Does politician turnover affect foreign subsidiary performance? Evidence in China

Weiguo Zhong (), Ya Lin (), Danxue Gao () and Haibin Yang ()
Additional contact information
Weiguo Zhong: Peking University
Ya Lin: Hong Kong Baptist University
Danxue Gao: Central University of Finance and Economics
Haibin Yang: City University of Hong Kong

Journal of International Business Studies, 2019, vol. 50, issue 7, No 6, 1184-1212

Abstract: Abstract While research has acknowledged the importance of political risks in affecting multinational companies’ behavior and performance outcomes, the roles of political agents in this process have largely been ignored. This study explores one important dimension of political risks caused by politician turnover at the sub-national level and examines its influence on the performance of foreign subsidiaries. We contend that policy uncertainty arising from politician turnover adversely affects the performance of foreign subsidiaries. We further develop a multi-level framework identifying contingent factors at event (i.e., internal promotion), firm (i.e., international joint venture), and environment (i.e., market intermediary development) levels that moderate the relationship between politician turnover and MNC performance. Analyses of foreign subsidiaries located in 310 Chinese cities from 1998 to 2007 largely support our thesis that politician turnover dampens the performance of foreign subsidiaries. This negative performance impact is then alleviated for internal promotions, international joint ventures, and firms located in regions with a high degree of market intermediary development. Our study opens a new avenue for examining the role of host-country political agents in affecting MNC performance.

Keywords: politician turnover; regional political uncertainty; multinational corporations; sub-national environment (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

Downloads: (external link)
http://link.springer.com/10.1057/s41267-019-00229-5 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:jintbs:v:50:y:2019:i:7:d:10.1057_s41267-019-00229-5

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/41267/PS2

DOI: 10.1057/s41267-019-00229-5

Access Statistics for this article

Journal of International Business Studies is currently edited by John Cantwell

More articles in Journal of International Business Studies from Palgrave Macmillan, Academy of International Business
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().