Hostname: page-component-586b7cd67f-2brh9 Total loading time: 0 Render date: 2024-11-23T19:29:23.279Z Has data issue: false hasContentIssue false
  • English
  • Français

SME resource acquisition in transition economies: power dependence and induced bribery

Published online by Cambridge University Press:  17 October 2017

Karen Yuan Wang Open the ORCID record for Karen Yuan Wang [Opens in a new window]  and
Stewart R. Clegg
Get access Rights & Permissions [Opens in a new window]

Abstract

Researchers have extensively studied how large firms and SMEs use business and political ties to obtain tangible and intangible resources in transition economies. However, how SMEs establish these ties in the context of power-imbalanced dependence by using unethical and illegal “strategic practice” such as bribery remains underexplored. Furthermore, how SMEs deploy strategies to mitigate such risky actions in the process of resource acquisition is also given limited attention in the literature. Lack of exploration of these issues leaves significant gaps in our understanding of how SMEs are able to initiate and operate their ties for survival and growth despite enormous institutional constraints. We analyze the negative and positive effects of power dependence on business resource acquisition via regression analysis using survey data drawn from 232 Chinese SMEs. The findings indicate that power-imbalanced dependence among SMEs is associated with their use of bribery to establish political ties with officials for access to resources. The moderating effect of power-mutual dependence on this relationship is also examined. Theoretical significance and managerial implications of these findings for SMEs in transition economies are discussed.

