Board political ties and firm internationalization
Michael A. Leven School of Management, Entrepreneurship and Hospitality
How do political ties of the board directors influence firm internationalization? Board political ties have both the buffering effect (beneficial) and the binding effect (generating costs and obligations towards the government) in emerging economies where firms may strongly depend on the government. We propose that these two effects may coexist in emerging economies, and thus the benefits of board political ties exceed the costs only at a certain level of board political ties. We predict that such joint influence of these two effects on firms' ability and motivation to internationalize may result in a U-shaped relationship. We test this prediction with a sample of Chinese firms. We further predict and test for moderating effects of slack resources and structural holes in firms' ego network of interlocking directors, which allow firms to access key resources via alternative means.
Journal of International Management
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