Performance implications of a corporate political strategy in Chinese firms: State versus market logics in different institutional settings

Abstract

This study investigated the performance implications of private firms appointing their CEOs to serve as the firms' Communist Party Secretaries in China. Integrating insights from the corporate political strategy literature and institutional theory, this study used a panel dataset of Chinese privately controlled and listed firms covering 2008 through 2019 to investigate CEO/Communist Party Secretary duality as a special political strategy. The effect on firm performance was shown to vary depending on the institutional environment in which a firm operated. CEO/Communist Party Secretary duality enhanced firm performance for firms in less developed regions, where state logic was more influential. But it hampered firm performance in better developed regions, where market logic was more influential. Furthermore, indicators of firms’ inclination to state logic versus market logic were found to influence the effectiveness of CEO/Communist Party Secretary duality on firm performance.