How to Choose the Right Partners in Cross-Sector Partnership in Emerging Countries? A Political Embeddedness Perspective

Abstract

In emerging countries such as China where the government is gradually withdrawing from involvement in social affairs, firms face dilemmas around relational risks of partnering with different forms of nongovernmental organizations (NGOs). Affiliated NGOs (those with close relationships with government) are more likely to sabotage the social partnership through misconduct, and are also capable of higher standards of collaborative social performance compared with independent NGOs (those with few such relationships). This study proposes that firms’ political embeddedness helps mitigate relational risks in cross-sector partner selection, and finds that politically connected firms are more likely to partner with affiliated NGOs than with independent NGOs in China. This effect is more pronounced for private firms that are less socially oriented or are located in regions with less-developed formal institutions and social trust. Our findings highlight relational risks relevant to cross-sector partner selection literature and offer important insights into how relational risks can be reduced in cross-sector partner selection in emerging countries.