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Culture and Enterprise Rent-Seeking: Evidence from Native Place Networks among Officials in China

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  • Lili Fu
  • Fengyun Wu

Abstract

Using data on Chinese municipal party secretaries (MPS), we study whether firms prefer to pay more to officials who have a wider native place network. In doing so, we find the state-owned enterprises (SOEs) are more willing to pay for benefits from an official’s native place network. Furthermore, we investigate why firms pay for access to officials who have a wider native place network. On the one hand, as an important political social resource, officials’ native place networks enhance the probability of officials’ promotion. The firm is just buying a “political call option.” On the other hand, an MPS’s native place network can help firms to have more merger and acquisition activity. Using officials’ native place networks, this article provides a new angle on the effect of traditional culture on rent-seeking by firms.

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  • Lili Fu & Fengyun Wu, 2019. "Culture and Enterprise Rent-Seeking: Evidence from Native Place Networks among Officials in China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 55(6), pages 1388-1404, May.
    • Handle: RePEc:mes:emfitr:v:55:y:2019:i:6:p:1388-1404
    DOI: 10.1080/1540496X.2018.1512851
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    Cited by:

    1. Shubin Wang & Qiang Li & Yan Gu, 2023. "Local officials' political capital and poverty alleviation," International Studies of Economics, John Wiley & Sons, vol. 18(3), pages 351-369, September.

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