Political Connections And Enterprise Diversification: Moderating Effect Of Environmental Uncertainty

With the deepening of the economic globalization, Chinese enterprises to enhance the international competitiveness has become a key study point for those strategic management scholars in domestic enterprises, diversification strategy has gradually become a new hotspot in the field of corporate strategic management. Based on strategic management for institutional theory and resource-based view, diversification of enterprises depends not only on internal decision-making, but also affected by external funding and environment, political connection, which may serve as a positive alternative protection mechanisms to deal with market and legal control failure, is an important factor for enterprise diversification. Many scholars have pointed out in the study that enterprise and government to build up political connection can improve the business environment and the enterprise diversification effectively and significantly; however, there are still a number of researchers have found the existence of the political connection will play a kind of "grabbing hand" effect, which may reduce the corporate diversification. So far, studies on the impact of political association on enterprise diversification is still relatively small, but has not yet reached the same conclusion. Thus, the impact of establishment of political connection on the extent of enterprise diversification for what is a positive role or a reverse effect requires further examination.By carding on the existing literature review, this article establishes a conceptual model to determine the research methods on the relationship between political connection and corporate diversification strategy, and thus establish the relationship between the two. Firstly, by the background of enterprise political connection as a research base, this article raises two dimensions on corporate diversification research: diversification of the regional business and of products; then taking the environmental uncertainty as an important feature that have impact on corporate diversification, to study its adjustment role between political association and corporate diversification, then this paper proposes a total of four research hypotheses, aiming to more deeply explore the influential situation on the relevance of corporate political connection to corporate diversification.This article uses empirical research questionnaire to study. By recovering the data for descriptive analysis, correlation and regression analysis, from which to explore the political connection to enterprise diversification, we conclude to the following results:(1) enterprise political connection has positive impact on regional business diversification;(2) enterprise political connection has positive impact on company’s product diversification;(3) environmental uncertainty plays a positive regulatory role between enterprise political associations and regional business diversification;(4) environmental uncertainty plays a positive regulatory role between enterprise political associations and company’s product diversification.