This paper examines the influences from the political sector on international expansion of Chinese firms. In analyzing the political sector, we distinguish between ‘formal institutional influences from the government’ and ‘informal relational influences from elite politicians.’ We argue that the government can pressure emerging-market firms to expand abroad despite the risk when outbound globalization is the national policy. However, networks with powerful politicians can discourage international expansion since sufficient domestic returns provided by the political connections can lead to lower motivation for internationalization. The governmental pressures toward internationalization can be moderated by firm size and relational networks with powerful politicians.
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Unlike countries where multiple parties compete for power, and where political institutions for administration, legislation, and jurisdiction are independent from one another, CCP exercises comprehensive authority over the entire political and economic system in China. Outbound globalization of Chinese firms is one of the domains to which the Chinese government demonstrates keen interest, and accordingly exercises great power. Luo et al. (2010) provide a detailed description of the institutional environment for Chinese SOEs in their internationalization process. SOEs need to gain approval from the Ministry of Commerce (MOC) for investments abroad, and for central SOEs owned by the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC), approval from SASAC is also required. If the investment is a large-scale project, SOEs also need to gain
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All Science Journal Classification (ASJC) codes
- Business and International Management
- Sociology and Political Science
- Political Science and International Relations
- Strategy and Management