Keywords

resource acquisitioninduced briberypower-imbalanced dependencepower-mutual dependenceSMEstransition economies
Type
Research Article
Information
Business and Politics , Volume 20 , Issue 3 , September 2018 , pp. 331 - 359
Copyright
Copyright © V.K. Aggarwal 2017 and published under exclusive license to Cambridge University Press 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ajzen, I. 1991. “The Theory of Planned Behavior.” Organizational Behavior and Human Decision Processes 50(2): 179–211.Google Scholar
Ajzen, I. and Fishbein, M.. 1980. Understanding Attitudes and Predicting Social Behavior. Englewood Cliffs, NJ: Prentice-Hall.Google Scholar
Ahlstrom, D. and Bruton, G. D.. 2006. “Venture Capital in Emerging Economies: Networks and Institutional Change.” Entrepreneurship Theory and Practice 30(2): 299–320.Google Scholar
Alvarez, S. A. and Barney, J. B.. 2007. “Discovery and Creation: Alternative Theories of Entrepreneurial Action.” Strategic Entrepreneurship Journal 1(1): 11–26.Google Scholar
Arregle, J-L., Batjargal, B., Hitt, M. A., Webb, J. W., Miller, T. L., and Tsui, A. S.. 2015. “Family Ties in Entrepreneurs' Social Networks and New Venture Growth.” Entrepreneurship: Theory and Practice 39(2): 313–44.Google Scholar
Batjargal, B. 2006. “The Dynamics of Entrepreneurs’ Networks in a Transition Economy: The Case of Russia.” Entrepreneurship and Regional Development 18(4): 305–20.Google Scholar
Baumol, William J. 1990. “Entrepreneurship: Productive, Unproductive and Destructive.” Journal of Political Economy 98(5): 893–921.Google Scholar
Burt, R. S. 2005. Brokerage and Closure: An Introduction to Social Capital. New York: Oxford University Press.Google Scholar
Calderón, R. A., lvarez-Arce, J. L., and Mayoral, S. 2009. “Corporation as a Crucial Ally against Corruption.” Journal of Business Ethics 87: 319–32.Google Scholar
Casciaro, T. and Piskorski, M. J.. 2005. “Power Imbalance, Mutual Dependence, and Constraint Absorption: A Closer Look at Resource Dependence Theory.” Administrative Science Quarterly 50: 167–99.Google Scholar
Chandler, D. J. and Graham, L. J.. 2010. “Relationship-oriented cultures, corruption, and international marketing success.” Journal of Business Ethics 92: 251–67.Google Scholar
Chen, Y., Yasar, M., and Rejesus, R. M.. 2008. “Factors Influencing the Incidence of Bribery Payouts by Firms: A Cross-Country Analysis.” Journal of Business Ethics 77(2): 231–44.Google Scholar
Chisholm, A. M. and Nielsen, K.. 2009. “Social Capital and the Resource-Based View of the Firm.” International Studies of Management & Organization 39(2):7–32.Google Scholar
Clegg, S. R. 1989. Framework of Power. London: Sage.Google Scholar
Corruption Perception Index - Transparency International. 2005. (Accessed on 9 December 2013) http://www.transparency.org/policy_research/surveys_indices/cpi.Google Scholar
Cunningham, L. X. 2011. “SMEs as Motor of Growth: A Review of China's SMEs Development in Thirty Years (1978–2008).” Human Systems Management 30(1): 39–54.Google Scholar
de Jong, G., Tu, P. A., and van. Ees, H.. 2012. “Which Entrepreneurs Bribe and What . . . Exploratory Evidence from Vietnam.” Entrepreneurship Theory and Practice 36(2): 323–47.Google Scholar
Dieleman, M. and Boddewyn, J.. 2012. “Using Organization Structure to Buffer Political Ties in Emerging Markets: A Case Study.” Organization Studies 33(1): 71–95.Google Scholar
Dunfee, T. W., Smith, N. C., and Ross, W. T. Jr. 1999. “Social Contracts and Marketing Ethics.” Journal of Marketing 63(3): 14–32.Google Scholar
Emerson, Richard M. 1962. “Power-Dependence Relations.” American Sociological Review 27(1): 31–41.Google Scholar
Freeman, J. 1999. “Venture Capital as an Economy of Time.” In Corporate Social Capital and Liability, edited by Leedners, Th.A.J. and Gabbay, S.M.. Boston, MA: Springer.Google Scholar
Gao, Y. 2011. “Government Intervention, Perceived Benefit, and Bribery of Firms in Transitional China.” Journal of Business Ethics 104(2): 175–84.Google Scholar
Granovetter, M. 1992. “Problems of Explanation in Economic Sociology.” In Networks and Organization, edited by Nohria, N. and Eccles, R.. Boston, MA: Harvard Business School Press, 25–56.Google Scholar
Greve, A. and Salaff, J. W.. 2003. “Social Networks and Entrepreneurship.” Entrepreneurship Theory and Practice 28(1): 1–22.Google Scholar
Guillen, M. F. 2000. “Business Groups in Emerging Economies: A Resource-Based View.” Academy of Management Journal 43(3): 362–80.Google Scholar
Hamra, W. 2000. “Bribery in International Business Transactions and the OECD Convention.” Business Economics 35(4): 33–46.Google Scholar
Hillman, A. J., Withers, M. C., and Collins, B. J.. 2009. “Resource Dependence Theory: A Review.” Journal of Management 35(6): 1404–27.Google Scholar
Huang, F. and Rice, J.. 2012. “Firm Networking and Bribery in China: Assessing Some Potential Negative Consequences of Firm Openness.” Journal of Business Ethics 107(4): 533–45.Google Scholar
Huang, K. P. and Wang, K. Y.. 2013. “The Moderating Effect of Social Capital and Environmental Dynamism on the Link between Entrepreneurial Orientation and Resource Acquisition.” Quality & Quantity: International Journal of Methodology 47(3): 1617–28.Google Scholar
Kruskal, W. and Mosteller, F. 1979. “Representative Sampling, I: Non-scientific Literature.” International Statistical Review 47(1): 13–24.Google Scholar
Labianca, G. and Brass, D., 2006. “Exploring the Social Ledger: Negative Relationships and Negative Asymmetry in Social Networks in Organizations.” Academic Management Review 31(3): 596–614.Google Scholar
Lawler, E. J., and Yoon, J.. 1996. “Commitment in Exchange Relations: Test of a Theory of Relational Cohesion.” American Sociological Review 61: 89–108.Google Scholar
Li, H. and Zhang, Y.. 2007. “The Role of Managers’ Political Networking and Functional Experience in New Venture Performance: Evidence from China's Transition Economy.” Strategic Management Journal 28: 791–804.Google Scholar
Lin, N. 1999. “Social Networks and Status Attainment.” Annual Review Sociology 25: 467–87.Google Scholar
