Influence of political relationship building on the business activity of firms in China.

Abstract

As Chinese firms increase their level of business activity, they are gradually paying attention to corporate political activities, which can bring political and economic benefits. This paper studies the influence of political relationship building of the business activity of Chinese firms. It reveals that there is a certain relationship between political relation strategy and political performance among different ownership's firms and in different periods.

Key Words: Business activity; political relation strategy; political performance; content analysis

Introduction

On 5 April 2001, the South Carolina (SC) state government held a grand ceremony of the naming of "Haier Road", in which the mayor of Kanmuton City awarded the Gold Key and Honorary Citizenship to Zhang Ruimin, CEO of Haier Co. In this way, the American host state thanked Haier Industrial Park for their contributions to the development of the local economy.

The SC state and city governments gave some preferential policies to Haier, such as the reduction and exemption of income tax, real estate tax, and sales tax. These incentives may be viewed as enhancing a firm's competitive efforts. Other benefits include publicity generated by the event.

Linking corporate political activity to organisation performance is a topic well studied in corporate political strategy (CPS) or corporate political action (CPA) literature. Previous research has demonstrated the use of industry and collective political activities to achieve group benefits (Epstein, 1984; Keim and Zardkoohi, 1988; Pittman, 1977; Salamon and Seigfried, 1977). For example, Olson (1965) argues that two types of benefits may result from collective activity. Collective benefits from corporate political strategies are derived from trade barriers, quotas, standard setting, or any regulation which affects the economy as a whole, or all of a particular industry or subset of an industry. Selective benefits pertain to useful access to or influence with decision-makers unavailable to rivals, information not available to rivals, special tax benefits, and the award of government contracts. Though western scholars believe that the benefits outweigh the costs of firm political activities, the effectiveness of such activities has remained difficult to evaluate (Boddewyn, 1988; Keim and Baysinger, 1988; Sethi, 1982). While in theory, government relations and strategies may create value for firms, it is difficult to link these activities to measurable performance at the firm level. Corporate political activities may be considered a "non-market" strategy that attempts to improve overall performance, while "market" strategy attempts to create value by improving economic performance (Baron, 1995a; 1995b; 1997). Because of this, the nature of the benefits accrued from such activity is not easily measured although it has the potential to affect overall firm performance. Therefore, to our knowledge, to date no research has been done to empirically measure firm-specific benefits of political activity or linkages.

However, there is significant difference between the Chinese business environment and western environment. The relevant literature in China focuses on the theoretical discussion of corporate political activity, and puts forward some concepts from the government perspective, such as "business-government relation", "political image", "political public relation", "political business", "political entrepreneur", "government public relation", "political orientation" and "political marketing", etc. (Sun Minggui, 2002; Liu Hongjun, 2002; Chen Zhaoxiang, 2002). This paper uses the relevant government news of Chinese firms' Web sites as its study objects, and analyses the influence of political relationship based on the business activity.

In the following section, we introduce the research methodology of content analysis, and then we define and categorise political relation strategy and political performance, and explore the relationship between them by means of stepwise regression, time series, and correlation method. Finally, we summarise our study and discuss the suggestions of our research findings.

Research Methodology and Data

Content analysis was used in our study to analyse the news of Chinese firms. Berelson (1952) defines content analysis as "a research technique for the objective, systematic, and quantitative description of the manifest content of communication". In this study, it was used as inferences for latent key information, content, and phenomena of the news, which are not apparent or visible in understanding political relation strategy and political performance.

Samples and Selection Criteria

The sample for the content analysis was drawn from the population of the news found in the Web sites of 76 Chinese firms. The dates of the news were restricted to range from January 2001 and September 2003. The firms were selected from a list in the "National Firm Directory 2002". We singled out only those Chinese firms which fulfilled the certain criteria. First, they had annual sales greater than 10 billion yuan and a staff of more than 1,000 in total. Second, their firms not only have a certain political influence, but also have a great deal of publicly available news to the relevant columns on their Web sites.

Third, the firms are State-Owned Enterprises (SOE), private or foreign firms. This helps to analyse the differences of political relation strategy and political performance among different types of firms. Finally, using popular search engines (for example, Baidu, Yahoo, Google), we found the home pages of selected firms, which include P&G, Epson, Motorola, Fujitsu, Galanz, Lifan, Ufida, Haier, TCL, Baosteel. A list of Web sites is included in the appendix.

Unit of Analysis

Content analysis requires the selection of a unit of analysis. According to Holsti (1969), a recording unit is "the specific segment of content that is characterised by placing it into a given category". The unit of analysis in this study was the news of a complete firm Web site, defined as all HTML pages that are included in the site's root. Therefore, the news of the entire site was coded, including all links and pages associated with that particular site without going beyond the main root address (Chan-Olmsted and Suk Park, 2000). In corporate political strategy literature, debate and major ambiguity have arisen (Gray et al, 1995b) relating to the question as to what political outcome firms obtain in their business activity, which is regarded as the basis for the coding. Thus, the selection of unit of analysis was also based on two primary criteria.

