Managerial ties with local firms and governments: an analysis of Japanese firms in China

Abstract

This study explores how managerial ties between foreign firms and local firms and those between foreign firms and local government officials affect the performance of firms operating in transition economies. Using survey data collected from Japanese firms operating in China, this study finds that managerial ties between foreign firms and both local firms and local government officials are positively associated with the performance of Japanese firms in China. The study also examines how attributes specific to foreign firms operating in transition economies moderate the positive effect of managerial ties on the performance of foreign firms. Three significant moderators: host country experience, strategic orientation, and local market knowledge of foreign firms, are highlighted in the analysis.