The Contingent Value of Entrepreneurs’ Political Capital: Evidence from China

ABSTRACT

Who benefit from a transitioning economy, entrepreneurs who are politically connected or disconnected? Market transition theory and power conversion theory offer two divergent answers. Our study seeks to contribute to this debate by examining the contingent value of entrepreneurs’ political capital. We draw from social network theories and investigate whether and how entrepreneurs’ social networks influence the relationship between their political capital and social mobility. Using the data on Chinese entrepreneurs, we find that the impact of political capital on entrepreneurs’ social mobility is contingent on their network centrality. Practical implications and suggestions for future research are also discussed.

KEYWORDS:

• China’s transitional economy
• Chinese entrepreneurs
• contingent value
• entrepreneurs’ political capital
• social mobility
• social networks

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Wasserman & Faust defined an actor-level degree centrality as follows:

$C_D\left(n_i\right)=\frac{d\left(n_i\right)}{g-1}$

where $C_D\left(n_i\right)$ is an actor-level centrality, $d\left(n_i\right)$ denotes the degree of the node, and g is the group size where node situates in.