Abstract:

This paper challenges the dominant economic view in the study of business leaders pursuing political connections. Instead, we propose a social hypothesis, i.e., beyond economic reasons, the deep motive for Chinese business leaders to pursue political connections is rooted in their Government Official Standard (GOS) value orientation. We conducted four studies to test both the economic and social hypotheses. In Study 1, we analyzed longitudinal data of 643 private owned enterprises listed in the Shanghai-Shenzhen Stock Exchange from 1993-2009, and found that political connections did not bring firms any significant economic benefits such as lower tax rate, higher tax refund rate, easier bank loan access, or higher return of equity. In Study 2, we conducted an in-depth interview of six business leaders and identified the GOS value orientation as a driving force for pursuing political connections. In Study 3, we developed a 13-item scale to measure GOS value orientation, and in Study 4, we tested the social hypothesis using survey data of 321 high level business executives. Results show that the GOS value orientation explained significant additional variance in leaders’ willingness to pursue political connections, after controlling for the effects of perceived economic, influence/ information access benefits and costs. We discuss the theoretical and practical implications of these findings in the Chinese context.