First, only significant news that provide useable information were chosen. Selection of news was restricted to those one-quarter pages or larger. Second, the news had to contain a business activity involving the government that was clearly discernable. From the Web sites, a total of 27,780 pieces of the news that met those criteria were used.

Coding Sheet

We were specifically interested in understanding if we could identify and categorise political relation strategy and political performance, and determine if they were linked, as theorised by Baron (1995a, 1995b, 1997). Therefore, in examining the news content, we further divided the relevant information into two coding sheets. The coding sheet used by the judges contained a variety of variable measures that provided a detailed and comprehensive examination of the characteristics of political relation strategy and political performance appearing in the news of Web sites.

Political Relation Strategy

A coding sheet was developed to record the information on how and what political activities firms in China adopt to communicate with the government in the course of their business. The coding sheet included variables in previous literature of corporate political strategy or action (Tian Zhilong et al, 2002; Salamon and Seigfried, 1977; Yoffie, 1987; Douglas, 1995; Getz, 1993, 1997; Hillman, et al, 1999; Davis, 1998; Hillman and Michael, 1999), as well as variables appropriate to the news characteristics of Web sites.

The political relation strategy was segmented into seven specific strategy categories (public welfare strategy, public relation strategy, visiting strategy, participating strategy, publicising strategy, party affair strategy, and media strategy) listed in Table 1. This procedure and resultant strategy variables or categories was coded also according to the definition of political relation strategy used by Wei Wu et al (2004), with a few additions (overlapping information, and contradictions discussed in the news content).

Political Performance

The next coding sheet captured the key information characteristics of political outcome in firm business activity. Then, following the original definitions by Wei Wu et al (2004), corporate political performance was categorised as government resources, political competitive advantage (for example, government support of R&D, integration and internationalisation), market performance, and financial performance, as illustrated in Table 2.

Additionally, an "other" category was included to cater to other aspects of political outcomes. After the coders were trained, they pretested the coding sheet to establish preliminary reliabilities and determine whether modifications were needed to the coding sheets or categories.

Tables 1 and 2 contain a list of some key information and several news samples across seven political relation strategies and four political performance type categories or variables. The specifics of how each variable measured was operationalised and related to the research questions are detailed in the results section.

Coding Procedure

Two coders (an EMBA student in Wuhan with over eight years of working experience, and a professor of strategic management at Huazhong University of Science and Technology) were thoroughly trained on how to code the news of Web sites relating to political relation strategy and political performance, and what the operational definitions were for each category or variable based on the key information of the coding sheet.

During the training sessions, all disagreements between the judges of two coders were solved through discussion to give the tests higher validity. Finally, two coders were asked to analyse each news item by determining the presence of any of the corresponding categories and variables information cues while at the same time counting the total number of information cues for each category or variable contained in the news of Web sites.

When the two coders encountered coding disagreements, group consensus took priority over individual judgment. When faced with unsolvable conflicts, a final judgment was given by the author. All coding tasks were completed by the second week of October 2004. The final data set contains a total of 6,638 political relation strategies or actions and 4,754 political performances.

Reliability

Two reliability tests were carried out on 20 per cent of the sample using the Holsti's (1969) formula. First, an intra-coder reliability test was performed by a primary judge over a one-month interval and average scores exceeded 85 per cent, the minimum suggested by Kassarjian (1977), which were considered to be satisfactory.

Second, an inter-judge agreement was calculated using a reliability index suggested by Perreault and Leigh (1989), which is considered to be the best by various researchers (Kolbe and Burnett, 1991; Ji and McNeal, 2001). After coding all the news items, the author evaluated the same sample independently and later compared his results with those of the coders. The majority of the reliability indexes exceeded the critical value of 0.80 recommended by Perrault and Leigh (1989).

Analyses and Results

The frequency corresponded to each category or variable of political relation strategy and political performance was recorded by content analysis. Table 3 gave the percentage of news including at least one instance of each category or variable, and explored operational definitions of all coding categories or variables. Table 4 gave descriptive statistics for all categories or variables among firms of different ownership used in the study. It assigned the relative weights of each type of corporate political performance. Stepwise regression, time series, and correlation method were used to test the effect of political relation strategy on political performance among different ownership's firms and in different periods.

Operational Definitions of Variables

Through the content analysis method, several areas were identified as being the key information to understanding how and what the news of Web sites are related to political activity of Chinese firms as denoted by Political Relation Strategy and the corresponding political outcome in their business activity as denoted by Political Performance in Table 3. The most frequent information cue of political relation strategy was "public relations strategy" (appearing in 39.89 per cent of the news), followed by "visiting strategy" (19.01 per cent), "publicising strategy"(12.17 per cent), "Public welfare strategy" (11.27 per cent), "Media strategy" (9.16 per cent), "Party affairs strategy" (4.28 per cent) and "Participating strategy" (4.22 per cent). However, the most frequently information cue of political performance was "intangible resources" (49.35 per cent), followed by "market performance" (22.09 per cent), "financial performance" (11.61 per cent), "relation resources" (9.09 per cent), "political competitive advantage" (4.16 per cent), and "tangible resources" (3.7 per cent). Operational definitions of all coding categories or variables discussed in the paper are as follows:

