Abstract This empirical paper studies corporate political activities in Chinese transitional environment. The research results show that 1) Corporate political activities widely exist in China; 2) Firms can develop and implement eight types of political strategies in China; 3) There is a high level of similarity, as well as significant differences between political activities of firms in Chinese environment and western environment.
Key words Corporate political
strategy, Government policy, Chinese transitional environment
1 Introduction
In developed countries with market economy, the issues of public policies and rules, which influence business activities, have always been concerned by business organizations (Shaffer, 1995). Firms not only comply with government policies and regulations, but also influence the government decision-making process actively in many aspects, in order to create a favorable
business environment for them (Zhang WeiYing, 2001; Hillman and Hill, 1999). The later is called corporate political activities, which have been studied extensively in past twenty years (such as, Davis,1998; Getz,1993; Hillman and Hitt, 1999; Keim,1981; Sethi,1982; etc.). For example, Getz (1993) identified seven tactics of corporate political actions (CPA), including lobbying, reporting researching results, reporting survey results, testimony, legal actions, private services and constituency building. Davis (1998) focused on CEO testimony and direct lobbying, and found out that most of firms affected the government policy through lobbying, communication and electoral contribution.
China is still in a transition period from planned economy to market economy, and the government’s influences over firms remains not only at macro level by means of the policy and regulation, but also at the microcosmic level by means of direct intervention. At the same time, business sectors (including public firms and private firms) exert enormous influences on government decision-making and resource allocation process, and such phenomenon in China is more common than that in the West (Chen Huaiyuan, 2000). Although the above-mentioned political activities of Chinese firms exist to a large extent, they are not well studied academically.
This paper takes Chinese firms as its study objects and studies the characteristics of corporate political activities in the course of Chinese economic transition. In the section follows, we first introduce research questions and research methodology, and then in section three, we analyze the research results obtained through questionnaire survey by categorizing corporate political strategies, and exploring the extent of their usage by means of factor analysis. In section four, we discuss the research results by relating them with the research findings in existing literature, and finally in section five, we summarize our study and discuss the implications of our research findings.
2 Research Methodology
2.1 Research Questions
We define corporate political strategy as the strategy that firms employ to influence the formulation and implementation process of government policy and regulation in order to create a favorable external environment for their business activities (Getz,1993; Zhilong Tian, Yongqiang Gao & Wei Wu, 2003). Based on discussions in the introduction section, we study following two questions in detail: (1) What kind of political strategies do firms in China adopt and what is the extent of their usage? (
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