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Title: EMMNCs’ political connections and their overseas investment outcomes, and firm performance shaped by outside CEO succession, and by China's anti-corruption campaign
Authors: Huang, Dongdong
Keywords: Business::Management
Business::International business
Issue Date: 2020
Publisher: Nanyang Technological University
Source: Huang, D. (2020). EMMNCs’ political connections and their overseas investment outcomes, and firm performance shaped by outside CEO succession, and by China's anti-corruption campaign. Doctoral thesis, Nanyang Technological University, Singapore.
Abstract: Chapter 1: The recent wave of overseas investments from emerging market multinational corporations (EMMNCs) stirred debate in both corporate and political circles as many new players have connections to governments or politicians in their home countries. The puzzle is: Do home country political connections make good travel companions? While the role of political connections in domestic markets has been studied extensively, we know less about the impact of such connections on EMMNCs’ overseas investments despite the growth of this literature. I first review this emerging literature which predominantly draws on the institutional perspective, the resource-based view, resource dependence theory, and transaction cost theory. Second, I identify and map the key findings and analyses on the mediating mechanisms, moderating mechanism, and overseas investment outcomes. Next, I synthesize arguments and analyses to develop a multi-theoretical framework. Specifically, I (a) highlight the mediating mechanisms of resources and liabilities that in turn shape an EMMNC’s overseas investment outcomes, (b) summarize the factors shaping the strength of resources and liabilities, and (c) identify the moderating mechanisms in the context of EMMNCs’ overseas investments across the inter-country and firm-specific levels. The multi-theoretical framework paves the way for identifying gaps and opportunities for future research directions. Finally, I develop a research agenda to: (a) advance the theoretical development by incorporating relevant concepts from perspectives on political embeddedness, legitimacy, and geopolitics, and (b) re-direct future research into politically connected privately-owned enterprises, home country dynamics, resources and liabilities including organizational stigma, and non-market strategy. Chapter 2: I draw inspiration from the legitimacy perspective and political embeddedness theory to examine the effects of outside chief executive officers (CEOs) in globalizing Chinese firms on firm performance. Specifically, I argue that the fast-changing and turbulent market environment for globalizing firms from emerging markets will amplify the adaptive capability of outside CEOs and reduce the costs of organizational disruption that they may bring. Hence, outside CEO succession will bring positive effects to the performance of globalizing Chinese firms. Moreover, such positive effects will be stronger in central state-owned enterprises (SOEs) due to their greater improved legitimacy perceived by stakeholders in host countries. In addition, the performance effects of outside CEOs will be even more positive in central SOEs with a Party Secretary that have work experience in both the government and industry sectors, who helps outside CEOs better embedded in the home country political system. However, outside CEOs’ performance effects will be less positive when there is a strong presence of Party Secretaries on the board of directors, which leads to over-embeddedness problems. I test my hypotheses using a sample of 251 globalizing Chinese firms listed on the Shanghai and Shenzhen stock exchanges. The results offer strong support for my arguments. The results point to the importance of alignment among CEO origin, market characteristics, legitimacy in host countries, and political embeddedness within the home country government for firm performance. Chapter 3: This study introduces behavioral perspectives to complement macro-level views into anti-corruption research. Specifically, I draw from threat-rigidity thesis and social exchange theories to argue that anti-corruption campaigns subject state-owned enterprises (SOEs) to stresses and anxieties leading to their inability to act and thus lower firm performance. However, I argue that if government sends signals of trust, such as appointing a Party Secretary after the campaign or as a CEO, the perceived threat will be alleviated and firm leaders can perform better. By examining firm-level data of Chinese listed SOEs and privately-owned enterprises (POEs), I tested the hypotheses that receive clear supports.
DOI: 10.32657/10356/137125
Schools: Nanyang Business School 
Rights: This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0).
Fulltext Permission: open
Fulltext Availability: With Fulltext
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