Political connections and cost stickiness: The moderating role of product market competition

Abstract

The impact of political connections on business organizations, has been the subject of interest for many researches throughout the world. Since executive and non-executive directors, with political connections, can bring diverse benefits to the firm through using their connections and relations with politicians, they are often considered to be really powerful. In addition to investigating the relationship between firm's political connections and cost stickiness, this study also examined the moderating impact of product market competition on this relationship. To this end, the data from 154 listed firms in Tehran Stock Exchange, multiple regression, and panel data model were used. The results showed that firm's political connections would increase cost stickiness, and product market competition mitigated the direct relationship between firm's political connections and cost stickiness.