Political Relation Strategy

Political relation strategy is used when firms relate their business activities with the achievements, personal preferences, and wills of government officials, and improve the relationship between governments and firms, thus enhancing their influence on the formulation and implementation process of government policies and regulations. The following strategies were based on the descriptions of the news:

1. Public welfare strategy in which firms support all kinds of public welfare activities (education, hygiene and health, city development, environmental protection, relief work in disasters) by means of donations and funding;

2. Public relation strategy relates to firms taking advantage of various opportunities of business activities to improve their political reputation, and expand their political influence, thus fulfilling their social ambition to achieve anything, win acceptance by the governments, and gain favourable impressions from the public;

3. Visiting strategy means that firms invite government officials to see their contribution to local economic and social development, and make them realise the influence of policies and laws on the firms' business activities;

4. Participating strategy occurs when firms express their opinion to some policies and laws by participating in the government meetings, or submit formal reports to government departments, trade associations, and legislation departments;

5. Publicising strategy relates to firms understanding the thoughts of the Communist Party or the speeches of government officials, and make their employees publicise policies and laws in business activities, and ensure the effective execution of government policies, and win the trust of government officials, thus improving their political reputation and image;

6. Party affair strategy means that Communist Party organisations not only participate in firm business activities, but also play a key role in firm political activities, thus improving the level of strategic decision-making, and enhancing the ability to communicate with the government;

7. Media strategy focuses on firms making use of various media not only to report their business activities, development direction, and strategy plan to the government, but also to call on the pubic to support or oppose those pending legislations, thus indirectly creating favourable public opinion to influence the attitude of the government.

Political Performance

Political performance in the news is defined as all kinds of political and economic benefits firms obtained in the course that they formulate and implement political relation strategies to influence the decision-making process of government policy. The following explanations of political performance were based on the descriptions of the news:

1. Government resources can be identified into three different types in the firms' business activities including: tangible resources such as the budgets, funds, and personnel involved with governments; intangible resources such as corporate reputation and political image; relational resources such as the existing relationships with customers, governments, society, and other stakeholders. These types of government resources are obtained through political relation strategies.

2. After firms develop and execute political relation strategies to obtain all kinds of government resources, the initial outcome of these strategies is the realised political competitive advantages which firms are able to gain political market relative to competitors by influencing the government decision process. Political competitive advantage reflects the government's support in the firms' competitive strategies (for example, R&D, integration and internationalisation activities).

3. There is a kind of interaction among political performance, market performance, and financial performance, which may be viewed from political orientation, political market, and political outcome perspectives (Wei Wu et al, 2004). From the political orientation perspective, political performance concerns cognitive and affective responses of the government to political relation strategies, the subsequent government resources available to the firm, and competitors in the political market to the realised political competitive advantages achieved by the firm. From the political market perspective, market performance is manifest in the subsequent effect of political relation strategies as seen in terms of government contracts, product sales, and market share.

From the political outcome perspective, the sales performance of the firm in combination with the cost of political relation strategies in the political market will determine the financial performance outcomes in terms of revenue, cash flow, and profitability. Therefore, political performance is a premise that firms enhance their market position and financial level, while market and financial performance helps firms to improve their political performance through political strategy or political relation strategy.

Effects of Political Relation Strategy on Political Performance among Firms with Different Ownership

To address possible differences among different types of firms, we first categorised Chinese sample firms into SOE, private, and foreign ones. Table 4 shows the means and standard deviations of descriptive statistics for the study's variables. As can be seen in Table 4, there are considerable differences in the frequencies of political relation strategy and political performance among firms of different ownership. For political relation strategy, SOE firms are widely concerned with all levels of governments, as they have good relationships with governments. Therefore, SOE firms often develop and execute political relation strategy in their business activities, and the means of all types of strategies are higher. Private firms not only pay attention to political affairs, but also participate in the discussion of government policies. However, it is usually difficult for private firms to organise some activities of the Communist Party, so the means of public relation, visiting, participating and publicising strategy are higher, while those of public welfare, party affairs, and media strategy are lower.

For political performance, SOEs and private firms often obtain all kinds of political honours and titles which governments or trade associations award, so the means of intangible resources are higher. Generally, SOE firms are much larger, while foreign firms are more profitable, so the means of market performance and financial performance are higher. However, private firms are at the developing stage, smaller and weaker, so the means are lower.

Table 5 shows the panel' s weights of corporate political performance types in our study. As can be seen, tangible resources (0.80), political competitive advantage (0.80), market performance (0.80), and financial performance (1.00) were considered more important than the two types of intangible resources (0.20) and relation resources (0.60), which would likely not be considered important. These panelist weightings are consistent with other potential measures of corporate political performance (for example, Wei Wu, 2006). After considering those weights, we measure the total level of political performance every firm.

Table 6 presents the results of three stepwise regression analysis using seven types of political relation strategies as the independent variable and corporate political performance as the dependent variable. Models 1 to 3 test for those political relation strategies that have a significant effect on the political performance among firms of different ownership (SOE, private, foreign). As can be seen in Table 6, each of the models is significant overall at the p<0.01 level.

