MANAGERIAL TIES AND FIRM PERFORMANCE IN A TRANSITION ECONOMY: THE NATURE OF A MICRO-MACRO LINK.

TLDR

The study empirically quantifies how managerial ties affect firm performance in a transition economy, showing both their benefits and limits. Survey data from China reveal that managers’ micro‑interpersonal ties with other firms’ executives and government officials boost firm performance, though the effect varies by ownership, sector, size, and industry growth, and ties alone are insufficient without other strategic factors.

Abstract

Using survey data from China, we demonstrate that managers' micro interpersonal ties with top executives at other firms and with government officials help improve macro organizational performance. This micro-macro link differs among firms with different (1) ownership types, (2) business sectors, (3) sizes, and (4) industry growth rates. In addition, managerial ties were found to be necessary but insufficient for good performance; a number of traditional strategy variables also drive performance. Theoretically, the findings point to the importance of the social context in which managerial ties are embedded. Empirically, this study provides the first set of quantitative data demonstrating both the extent and limits to which managerial ties are beneficial in a transition economy.