Antecedents to Government Relationship Building and the Institutional Contingencies in a Transition Economy

Abstract

This study argues that the government-relationship building efforts by foreign invested enterprises (FIEs) depend on the perceived level of regulatory uncertainties, which, in turn, is conditioned by the institutional distances between their home and host countries. The regulatory antecedents (regulatory complexity and enforcement uncertainty) to government-relationship building by foreign-invested enterprises and the moderating effects of institutional distance (regulative and cultural distances) in the context of the large transition economy of China are examined using a sample of 424 foreign-invested enterprises. The results show that they tend to actively engage in government-relationship building when regulatory uncertainties (complexity and enforcement uncertainties) are high. The moderating analyses reveal the strengthening effects of regulative distances on the relationship between regulatory uncertainties and government-relationship building and the mixed effects of cultural distance.