In Model 1, public relations strategy, participating strategy, publicising strategy, party affairs strategy were positively and significantly related to political performance at the p<0.1 level.

In Model 2, visiting strategy and participating strategy were positively and significantly related to political performance at the p<0.1 level.

In Model 3, the level of political performance was significantly influenced by public welfare strategy. The three models explained 76.7, 77.8 and 74.1 per cent of the variation of political performance respectively. Their R-squared were all more than the threshold value of correlation coefficient at the p<0.1 level, which indicates that those models can approximately describe the relationship between political relation strategy and corporate political performance of firms of different ownership.

Effects of Political Relation Strategy on Political Performance in Different Periods

To explore the dynamic, periodical, regular relationship between firms and governments, we analysed the news on the Web sites from January 2001 to September 2003. Table 7 presents the frequency statistics of political relation strategy and political performance every month. As can be seen from the table, the frequency of political relation strategy shows an irregular trend in different periods, which results from different political issues including: (1) the National People's Congress and the Chinese People's Political Consultative Conference in March or April every year; (2) the 16th National People's Congress in November 2002; (3) the SARS outbreak from March to June 2003.

After eliminating the effect of above-mentioned political issues (the values of political relation strategy in March and April every year, which are replaced by the average value in November 2002 and from March to June 2003), we analysed the frequency of political relation strategy and political performance with time series. Table 8 reports autocorrelations (AC) coefficients of political relation strategy and political performance respectively. It shows the frequency of political relation strategy and political performance won't change regularly according to the season, because AC coefficients trend to zero when the lagtime is 12, and all nearly are within confidence interval (-0.341, 0.341) at the level .05 of significance. In other words, the frequency of political relation strategy in China isn't related to time.

Table 9 reports the augmented Dickey-Fuller (ADF) test results of political relation strategy and political performance respectively. It shows t statistics of political relation strategy is less than the critical value, which is -2.9558 at the level .05 of significance, so the time series of political relation strategy is stationary. In other words, the frequency of political relation strategy fluctuates around the average value each month. However, t statistics of two kinds of measuring political performance frequency are -1.953 and -1.994, which are all more than the critical value at the level. 1 of significance, so the time series are nonstationary and irregular, which results from the different lagging effects of political relation strategy on political performance.

Additionally, to analyse the influence of political relationship in the business activity further in different periods, those data in Table 7 were used to test the relationship between political relation strategy and weighted political performance by two rank correlation methods. Its finding shows the value of Spearman correlation coefficient is 0.334 between weighted political relation strategy and political performance, while the value of Kendall correlation coefficient between them is 0.229. This supports the notion that the political relation strategy in the business activity was positively and significantly related to political performance.

Discussion and Conclusion

The results of content analysis, frequency statistics, stepwise regression, time series, and correlation analysis suggest that the study of the influence of political relation strategy on corporate political performance has two components: (1) effects of different firms; (2) effects over time.

The first major finding of this study differentiates among firms of different ownership with respect to the political relationship after examining the types of political relation strategy and political performance in the business activities. SOE firms who have been concerned by all levels of governments and medium, make great efforts to publicise government policies or laws, and establish communist party organisation, thus they are good at the execution of political relation strategy to create the favourable political environment, and obtain the most political and economic benefits. Private firms who recently participate in political affairs for their survival right, have already realised the importance of the relation with governments, and develop or execute visiting strategy and participating strategy to improve the level of political performance. Foreign firms usually don't know the Chinese business and political environment, thus they develop or execute public welfare strategy to strengthen the political influence, and obtain some government contracts. Furthermore, the firms of different ownership have a significant difference among the effects of political relation strategy on political performance.

The second major finding differentiates among firms with respect to the intensity of their political relation strategies across the study period. From January 2001 to September 2003, three political issues were the most important determinants of the levels of firms' political involvement across time, which include: (1) firms made use of the Communist Party organisation to publicise the government policies or laws during the annual National People's Congress and Chinese People's Political Consultative Conference; (2) firms asked employees to learn and know the reports and spirits of the 16th National People's Congress; and (3) firms supported Chinese government to fight against the SARS outbreak by participating in public welfare activities actively.

The findings indicated that political actions of Chinese firms have already become a kind of daily business activity when political issues don't occur during those period. Though political relation strategies have a lagging and random effect on political performance in business activities, there is still a certain relationship between them. Therefore, as Chinese firms strengthen political influence in their business activities, they have gradually the importance of political relation strategy, which can bring political interests and economic benefits.

