An investigation into political connections: literature review and empirical tests of the impact and antecedent

Abstract

Connections between business and political entities (“political connections”) have received unprecedented research attention in the last decades. Studies investigate the relationships between political connections and firms’ behavior, strategy, as well as various performance outcomes. Meanwhile, scholars have adopted diverse perspectives to explain the role of political connections in these relationships. Nevertheless, reviews designed to synthesize political connections studies has not kept pace with the explosive growth of this scholarship. In addition, there are still research gaps to be addressed within the scholarship. In particular, as political connections can generate both positive and negative impact on the firm, further research is needed to explain the reason behind and reconcile existing mixed findings. Furthermore, prior studies have predominantly focused on understanding the impact of political connections while leaving the antecedents of such connections underexplored. This thesis takes up these challenges by synthesizing prior political connections studies and addressing the research gaps above. This thesis consists of three studies. First, it combines bibliographic techniques and qualitative review techniques to conduct a comprehensive review of the political connections studies published during the last three decades (in Chapter 2). Next, based on the findings of Chapter 2 and guidance for future research provided therein, it includes two empirical studies to investigate how connections may paradoxically influence firms’ resource acquisition and utilization for innovation performance (in Chapter 3) and to examine how the emphasis the firm places on financial vs. nonfinancial goals acts as an antecedent of formation of different types of political connections (in Chapter 4). In sum, this thesis offers a more complete and fine-grained understanding of political connections and provides research guidance for future development of the scholarship of political connections.