An Empirical Study On Political Connection,Multimarket Contact And Firm Performance

With the diversification of business trends,it is normal that an enterprise and its competitors encounter in a number of market and then lead to the formation of multimarket contact.The formation of multimarket contact in a number of markets bring the enterprise with different competitive landscape compared to traditional competition,and meanwhile it is also a challenge for managers to take competitive measures in face of opponents and take effective response measures.According to the previous conclusions on the study of multimarket contact literature,it can be seen that multimarket contact not only has an impact on intensity of enterprise’s competition,but also has a strong impact on corporate performance.Then business managers in the process of making decisions must consider how to make a strong and effective strategic decision in a complex multimarket market competition environment,and to make enterprises in the multimarket contact environment to obtain considerable performance and get rid of similar to the home appliance industry price war and other irrational competition behavior as far as possible,which have a certain degree of difficulty.In fact,the multimarket contact between a firm and its competitors will lead to a competitive form of multimarket competition.This is mainly because companies involved in multimarket competition will compete in multiple markets,and meet in multiple markets and then form a multimarket contact.Therefore,the enterprises who have multimarket contact with competitors should make measures from the multimarket competition strategic thinking,when they take or respond to the corresponding competitive behavior.The the key point to so-called multimarket competitive strategic thinking is that business managers in the process of enterprise development and decision-making process should not only decide from their own point of view,but also should consider the reaction of competitors because of their own behavior.Due to factors of asymmetric market information and incomplete corporate information collection and so on,enterprises find it difficult to effectively predict the strategic behavior of competitors.Based on this situation,Korn and Rock(2001)pointed out that enterprises can increase the degree of familiarity with their competitors through increasing the intensity of multimarket contact,and in that circumstance,multimarket contact can be seen as an important competitive strategy.In addition,according to the ideas put forward by Baum and Korn(1999),the interaction of the firm with the competitors in the shared market will increase the familiarity,the intensity and speed of competing behavior with each other,and mutual deterrence ability.Therefore,in summary,companies can increase the degree of familiarity with rivals and the ability to deter each other by increasing the degree of contact with competitors.The process of increasing the degree of familiarity and deterrence between firms to a certain extent so as to reduce the intensity of competition among firms is expressed in terms of mutual forbearance by Jayachandran(1999),and only when the degree of multimarket contact reaches to a certain level of value,can mutual tolerance between enterprises be formed.In order to verify the idea that the multimarket contacts can be viewed both as a competitive pattern and a competitive strategy proposed by Korn and Rock(2001),Baum and Korn(1999),to find out the factors of impact on the intensity of multimarket contact,and to study its impact on corporate performance.This paper,combined with business environment faced by the domestic private enterprises,and from the perspective of the enterprise,the political relationship can affect the multimarket contact between the and its competitors by influencing behavior of an enterprise to enter other enterprise’s market,and then it has an impact on corporate performance.In the process of specific operation,this paper makes market reciprocity as the adjustment variable based on the logic of the influence of the political connection on the market behavior of the enterprise,and by taking the distribution of the nine listed private real estate enterprises in 2008 to 2014 in the 151 regional markets as a sample,combined with the theory of mutual tolerance hypothesis,this paper explores relationship between political connection,multimarket contact and enterprise performance in multimarket competitive environment.Through the OLS regression analysis,the results show that enterprises can use the political association to reduce the market entry barriers,to achieve the initiative to increase the degree of multimarket contact with its main competitors,and then played a positive impact on performance;In addition,when the enterprises have market reciprocity in the overlapping market,which can negatively moderate the relationship between political connection and firm performance.According to the discussion about impact of multimarket contact on enterprise business in the domestic environment,this paper can guide the direction of firms’ strategic decisions to pursuit the better performance for domestic firms under the environment of multipoint competition,and it can provide more solutions to effectively and actively increase the degree of multipoint contact with competitors for domestic firms,what’s more,this also broaden the train of thought for the research about multipoint contact in the future.