Appendix: Web Sites of Some Sample Firms

Firm                  Web Site                           Ownership

P&G                   http://www.pg.com.cn               Foreign
GE                    http://www.ge-china.com            Foreign
ERICSSON              http://www.ericsson.com.cn         Foreign
AMWAY                 http://www.amway.com.cn            Foreign
SHANGHAI VOLKSWAGEN   http://www.csvw.com/csvw           Foreign
EPSON                 http://www.epson.com.cn            Foreign
HONDA                 http://www.guangzhouhonda.com.cn   Foreign
NOKIA                 http://www.nokia.com.cn            Foreign
FUJITSU               http://www.fujitsu.com.cn          Foreign
MOTOROLA              http://www.motorola.com.cn         Foreign
DIGITALCHINA          http://www.digitalchina.com        Foreign
CANON                 http://www.canon.com.cn            Foreign

GALANZ                http://www.galanz.com.cn           Private
UFIDA SOFTWARE        http://www.ufsoft.com.cn           Private
JUNYAO GROUP          http://www.junyao.com              Private
CHNT GROUP            http://www.chint.net               Private
LIFAN GROUP           http://www.lifan.com               Private
DELIXI GROUP          http://www.delixi.com              Private
SANY GROUP            http://www.sany-china.com          Private
ZHONGDA GROUP         http://www.zhongda.com.cn          Private
HONGDOU GROUP         http://www.hongdou.com.cn          Private
AOKANG GROUP          http://www.aokang.com.cn           Private

TONGRENTANG GROUP     http://www.tongrentang.com         SOE
999 GROUP             http://www.39.net                  SOE
CHINA FAW GROUP       http://www.faw.com                 SOE
HATER GROUP           http://www.haier.com               SOE
CHUNLAN GROUP         http://www.chunlan.com             SOE
DONGFENG MOTOR
  CORPORATION         http://www.dfmc.com.cn             SOE
CAPINFO GROUP         http://www.capitel.com.cn          SOE
LUCKY COMPANY         http://www.luckyfilm.com           SOE
COCONUT PALM GROUP    http://www.yeshu.com               SOE
TCL GROUP             http://www.tcl.com                 SOE
BAOSTEEL GROUP        http://www.baosteel.com            SOE
BANK OF CHINA         http://www.bank-of-china.com       SOE
ZTE CORPORATION       http://www.zte.com.cn              SOE
HONGTA GROUP          http://www.hongta.com              SOE
AUCMA GROUP           http://www.aucma.com.cn            SOE
ANSHAN IRON AND
  STEEL GROUP         http://www.ansteel.com.cn          SOE

Acknowledgement

This research was supported by the Social Science Foundation of China under Grant 07CTQ013 and by the Social Science Foundation of the Ministry of Education of China under Grant 06JC630029.

References

Baron D, 1997. "Integrated Strategy, Trade Policy, and Global Competition", California Management Review, Vol 39, pp 147-169.

--, 1995a. "Integrated Strategy: Market and Non-market Components", California Management Review, Vol 37, pp 47-65.

--, 1995b. "The Non-market Strategy System", Sloan Management Review, Fall: pp 73-85.

Berelson B, 1952. Content Analysis in Communication Research. The University of Chicago Press: Chicago.

Boddewyn J, 1988. "Political Aspects of MNE theory", Journal of International Business Studies, Vol 4, pp 341-363.

Chan-Olmsted, Sylvia and Jung Suk Park, 2000. "From OnAir to Online World: Examining the Content and Structures of Broadcast TV Stations' Web Sites", Journalism and Mass Communication Quarterly, Vol 77 No 2, pp 321-339.

Chen Zhaoxiang. 2002. "The Means of Political Market", Journal of Beijing Price, Vol 2, p 34 (in Chinese).

Davis B, 1998. "CEOs, Stymied in Capital on Trade, Lobby Hinterland", Wall Street Journal, June, A30.

Douglas D, 1995. "Corporate Political Activity as a Competitive Strategy: Influencing Public Policy to Increase Firm Performance" PhD thesis, Texas A&M University.

Epstein E, 1969. The Corporation in American Politics, Englewood Cliffs, NJ: Prentice Hall.

Getz K, 1993. Selecting Corporate Political Tactics. Newbury Park, CA: Sage.

--, 1997. "Research in Corporate Political Action: Integration and Assessment", Business and Society, Vol 36 No 1, pp 32-72.

Gray R, R Kouhy and S Layers, 1995. "Corporate and Social Environmental Reporting: A Review of the Literature and A Longitudinal Study of UK Disclosure", Accounting, Auditing & Accountability Journal, Vol 8 No 2, pp 44-77.

Hillman A, A Zardkoohi and L Bierman, 1999. "Corporate Political Strategies and Firm Performance: Indications of Firm-specific Benefits from Personal Service in the US Government", Strategic Management Journal, Vol 20, pp 67-81.

Hillman J and A Michael, 1999. "Corporate Political Strategy Formulation: A Model of Approach, Participation, and Strategy Decisions, Academy of Management Review, Vol 24 No 4, pp 825-842.

Holsti O, 1969. Content Analysis for the Social Sciences and Humanities, Addison-Wesley, Reading, MA.

Ji MF and JU McNeal, 2001. "How Chinese Children's Commercials Differ from those of the United States: A Content Analysis", Journal of Advertising, Vol 30 No 3, pp 79-92.

Kassarjian HJ, 1977. Content Analysis in Consumer Research, Journal of Consumer Research, Vol 4, pp 8-18.

