is the starting point of this research.Drawing on signaling theory,the catch-up mission proposed by the firm is a costless commitment-while this commitment has the socially constructed legitimacy-it is impossible to provide any valuable information to external stakeholders theoretically.However,this study posits that since this commitment can have an impact on the resource allocation decisions of external stakeholders,there must be a deeper political incentive and rent-seeking logic behind it.To reveal this phenomenon,this dissertation integrates institutional theory and signaling theory to explore the political incentives and rent competition logics of firms’ resource acquisition by using theoretical and empirical studies in transition economies.This dissertation specifically includes the following contents:In the first study,I attempt to establish a preliminary conceptual model of firms’ access to resources in the transition context based on the concept of political market competition.The research posits that under the background of a transition economy with a less efficient market and incomplete contract,firms still rely on the support of political stakeholders in contract negotiation and implementation.This means that if firms want to obtain government resources,they need to compete with other firms for rent in the political market.However,the essence of competitive rent-seeking is to realize the resource exchange between government and firms by implementing the strategic action of credible commitment.This study reveals that the means of competitive rent-seeking include economic exchange and social exchange.Combined with institutional theory and stakeholder theory,this study preliminarily constructs a2x2 matrix with two dimensions,namely firms’ strategic action cost(high/low)and institutional efficiency(high/low).It also focuses on the theoretical mechanism of costless language communication for firms to obtain government resources.The second study aims to reveal the impact of catch-up missions on land resource acquisition.The study hypothesizes the relationship between catch-up mission and land resource acquisition in the aftermath of anticorruption campaigns.Drawing on the data of listed companies from 2007 to 2018 and using time-varying difference in difference model,this study shows that there is no obvious causal relationship between catch-up mission and land resource acquisition before the anticorruption campaigns,while catch-up mission has a significant positive impact on the acquisition of land resources in the aftermath of anticorruption shocks.In addition,the study shows that the impact of catch-up mission on firms’ access to land resources is contingent on private ownership,career horizon of local government officials,and institutional environment.Specifically,private ownership plays a positive moderating effect on the relationship between catch-up mission and land resource acquisition in the aftermath of anticorruption campaigns.Local government official’s career horizon plays a negative moderating effect on the relationship between catch-up mission and land resource acquisition.Institutional environment plays a positive moderating effect on the relationship between catch-up mission and land resource acquisition.The third study aims to explore the impact of catch-up mission on access to bank loans.This study hypothesizes the relationship between catch-up mission and credit resource acquisition in the aftermath of anticorruption campaigns.Drawing on the data of listed companies from 2007 to 2018,this study shows that there is no obvious causal relationship between catch-up mission and credit resource acquisition before the anticorruption campaigns.In the aftermath of anticorruption campaigns,catch-up mission has a significant positive impact on the acquisition of credit resources.In addition,moderating effect analysis shows that the impact of catch-up mission on firms’ access to credit resources is moderated by organizational decline and prosocial input in the aftermath of anticorruption shocks.Specifically,the organizational decline weakens the positive relationship between the catch-up mission of firms and the acquisition of credit resources in the aftermath of anticorruption shocks.However,prosocial input strengthens the relationship between the catch-up mission of firms and credit resources acquisition in the aftermath of anticorruption campaigns.Below are the theoretical contributions of this dissertation:First,this study constructs a theoretical model of language communication and firms’ resource acquisition in the transition economy.I construct a theoretical model regarding how firms obtain government resources in the transition context,which extend the existing literature on government-firm interaction to some extent.Previous studies point out that firms in transition economies usually adopt nonmarket strategies to reduce institutional transaction costs,and these nonmarket strategies often require firms to pay higher commitments in essence.The implicit assumption is that firms can obtain government resources only through high committed cost investment.However,this study explores the cognitive model of heuristic decision-making of political stakeholders,and reveals the deep institutional logic between language strategy and firms’ resource acquisition.Specifically,this paper analyzes the legitimization process formed by language communication,and explores how language engage political stakeholders theoretically.This perspective expands the conventional economic exchange view on the interaction between government and firms in transition economies.Second,this dissertation discusses the theoretical relationship between catch-up mission and firms’ access to resources in the Chinese institutional context.It takes the anticorruption campaigns as exogenous shocks and introduces it into the theoretical model of language strategy and firms’ resource acquisition.It reveals the limited rationality of political stakeholders,which enriches the extant literature to some extent.Previous literature has reached contradictory conclusions about the theoretical relationship between exaggerated language strategies and firms’ resource acquisition.For example,some scholars believe that the exaggeration of firms’ language can attract public attention and affect stakeholders,while others posit that the exaggerated claims adopted by some firms usually contain risks and unreliability,and thus external stakeholders may not be affected by these claims.This study,however,regards political stakeholders as bounded rational decision-makers.From the perspective of negative error avoidance and heuristic decision-making model,this paper discusses the perception of political stakeholders on the catch-up promise made by firms under the impact of anti-corruption.Then it analyzes the possible path of catch-up mission affecting firms’ access to resources,which extends the theoretical research on language strategy and firms’ resource access in the transition context.Third,this dissertation focuses on the strategic characteristics of catch-up mission and deepens the understanding of catch-up strategies in previous literature.Catchingup is an important topic in recent international business and strategic management research,and there is space for the research on the catch-up strategy of emerging market enterprises.This dissertation,however,regards catch-up mission as impression tools and emphasizes how it engages with political stakeholders,which extends the existing strategic communication literature.The relevant conclusions of this study enlighten the direction of future policy optimization of factor market reform and policy distortions reduction in China.The policy implication is,in the process of cultivating and supporting world-class firms,government leaders need to be vigilant against “policy-induced distortion” under the slogan of catch-up mission.Also,Chinese policy decision-makers should put more emphasis on the decisive role of the market in resource allocation,so as to guide the high-quality development of local governments and local firms.