Political Connections and Firms: Network Dimensions

Maurizio Bussolo, Simon Commander () and Stavros Poupakis
Additional contact information
Simon Commander: IE Business School, Altura Partners

No 11498, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Business and politician interaction is pervasive but has mostly been analysed with a binary approach. Yet the network dimensions of such connections are ubiquitous. We use a unique dataset for seven economies that documents politically exposed persons (PEPs) and their links to companies, political parties and other individuals. With this dataset, we can identify networks of connections, including their scale and composition. We find that all country networks are integrated having a Big Island. They also tend to be marked by small-world properties of high clustering and short path length. Matching our data to firm level information, we examine the association between being connected and firm-level attributes. The originality of our analysis is to identify how location in a network, including extent of ties and centrality, are correlated with firm scale and performance. In a binary approach such network characteristics are omitted and the scale and economic impact of politically connected business may be significantly mis/under-estimated. By comparing results of the binary approach with our network approach, we can also assess the biases that result from ignoring network attributes.

Keywords: networks; connections: PEPs; rents (search for similar items in EconPapers)
JEL-codes: L14 L53 P26 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2018-04
New Economics Papers: this item is included in nep-big, nep-net, nep-pol and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published in: Oxford Economic Papers, 2023, 75 (1), 256–280,

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Related works:
Journal Article: Political connections and firms: network dimensions (2023)
Working Paper: Political connections and firms: network dimensions (2018)
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