Keim G and B Baysinger, 1988. The Efficacy of Business Political Activity: Competitive Considerations in a Principal-agent Context, Journal of Management, Vol 14, pp 163-180.

Keim G and A Zardkoohi, 1988. "Looking for Leverage in PAC Markets: Corporate and Labor Contributions Considered", Public Choice, Vol 58.

Kolbe RH and MS Burnett, 1991. "Content-analysis Research: An Examination of Applications with Directives for Improving Research Reliability and Objectivity", Journal of Consumer Research, Vol 18, pp 243-250.

Liu Hongjun, 2002. "The Study of Political Entrepreneur", Journal of Economic Review, Vol 6, pp 21-24 (in Chinese).

Olson M, 1965. The Logic of Collective Action, Cambridge, England: Cambridge University Press.

Perreault WD Jr and LE Leigh, 1989. "Reliability of Nominal Data Based on Qualitative Judgments", Journal of Marketing Research, Vol 26, pp 135-148.

Pittman R, 1977. "Market Structure and Campaign Contribution", Public Choice, Vol 31, pp 37-58.

Salamon L and J Siegfried. "Economic Power and Political Influence: The Impact of Industry Structure on Public Policy", American Political Science Review, Vol 71 No 3, pp 1026-1043.

Sethi P, 1982. "Corporate Political Activism", California Management Review, Vol 24 No 2, pp 32--42.

Sun Minggui, 2002. "The 'Political Business' and Effect Analysis of Foreign Firms", Journal of Foreign Economic and Management, Vol 1, pp 7-12 (in Chinese).

Tian Zhilong, Gao Yongqiang and Wei Wu, 2003. "The Study on the Corporate Political Strategy and Action of Chinese Enterprises", The Journal of Management World, Vol 12, pp 98-106 (in Chinese).

Wu Wei 

School of Economics and Management

Wuhan University, Hubei

Wei Wu, 2006. "Corporate Political Resources, Political Strategies, Political Performance and their Relationship in China's Transitional Environment", The Journal of Management World, Vol 2, pp 95-109 (in Chinese).

Wei Wu, Tian Zhilong and Liu Jing, 2004. "The Political Relation Study of the Business Activity in China", China Industrial Economy, Vol 4, pp 67-75 (in Chinese).

Wei Wu, Tian Zhilong and Gao Haitao, 2004. "The Study of Corporate Political Performance Assessment System Model", The Journal of Economy and Management Overseas, Vol 26 No 5, pp 13-16 (in Chinese).

Yoffie D, 1987. Corporate Strategies for Political Action: A Rational Model in A Marcus, A Kaufman and D Beam (eds), Westport, Connecticut: Quorum Books.

End Notes

(1) Corporate political strategies are classified into seven types in China's transitional environment, and each type of political strategy consists of a number of political tactics or actions. However, political relation strategy in business activities is only one of them, which often has been adopted by Chinese firms. The research results have been issued in detail: Tian Zhilong, Gao Yongqiang, Wu Wei. The Study of Corporate Political Action and Strategy in China. The Journal of Management World, 2002(12).

Table 1: Key Information and News Examples for Political
Relation Strategy Types on the Code Sheet

Variables       Key Information

Public          Scholarship, Public fund,
Welfare         Charitable fund, The Hope
Strategy        Project, Sports, education,
                hygiene, health and other
                public welfare cause, Social
                welfare, Employment problem,
                Social insurance,
                Environmental protection,
                Relieve the people in
                disasters.

Public          Invite, Interview, Government
Relation        or trade association officials,
Strategy        Ceremony, banquet and meeting,
                Cut ribbon, Present gift,
                Congratulatory signature,
                photo, telegramme or speech.

Visiting        Visit, Interview, Inspect,
Strategy        Government official, Managers
                of other firms, Representative
                of National People's Congress,
                Representative of Chinese
                People's Political Consultative
                Conference.

Participating   Participate in, National
Strategy        People's Congress of
                Political Consultative
                Conference, Chinese
                People's Political
                Consultative Conference,
                Government of trade
                association conference,
                Legislative conference,
                Submit formal report to
                the government.

Publicising     Publicise, Learn, Follow,
Strategy        Grasp, Communist Party
                thought or spirit, Government
                policy, Speech of government
                officials.

Party           Found Communist Party branch
Affair          or group, Celebrate Communist
Strategy        Party anniversary, Organise
                the activities of Communist
                Party Member, Learn Communist
                Party history or spirit.

Media           The media, Obtain favourable
Strategy        public opinion, Report their
                business activities, Create
                favourable political
                environment, Influence
                government policy.

Variables       Examples of News

Public          As well-known pharmacy
Welfare         firm, Tongrentang Group
Strategy        Co often donated some
                medicine or gave free
                medical treatment
                especially during
                SARS outbreak.

Public          UFsoft Co invited government
Relation        officials to participate
Strategy        in information system
                technology seminar.

Visiting        Many government officials
Strategy        often visit Haier Group Co
                to learn about its successful
                managerial experience.

