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Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China

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Bibliographische Detailangaben
Zeitschriftentitel: Administrative Science Quarterly
Personen und Körperschaften: Wang, Danqing, Luo, Xiaowei Rose
In: Administrative Science Quarterly, 64, 2019, 4, S. 773-809
Format: E-Article
Sprache: Englisch
veröffentlicht:
SAGE Publications
Schlagwörter:
Public Administration
Sociology and Political Science
Arts and Humanities (miscellaneous)
author_facet Wang, Danqing
Luo, Xiaowei Rose
Wang, Danqing
Luo, Xiaowei Rose
author Wang, Danqing
Luo, Xiaowei Rose
spellingShingle Wang, Danqing
Luo, Xiaowei Rose
Administrative Science Quarterly
Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
Public Administration
Sociology and Political Science
Arts and Humanities (miscellaneous)
author_sort wang, danqing
spelling Wang, Danqing Luo, Xiaowei Rose 0001-8392 1930-3815 SAGE Publications Public Administration Sociology and Political Science Arts and Humanities (miscellaneous) http://dx.doi.org/10.1177/0001839218786263 <jats:p>We develop a theory of how state officials’ political incentives can affect corporate behavior. In the pursuit of multiple goals, such as social stability and economic development, the state designs criteria to evaluate its officials’ performance. Those officials may be motivated to prioritize different goals at different stages of their careers and to mobilize firms to help them achieve those goals. We test our theory in the context of Chinese publicly listed firms’ diversification between 2001 and 2011, when the state faced economic and social ramifications of bankrupt state-owned enterprises (SOEs) laying off large numbers of workers. Our results show that when large layoffs occurred, some firms diversified into industries unrelated to their core business by acquiring bankrupt SOEs and reemploying their workers. This was more likely to occur when the governor of the firm’s home province was closer to retirement, as social stability was more important than economic development for the retiring governor’s career objective. The effect of career stage was weaker for Communist Party leaders, who more consistently prioritized social stability, and when a provincial state experienced intense collective actions that made social stability a stronger immediate focus. The effect was strengthened for firms more vulnerable to officials’ influence, such as those with a strong socialist imprint and those dependent on government resources. Our study extends the Weberian state literature and the political economy research on incentives, and it offers a political explanation for corporate diversification in a major transitional economy.</jats:p> Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China Administrative Science Quarterly
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title Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
title_unstemmed Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
title_full Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
title_fullStr Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
title_full_unstemmed Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
title_short Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
title_sort retire in peace: officials’ political incentives and corporate diversification in china
topic Public Administration
Sociology and Political Science
Arts and Humanities (miscellaneous)
url http://dx.doi.org/10.1177/0001839218786263
publishDate 2019
physical 773-809
description <jats:p>We develop a theory of how state officials’ political incentives can affect corporate behavior. In the pursuit of multiple goals, such as social stability and economic development, the state designs criteria to evaluate its officials’ performance. Those officials may be motivated to prioritize different goals at different stages of their careers and to mobilize firms to help them achieve those goals. We test our theory in the context of Chinese publicly listed firms’ diversification between 2001 and 2011, when the state faced economic and social ramifications of bankrupt state-owned enterprises (SOEs) laying off large numbers of workers. Our results show that when large layoffs occurred, some firms diversified into industries unrelated to their core business by acquiring bankrupt SOEs and reemploying their workers. This was more likely to occur when the governor of the firm’s home province was closer to retirement, as social stability was more important than economic development for the retiring governor’s career objective. The effect of career stage was weaker for Communist Party leaders, who more consistently prioritized social stability, and when a provincial state experienced intense collective actions that made social stability a stronger immediate focus. The effect was strengthened for firms more vulnerable to officials’ influence, such as those with a strong socialist imprint and those dependent on government resources. Our study extends the Weberian state literature and the political economy research on incentives, and it offers a political explanation for corporate diversification in a major transitional economy.</jats:p>
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description <jats:p>We develop a theory of how state officials’ political incentives can affect corporate behavior. In the pursuit of multiple goals, such as social stability and economic development, the state designs criteria to evaluate its officials’ performance. Those officials may be motivated to prioritize different goals at different stages of their careers and to mobilize firms to help them achieve those goals. We test our theory in the context of Chinese publicly listed firms’ diversification between 2001 and 2011, when the state faced economic and social ramifications of bankrupt state-owned enterprises (SOEs) laying off large numbers of workers. Our results show that when large layoffs occurred, some firms diversified into industries unrelated to their core business by acquiring bankrupt SOEs and reemploying their workers. This was more likely to occur when the governor of the firm’s home province was closer to retirement, as social stability was more important than economic development for the retiring governor’s career objective. The effect of career stage was weaker for Communist Party leaders, who more consistently prioritized social stability, and when a provincial state experienced intense collective actions that made social stability a stronger immediate focus. The effect was strengthened for firms more vulnerable to officials’ influence, such as those with a strong socialist imprint and those dependent on government resources. Our study extends the Weberian state literature and the political economy research on incentives, and it offers a political explanation for corporate diversification in a major transitional economy.</jats:p>
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spelling Wang, Danqing Luo, Xiaowei Rose 0001-8392 1930-3815 SAGE Publications Public Administration Sociology and Political Science Arts and Humanities (miscellaneous) http://dx.doi.org/10.1177/0001839218786263 <jats:p>We develop a theory of how state officials’ political incentives can affect corporate behavior. In the pursuit of multiple goals, such as social stability and economic development, the state designs criteria to evaluate its officials’ performance. Those officials may be motivated to prioritize different goals at different stages of their careers and to mobilize firms to help them achieve those goals. We test our theory in the context of Chinese publicly listed firms’ diversification between 2001 and 2011, when the state faced economic and social ramifications of bankrupt state-owned enterprises (SOEs) laying off large numbers of workers. Our results show that when large layoffs occurred, some firms diversified into industries unrelated to their core business by acquiring bankrupt SOEs and reemploying their workers. This was more likely to occur when the governor of the firm’s home province was closer to retirement, as social stability was more important than economic development for the retiring governor’s career objective. The effect of career stage was weaker for Communist Party leaders, who more consistently prioritized social stability, and when a provincial state experienced intense collective actions that made social stability a stronger immediate focus. The effect was strengthened for firms more vulnerable to officials’ influence, such as those with a strong socialist imprint and those dependent on government resources. Our study extends the Weberian state literature and the political economy research on incentives, and it offers a political explanation for corporate diversification in a major transitional economy.</jats:p> Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China Administrative Science Quarterly
spellingShingle Wang, Danqing, Luo, Xiaowei Rose, Administrative Science Quarterly, Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China, Public Administration, Sociology and Political Science, Arts and Humanities (miscellaneous)
title Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
title_full Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
title_fullStr Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
title_full_unstemmed Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
title_short Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
title_sort retire in peace: officials’ political incentives and corporate diversification in china
title_unstemmed Retire in Peace: Officials’ Political Incentives and Corporate Diversification in China
topic Public Administration, Sociology and Political Science, Arts and Humanities (miscellaneous)
url http://dx.doi.org/10.1177/0001839218786263