Political Strategy of Chinese Private Ventures: An Organizational Life Cycle Framework

By Li, Jun | International Journal of Entrepreneurship, Annual 2008 | Go to article overview

Political Strategy of Chinese Private Ventures: An Organizational Life Cycle Framework


Li, Jun, International Journal of Entrepreneurship


ABSTRACT

Drawing upon insights from multiple theories on corporate political strategy, this study proposes an organizational life cycle framework for explaining Chinese ventures' political strategies. The model suggests that Chinese private ventures exhibit different motivations, objectives and approaches in their political strategies at different life-cycle stages, due to changes in the environmental and institutional constraints and their organizational dominant problems. To better understand Chinese private ventures' political strategies, researchers need to take into account both the environmental and organizational contexts at each stage under which the venture's political strategies are developed.

INTRODUCTION

Scholars have long recognized the importance of political strategies in affecting firm behavior and performance (Getz, 1997; Hillman & Hitt, 1999; Hillman, Keim & Schuler, 2004; Hillman, Zardkoohi & Bierman, 1999; Keim & Baysinger, 1988; Masters & Baysinger, 1985; Masters & Keim, 1985). Because government policies have significant effects on competitive environment of firms, companies may employ political strategies or actions (such as lobbying, advocacy advertising, political campaign contribution, etc.) to create a favorable external environment, and to gain competitive advantages over their rivals. Current research on corporate political strategy, however, is largely conducted on Western companies, especially in the setting of multinational corporations (e.g., Blumentritt & Nigh, 2002; Chen, 2007; Hillman, 2003; Kennedy, 2007). The political strategy of private ventures in a non-Western country (such as China) is a much-understudied area. Given the increasing influence of private sector in Chinese national (ADB, 2003; Dougherty, Herd & He, 2007), and the significant power of government policies on the development of private ventures in China, knowledge about political strategies of Chinese private ventures becomes imperative.

This paper aims to enrich the research of corporate political strategy by building a descriptive theory for understanding Chinese private ventures' political strategies. Adopting an organizational life cycle approach, and drawing upon insights of multiple theories such as the resource-dependence theory (Pfeffer & Salancik, 1978), institutional theory (Dimaggio & Powell, 1983; Powell & DiMaggio, 1991), strategic choice theory (Child, 1972), exchange theory (Cook, 1977) and the resource-based view (Barney, 1991; Wernerfelt, 1984), the paper builds a framework to explain how the environmental and organizational factors influence political strategies of Chinese private ventures at different life-cycle stages. Since China differs sharply from Western countries in political, societal and cultural environment, I hope this study offer an opportunity to refine and test existing theories, and to further our understanding of corporate political strategy by focusing on emerging economies. The premise of the life cycle framework is that at different developmental stages, Chinese private ventures exhibit different motivations, objectives, and often take different approaches for their political strategies, due to different external and internal environments. Prior research has suggested that a firm's political strategy changes over time as it faces different sets of opportunities and threats from the environment, however less research has been done on the change of a firm's political strategy (Getz, 1997). This study therefore answers this research call as well.

THEORIES ON CORPORATE POLITICAL STRATEGY

Government business policies affect firms' competitive advantages significantly (Keim & Baysinger, 1988). Government has the ability to do so because it can influence the opportunity sets faced by the firms and affect their competitive environment through regulations and government policies (Hillman & Hitt, 1999; Hillman et al.

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