Participating   In 10th session of Chinese
Strategy        People's Political
                Consultative Conference, the
                board chairman of Delixi
                Group Co proposed some
                suggestions aiming at the
                problem of business pirating
                rights.

Publicising     China FAW Group Corp
Strategy        called on employees to
                learn the thought of "Three
                Representatives" that
                Chinese Communist Party
                proposed.

Party           San Jiu Group Co had
Affair          actively organised
Strategy        Communist Party Committee
                under the leadership of
                Shenzhen City government.

Media           Chongqing Lifan Group
Strategy        Corp told the media that
                it spent 10 million yuan to
                purchase 90 per cent share
                stock of Nanjin Co.

Table 2: Key Information and News Examples for Political
Performance Types on the Code Sheet

Variables                 Key Information

            Tangible      Preferential policy, land
                          or taxes. Trade barrier,
Government                Quota, Standard setting,
Resources                 Government fund, Bank loan,
                          Professional personnel,
                          Market chance, Policy
                          information.

            Intangible    Quality authentication,
                          Honorary title or name
                          (such as model worker,
                          pacemaker), Political
                          title or name (such as
                          representatives of
                          National People's
                          Congress, Political
                          prestige, image, and
                          reputation, Trademark
                          protection.

            Relation      Private or cooperative
                          relationships with customers,
                          competitors, suppliers, banks,
                          governments, and society, and
                          other stakeholders.

          Political       Government support of
          Competitive     R&D, integration and
          Advantage       internationalisation
                          activities (such as
                          patent, mergers,
                          technology innovation,
                          global market, etc),
                          Government policies
                          support (such as
                          exemption from
                          inspection, market
                          access, price
                          adjustment, industry
                          standard, anti-dumping
                          or anti-monopolising
                          bill, etc.)

          Market          Market share, Product
          Performance     sales (such as government
                          contract), New market
                          development.

          Financial       Revenue, Sale, Cash
          Performance     flow, Profitability,
                          ROA, ROE, EPS, etc.

Variables                 Examples of News

            Tangible      Haier Group Co obtained
                          various preferential land
Government                policies that the govern-
Resources                 ment gave when building
                          the industrial park.

            Intangible    Galanz Group Co was
                          often awarded the honor-
                          ary title "one of Most Excel-
                          lent Private Firms" by all
                          levels of governments.

            Relation      Baosteel Group Corp
                          signed the agreement of
                          strategic alliance with Wu-
                          han Steel Group Corp in
                          2001.

          Political       Shanghai Haiser Co ob-
          Competitive     tained the R&D fund sub-
          Advantage       sidised by Information
                          Industry Ministry to develop
                          the broadband access
                          chip technology.

          Market          Finance Bureau of Xiamen
          Performance     City chose to use the soft-
                          ware of UFsoft Co to train
                          the computer ability of its
                          accountants.

          Financial
          Performance

Table 3: Frequencies of Political Relation Strategy and
Political Performance

Categories    Variables                 Frequency   Percentage

Political     Public welfare strategy         748       11.27
Relation      Public relation strategy       2648       39.89
Strategy      Visiting strategy              1262       19.01
              Participating strategy          280        4.22
              Publicising strategy            808       12.17
              Party affair strategy           284        4.28
              Media strategy                  608        9.16

              Government   Tangible           176        3.70
              resources    Intangible        2346       49.35
Political                  Relation           432        9.09
Performance
              Political competitive           198        4.16
                advantage
              Market performance             1050       22.09
              Financial performance           552       11.61

Data source: News items in 76 firms' Web sites

Table 4: Results of Descriptive Statistics among Firms of
Different Ownership

                                           SOE firms (n=32)

Strategy      Ownership                     Mean         SD

              Public welfare strategy       12.00       10.82
              Public relation strategy      28.13       26.90
              Visiting strategy             27.69       26.73
Political     Participating strategy         4.00        3.52
  Relation    Publicising strategy          12.69       18.14
  Strategy    Party affair strategy         10.81        9.95
              Media strategy                12.81       17.56

              Tangible resources             3.63        3.93
              Intangible resources          46.31       39.09
Political     Relation resources             4.44        5.05
Performance   Competitive advantage          4.25        5.72
              Market performance            25.38       23.86
              Financial performance         11.75       12.00

                                           Private firms (n=20)

Strategy      Ownership                     Mean         SD

              Public welfare strategy        7.60        6.54
              Public relation strategy      32.40       36.80
              Visiting strategy             26.90       20.16
Political     Participating strategy        11.40       14.82
  Relation    Publicising strategy          14.40       21.26
  Strategy    Party affair strategy          4.40        5.87
              Media strategy                 3.00        3.16

              Tangible resources             2.50        2.68
              Intangible resources          31.30       24.06
Political     Relation resources             9.90       12.57
Performance   Competitive advantage          1.20        2.78
              Market performance             8.90        9.12
              Financial performance          2.20        2.25

                                          Foreign firms (n=24)

