Private entrepreneurs’ political participation and firm strategy making in China

We focus on a recent phenomenon in transition economies that entrepreneurs of private firms enter politics as an aggressive way to respond to inferior institutional environment. We theorize that private entrepreneurs’ direct political participation affects strategy making of their firms by influencing both their motivation and their capability. Using a sample of over 3000 private entrepreneurs in China, we find that political participation boosts their self-perceived social status and resource acquisition ability, which in turn prompts their firms’ strategic deviance and risk-taking. This study enriches our understanding of how private entrepreneurs in transition economies use political behaviors for business purposes.