Political uncertainty, leadership and productivity

Abstract

We investigate the impact of political uncertainty in the context of the upper echelon theory. Using provincial-level data of political leaders in China over the period 1995–2015, we take a two-step approach to first examine the impact of top leader teams’ (TLTs) traits on productivity and, second, to test if such leadership effects vary with political uncertainty. We find that TLTs’ education, generally a driving force behind productivity, is less effective during the period of high political uncertainty. TLTs’ work experience positively contributes to productivity, which is strengthened under high political uncertainty. TLTs’ career ambition leads to higher productivity, but such an effect attenuates when political uncertainty is high. Finally, TLTs’ political positions negatively contribute to productivity and the effect is barely affected by political uncertainty, suggesting a disconnection between political positions and economic outcomes.