Political Ties, Technological Capabilities, and Rigidity during Market Liberalizations in Emerging Economies
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Do political ties formed by business groups in emerging economies, such as China, facilitate or hinder technological capability building? Drawing on dynamic capabilities and organization rigidity literature, this paper argues that the relationship between political ties and technological capabilities in emerging economies is contingent on the extent of external environmental threats to which the business group is exposed. This paper aims to explain why business groups that have invested in political ties remain inertial to change their resource investment patterns despite the competitive threats from product market liberalization (e.g., trade liberalization), and how business groups that invested in political ties can sustain their preferential accesses to strategic factors until they encounter effective factor market liberalization (e.g., capital market liberalization).
Abstract
Do political ties formed by business groups in emerging economies, such as China, facilitate or hinder technological capability building? Drawing on dynamic capabilities and organization rigidity literature, this paper argues that the relationship between political ties and technological capabilities in emerging economies is contingent on the extent of external environmental threats to which the business group is exposed. This paper aims to explain why business groups that have invested in political ties remain inertial to change their resource investment patterns despite the competitive threats from product market liberalization (e.g., trade liberalization), and how business groups that invested in political ties can sustain their preferential accesses to strategic factors until they encounter effective factor market liberalization (e.g., capital market liberalization).
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