Buffering and Enabling: The Impact of Interlocking Political Ties on Firm Survival and Sales Growth

Strategic Management Journal, 2015

22 Pages Posted: 7 Apr 2015 Last revised: 13 Aug 2016

See all articles by Weiting Zheng

Weiting Zheng

University of New South Wales (UNSW)

Kulwant Singh

National University of Singapore (NUS)

Will Mitchell

University of Toronto

Date Written: 2015

Abstract

Several studies suggest that political ties help firms survive or perform but do not examine the boundary conditions concerning which types of firms and which type of ties help firms. We draw from resource dependence and resource-based theories to argue that political ties can improve both firm survival (labeled “buffering”) and performance (labeled “enabling”), with weaker firms gaining more from buffering and stronger firms gaining more from enabling. We further examine the relative impact of local and central ties. We test our hypotheses on the television manufacturing industry in China between 1993 and 2003. Results demonstrate the buffering roles of political ties, and under narrower conditions, their enabling roles. Local ties account for these outcomes, while central ties do not provide buffering or enabling benefits.

Keywords: interlocking political ties, performance, dissolution, growth, China

Suggested Citation

Zheng, Weiting and Singh, Kulwant and Mitchell, Will, Buffering and Enabling: The Impact of Interlocking Political Ties on Firm Survival and Sales Growth (2015). Strategic Management Journal, 2015, Available at SSRN: https://ssrn.com/abstract=2586918

Weiting Zheng (Contact Author)

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

Kulwant Singh

National University of Singapore (NUS) ( email )

1E Kent Ridge Road
NUHS Tower Block Level 7
Singapore, 119228
Singapore

Will Mitchell

University of Toronto ( email )

105 St George Street
Toronto, Ontario M5S 3G8
Canada

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