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The Dynamics of Political Embeddedness in China: The Case of Publicly Listed Firms

June 10, 2014 - 10:00-12:00

Lecture by Professor Heather A. Havemann, University of California, Berkeley

In the wake of China’s transition from state socialism toward market capitalism, there has been much debate about how relations between political and economic actors, in particular between state bureaucrats and business enterprises, have changed.  We argue that given the lack of political reform, political embeddedness has become increasingly important for business.  Economic reform created many new business opportunities; in the absence of political reform, ties to state bureaucrats became more important for acquiring resources, many of which remain state-controlled, and for gaining state authorization of business activities that allowed firms to take advantage of these opportunities.  
Our analysis of Chinese listed firms from 1992 to 2007 supports this argument:  as market development progressed, firms’ political connections had increasingly positive effects on overall performance and access to bank loans; they also increasingly sheltered firms from pressures to funnel assets to related parties.  Most of these effects were more pronounced in more-competitive markets because there was more at stake there.  All of these effects were less pronounced for larger firms because they benefited from economies of scale and so were better-positioned to handle increased competition; they also had easier access to state-controlled resources and lower risks of state expropriation of their assets.  Overall, our result reveals that economic reform without political reform has made political embeddedness in China an increasingly powerful force in the market economy.

This lecture is free of charge.

Registration deadline: 9 June.
Register: here

Organised by: Copenhagen Business Confucius Institute
Venue: Room Ks 48, Kilevej 14, 2000 Frederiksberg, Denmark

The Dynamics of Political Embeddedness in China: The Case of Publicly Listed Firms


June 10, 2014