Strategy      Ownership                     Mean         SD

              Public welfare strategy       12.67        9.22
              Public relation strategy       9.33        7.70
              Visiting strategy              2.50        3.90
Political     Participating strategy         2.25        2.49
  Relation    Publicising strategy           0.25        0.45
  Strategy    Party affair strategy          2.83        8.01
              Media strategy                18.00       41.40

              Tangible resources             0.25        0.62
              Intangible resources          10.58       11.27
Political     Relation resources             4.92        7.32
Performance   Competitive advantage          0.92        1.51
              Market performance            18.25       23.85
              Financial performance          4.67        5.33

Data source: News of 76 firms' Web sites

Table 5: Weights of Political Performance Types by Expert Panel

Weight              Attribute

 0.80    Tangible resources
 0.20    Intangible resources
 0.60    Relation resources
 0.80    Political competitive advantage
 0.80    Market performance
 1.00    Financial performance

Note: These weights represent the summary evaluations of a panel of
three corporate political strategy (CPS) or action (CPA) experts of
the relative importance of each of the types included within corporate
political performance.

Table 6: Results of Stepwise Regression Analysis

Ownership                  SOE firms    Private firms   Foreign firms
Strategy                    (Sig T)        (Sig T)         (Sig T)
                           (Model 1)      (Model 2)       (Model 3)

Independent variables
Public welfare strategy                                  0.175 *
Public relation strategy    0.481 ***
Visiting strategy                        0.179 *
Participating strategy      0.412 ***    0.191 *
Publicising strategy        0.202 *
Party affair strategy       0.182 *

Media strategy
[R.sup.2]                   0.767        0.778           0.741
F                           0.000        0.004           0.002
N                          32           20              24

Note: * p<0.1; ** p<0.05; *** p<0.01; The standard coefficient of
regression is [beta].

Table 7: Results of Frequency Statistics in Different Periods

           Time               2001.1    2001.2    2001.3

Political relation strategy    128       102       230
Political performance          140       132       104
Political performance *         75.2      73.6     53.2
           Time               2001.7    2001.8    2001.9
Political relation strategy    200       158       130
Political performance          138       100        78
Political performance *         70        58.4      44.8
           Time               2002.1    2002.2    2002.3
Political relation strategy    142       116       238
Political performance          166        96        96
Political performance *         98        50.8      48.8
           Time               2002.7    2002.8    2002.9
Political relation strategy    158       150       136
Political performance          166       152       158
Political performance *         84.4      73.2      88.4
           Time               2003.1    2003.2    2003.3
Political relation strategy    152       126       338
Political performance          168       130       166
Political performance *         81.6      75.6      84.4
           Time               2003.7    2003.8    2003.9
Political relation strategy    268       306       296
Political performance          198       186       242
Political performance *        114.8      96       134

           Time               2001.4    2001.5    2001.6

Political relation strategy    318       176       190
Political performance          148       154       158
Political performance *         70        71.2      72
           Time               2001.10   2001.11   2001.12
Political relation strategy    134       144       176
Political performance           58       132       110
Political performance *         27.2      64        57.2
           Time               2002.4    2002.5    2002.6
Political relation strategy    254       188       178
Political performance          108       130       130
Political performance *         58        64.4      59.2
           Time               2002.10   2002.11   2002.12
Political relation strategy    176       252       250
Political performance          176       152       184
Political performance *         98.8      84.8      80.8
           Time               2003.4    2003.5    2003.6
Political relation strategy    364       228       236
Political performance          184       150       164
Political performance *         98.4      78.4     100.4
           Time
Political relation strategy
Political performance
Political performance *

Note: Political Performance * represents the summary level of political
performance after considering different weights of different types.

Table 8: Results of the Absolute Value of AC Coefficients

                                       Lagtime

   Auto correlations
     Coefficients           1        2        3        4

Political relation
strategy                  0.545    0.138   -0.039   -0.019
Political performance     0.528    0.418    0.214    0.174
Political performance *   0.500    0.471    0.286    0.192

                                       Lagtime

   Auto correlations
     Coefficients           5        6        7        8

Political relation
strategy                 -0.037   -0.073    0.062    0.166
Political performance     0.263    0.322    0.201    0.165
Political performance *   0.269    0.300    0.169    0.186

                                       Lagtime

   Auto correlations
     Coefficients           9        10       11       12

Political relation
strategy                  0.194   -0.048   -0.041    0.024
Political performance     0.108   -0.097    0.034   -0.058
Political performance *    0.17    0.026    0.067   -0.053

Note: Political Performance represents the summary level of
political performance after considering different weights of
different types.

Table 9: Results of Augmented Dickey-Fuller
Test Statistics of Series

                                         1 per cent
                                          Critical
        Series            t statistics     Value

Political relation
  strategy                   -3.256       -3.6496
Political performance        -1.953       -3.6496
Political performance *      -1.994       -3.6496

                           5 per cent    10 per cent
                            Critical      Critical
        Series               Value         Value

Political relation
  strategy                  -.2.9558      -2.6164
Political performance       -.2.9558      -2.6164
Political performance *     -.2.9558      -2.6164

Note: Political Performance * represents the summary level
of political performance after considering different weights
of different types.