Doing Business in a Transitional Society: Economic Environment and Relational Political Strategy for Multinationals

Yadong Luo, Hongxin Zhao

Research output: Contribution to journalArticlepeer-review

22 Scopus citations

Abstract

This article addresses how foreign subsidiaries formulate their relational political strategy by responding to the unique parameters of the economic and institutional environment in an emerging market in an attempt to improve their performance. To this end, the authors have developed a model that assesses economic environment antecedents characterizing an emerging market (regulatory distance, industry accessibility, environmental uncertainty, and economic development) as well as the performance consequence of the subsidiaries' relational political strategy. A possible moderating effect of the firm's reputation in the host country and length of operations on the relationship between political strategy and local performance is also examined in the model. Our analysis of primary and secondary data concerning 358 foreign-invested enterprises in China generally supports this model.

Original languageEnglish (US)
Pages (from-to)515-549
Number of pages35
JournalBusiness and Society
Volume52
Issue number3
DOIs
StatePublished - Sep 1 2013

Keywords

  • China
  • economic environment
  • multinationals
  • political strategy
  • transition economies

ASJC Scopus subject areas

  • Business, Management and Accounting (miscellaneous)
  • Social Sciences (miscellaneous)

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