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| Research on the Effects of Political Connections on the Economic Performance of Private Enterprises in China |
| HE Xiaobin，LIU Jiankun |
| Tsinghua University, Beijing, China |
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Abstract This study distinguishes the individual and organizational levels of political connections based on the political co-option and organizational embeddedness strategies adopted by the ruling party for the private enterprises in China; and empirically examines the effects of the two connections on firm performance. The analysis of the 13th national Chinese Private Enterprise Survey (CPES) data in 2018 reveals that: (1) the establishment of Party organizations can significantly improve the economic performance of private enterprises, and this effect is stronger than that of political status; (2) the establishment of Party organizations and political status can both facilitate resource acquirement of private enterprises, and the organizational political connection has a stronger effect; (3) resource acquisition is an effective way for Party organizations toimprove private enterprises’ performance. This study suggests that Party organization as a political connection has a positive effect on the sustainable growth of private enterprises, implying the importance of Party building in private enterprises in China.
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Received: 21 March 2020
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