The relationship between political resources and diversification of private enterprises: An empirical study of the top 500 private enterprises in China

Abstract

This paper argues that the political resources owned by Chinese private enterprises affect their diversification strategy under the context of China's transitional economy. Based on the sample of top 500 private enterprises in 2004 in China, we find the following empirical evidence: First, political resources owned by private enterprises are positively and significantly related to their degree of diversification. Second, the possibility for private enterprises to diversify their business by entering industries under government regulation is positively related to their political resources. Third, the possibility of related diversification for private enterprise is negatively related to its political resources. © Higher Education Press and Springer-Verlag GmbH 2009.