Research On Political Connection, Institutional Environment, Salary Incentive And Enterprise Growth Of Private Enterprises

With the constant growth of China’s economy, the private economy has become an important force in the development of China’s market economy. Since that the private enterprises have become the major channel for resident employment security and social entrepreneurship promotion, it is of great benefit that the private firms do towards China’s economic development strategy of restructuring the country’s economic stable growth and strengthen national innovation capacity. It’s a great opportunity that the comprehensively deepen reforms brings to private enterprise in our country to make further development.Under this condition, this research tries to explore the following questions on private listed companies in China with an empirical study:(1) Whether the political connection of private enterprise is influential for business growth? If it is influential, is it a positive or negative relationship?(2) To what extent does the institutional environment affect the private enterprise? Is there a difference between different institutional environments?(3) How does the salary motivation in private enterprise influence the development?This paper applies both literature and empirical research method. Firstly, the author reviews the previous researches on political connection of the private enterprises, systematic theory and researches related to the environment, incentive salary and business growth. Besides, this research explores the difference caused by the different companies in the external environment or internal incentive pay system level, and proposed hypotheses according to these impacts.The samples are selected from the listed manufacturing industry private companies that are in continuing operations. The data period is between 2010 and 2014. Firstly, the comprehensive growth model based on the private financial index data sample of private enterprises is constructed. Secondly, the quantitative research methods of descriptive statistical analysis, factor analysis, correlation analysis and regression analysis are applied for evaluation and hypotheses testing.The main conclusions of this article are as follows:(1) Political connection of private enterprises have a significant impact on the growth of private enterprise, the higher the degree of corporate political connection of private enterprises, the business growth will be better.(2) Political connection of private enterprises to promote business growth is also affected by the enterprise’s institutional environment. The institutional environment in the horizontal dimension of the market has significant regulatory impact of political connections on enterprise growth. The degree of intervention in regulation of political dimension associated to the impact on the enterprise’s growth is not significant.(3) Political connections of private enterprises are affected by the level of internal salary motivation. The business growth promoting effect is more obvious for political connection when the private business provides higher salary motivation.