Do Business and Political Ties Differ in Cultivating Marketing Channels for Foreign and Local Firms in China?

Abstract

Despite the prominence of social ties in emerging economies, it remains unclear whether and how social ties matter in cultivating marketing channels for both local and foreign firms in China. Moreover, few studies have explicitly distinguished and examined the roles of business versus political ties. Drawing on the resource-based view and social network theory, the authors propose and test the moderating effects of political ties and business ties on channel capability–performance relationships. The findings from a survey of 342 firms indicate that the value of channel capability is conditional on political and business ties, but in opposite directions: business ties impede and political ties strengthen the effect of channel capability on firm performance. Furthermore, the moderating role of social ties is stronger for local, nonleading firms than for foreign, leading firms.

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