Wang, Delu and Ma, Gang and Song, Xuefeng and Liu, Yun (2016) Political connection and business transformation in family firms : evidence from China. Journal of Family Business Strategy, 7 (2). pp. 117-130. ISSN 1877-8585
Political_connection_and_business_transformation_in_family_firms_evidence_from_China.pdf - Accepted Version
Available under License Creative Commons Attribution-NonCommercial-NoDerivs.
Download (1MB)
Abstract
We investigate the impact of family ownership on core business transformation and the moderating role of political connections in this relation through a Probit model, conditional Logit model, and Heckman selection model with instrumental variable using data from Chinese listed companies covering 2001–2010. The results demonstrate that, compared with non-family firms, family firms are more likely to transform their core business, enter strongly correlative industries and non-regulated industries, and adopt a mergers and acquisitions (M&A) mode. Furthermore, compared with politically non-connected family firms, family firms with political connections are more likely to conduct business transformation and adopt M&A rather than an internal cultivation mode to realize transformation. In addition, political connections make family firms more likely to enter weakly correlative industries and increase their chances of entering government-regulated industries.