Impact of perk expenditures and marketing expenditures on corporate performance in China: The moderating role of political connections

Tsz Wan Cheng, Ricky Y.K. Chan, T. Y. Leung

Research output: Journal article publicationJournal articleAcademic researchpeer-review

9 Citations (Scopus)

Abstract

This study examines the performance implications of guanxi-related perk expenditures among listed Chinese firms. Specifically, it investigates how these expenditures influence long-term market-based corporate performance (Tobin's Q and market share) as compared with marketing expenditures. It also examines if political connections moderate this influence. Overall, the findings suggest that guanxi-related perks play an essential marketing role in enhancing long-term corporate success. Furthermore, although marketing expenditures exert much stronger influence on Tobin's Q than guanxi-related perks do, they exert no significant influence on market share. In summary, despite firms' much heavier investments in traditional marketing activities than guanxi-related perk activities, the findings highlight the significant performance contribution that guanxi-related perks can still make to a firm. Moreover, this study reveals that political connections weaken the positive impact of guanxi-related perks on both performance measures, thus reminding executives of the dampening effect of these connections on the effective use of perk spending.
Original languageEnglish
Pages (from-to)83-95
Number of pages13
JournalJournal of Business Research
Volume86
DOIs
Publication statusPublished - 1 May 2018

Keywords

  • Corporate performance
  • Emerging economies
  • Perk
  • Political connection

ASJC Scopus subject areas

  • Marketing

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