Preemptive or promotive: The differential impact of strategic leaders’ political connections on firm long-term investment in China

Research on corporate leaders' political connections has remained silent on the impact of heterogeneity of political resources on firm behaviors and of how strategic leaders differentially leverage these resources. We propose that a firm whose chair had ascribed bureaucratic connections as opposed to achieved political connections acquires different types of resources and chair differentially leverages the resources when making long-term investment. These effects are weaker when a firm is performing well. Our analyses of Chinese firms from 2003 to 2016 generally support these predictions. This study contributes to literature on political connections by providing greater specificity with respect to the heterogeneity of political resources and offering new insights into how strategic leaders leverage these resources. This study also contributes to the literature on board chairs and corporate governance by suggesting that when considering a firm's long-term plan, chair plays an important role and it is also important to monitor chair behaviors. Finally, it highlights the role of the interface between strategic leaders and state matters when considering the antecedents of long-term investment.