Lovell, S., Ledeneva, A., and Rogachevskii, A. (eds.). 2000. Bribery and Blat in Russia: Negotiating Reciprocity. London: Macmillan, 1–19.Google Scholar
Luo, Y. 2003. “Industrial Dynamics and Managerial Networking in an Emerging Market: The Case of China.” Strategic Management Journal 24(13): 1,315.Google Scholar
Luo, Y. 2008. “The Changing Chinese Culture and Business Behavior: The Perspective of Intertwinement between Guanxi and Corruption.” International Business Review 17: 88–93.Google Scholar
Mahoney, J. T. 1995. “The Management of Resources and the Resource of Management.” Journal of Business Research 33(2): 91–101.Google Scholar
Martens, M., Jennings, M. E., and Jennings, P. D.. 2007. “Do the Stories They Tell Get Them the Money They Need? The Role of Entrepreneurial Narratives in Resource Acquisition.” Academy of Management Journal 50(5): 1,107–32.Google Scholar
Martin, K., Cullen, J., Johnson, J., and Parboteeah, K.. 2007. “Deciding to Bribe: A Cross Level Analysis of Firm and Home Country Influences on Bribery Activity.” Academy of Management Journal 50(6): 1,401–22.Google Scholar
Medcof, J. W. 2001. “Resource-Based Strategy and Managerial Powers.” Strategic Management Journal 2(11): 999–1,138.Google Scholar
Meznar, M. B. and Nigh, D.. 1995. “Buffer or Bridge? Environmental and Organizational Determinants of Public Affairs Activities in American Firms.” Academy of Management Journal 38:975–96.Google Scholar
Michener, H. A. 2004. Social Psychology. Toronto: Wadsworth.Google Scholar
Molm, L. D., Takahashi, N., and Peterson, G. A.. 2000. “Social Exchange and the Structure of Power.” American Journal of Sociology 105(5): 1,396–427.Google Scholar
Moran, P. 2005. “Structural vs. Relational Embeddedness: Social Capital and Managerial Performance.” Strategic Management Journal 26: 1,129–51.Google Scholar
Newbert, S. L. and Tornikoski, E. T.. 2013. “Resource Acquisition in the Emergence Phase: Considering the Effects of Embeddedness and Dependence.” Entrepreneurship Theory and Practice 37(2): 249–80.Google Scholar
Nguyen, A. and Cragg, W.. 2012. “Interorganizational Favour Exchange and the Relationship between Doing Well and Doing Good.” Journal of Business Ethics 105(1): 53–68.Google Scholar
Oliver, C. 1997. Sustainable competitive advantage: combining institutional and resource-based views, Strategic Management Journal 18(9): 697–713.Google Scholar
Olken, B. A., and Pande, R.. 2012. “Corruption in Developing Countries.” Annual Review of Economics 4: 479–510.Google Scholar
Park, S. and Luo, Y. D.. 2001. “Guanxi and Organizational Dynamics: Organizational Networking in Chinese Firms.” Strategic Management Journal 22(5): 455–77.Google Scholar
Peng, M. W. 2004. “Identifying the Big Question in International Business Research.” Journal of International Business Studies 35(2): 99–108.Google Scholar
Peng, M. W. and Luo, Y.. 2000. “Managerial Ties and Firm Performance in a Transition Economy: The Nature of a Micro–Macro Link.” Academy of Management Journal 43(3): 489–501.Google Scholar
Peng, M. W., Wang, D. Y. L., and Jiang, Y.. 2008. “An Institution-Based View of International Business Strategy: A Focus on Emerging Economies.” Journal of International Business Studies 39(5): 920–36.Google Scholar
Peng, M. W. and Zhou, J. Q.. 2005. “How Network Strategies and Institutional Transitions Evolve in Asia.” Asia Pacific Journal of Management 22(4): 321–36.Google Scholar
Pfeffer, J. and Salancik, G. R.. 1978. The External Control of Organizations: A Resource Dependence Perspective. New York: Harper and Row.Google Scholar
Pfeffer, J. and Salancik, G.. 2003. The External Control of Organizations: A Resource Dependence Perspective. Stanford, CA: Stanford University Press.Google Scholar
Provan, K. and Gassenheimer, J. B.. 1994. “Supplier Commitment in Relational Contract Exchanges with Buyers: A Study of Interorganizational Dependence and Exercised Power.” Journal of Management Studies 31(1): 55–68.Google Scholar
Powpaka, S. 2002. “Factors Affecting Managers’ Decision to Bribe: An Empirical Investigation.” Journal of Business Ethics 40: 227–46.Google Scholar
Puffer, S. M., McCarthy, D. J., and Boisot, M.. 2009. “Entrepreneurship in Russia and China: The impact of Formal Institutional Voids.” Entrepreneurship Theory and Practice 34(3): 441–67.Google Scholar
Ryvkin, D. and Serra, D.. 2012. “How Corruptible Are You? Bribery under Uncertainty.” Journal of Economic Behavior & Organization 81(2): 466–77.Google Scholar
Sheng, S., Zhou, K. Z., and Li, J. J.. 2013. “The Effects of Business and Political Ties on Firm Performance: Evidence from China.” Journal of Marketing 75(1): 1–15.Google Scholar
Spence, L. J., Jeurissen, R., and Rutherfoord, R.. 2000. “Small Business and the Environment in the UK and the Netherlands: Towards Stakeholder Cooperation.” Business Ethics Quarterly 10(4): 945–65.Google Scholar
Street, C. T. and Cameron, A.. 2007. “External Relationships and the Small Business: A Review of Small Business Alliance and Network Research.” Journal of Small Business Management 45(2): 239–66.Google Scholar
Sun, P., Mellahi, K., and Wright, M.. 2012. “The Contingent Value of Corporate Political Ties.” Academy of Management Perspectives 26(3): 68–82.Google Scholar
Svensson, J. 2003. “Who Must Pay Bribes and How Much?” Quarterly Journal of Economics 118(1): 207–30.Google Scholar
Svensson, J. 2005. “Eight Questions about Corruption.” Journal of Economic Perspectives 19(3): 19–42.Google Scholar
Tian, Q. 2008. “Perception of Business Bribery in China: The Impact of Moral Philosophy.” Journal of Business Ethics 80: 437–45.Google Scholar
Thompson, E. R. and Phua, F. T. T.. 2005. “Reliability among Senior Managers of the Marlowe-Crowne Short-Form Social Desirability Scale.” Journal of Business and Psychology 19: 541–54.Google Scholar
Tonoyan, V., Strohmeyer, R., Habib, M., and Perlitz, M.. 2010. “Corruption and Entrepreneurship: How Formal and Informal Institutions Shape Small Firm Behavior in Transition and Mature Market Economies.” Entrepreneurship: Theory and Practice 34(5): 803–31.Google Scholar
Tsai, W. and Ghoshal, S.. 1998. “Social Capital and Value Creation: The Role of Intrafirm Networks.” The Academy of Management Journal 41(4): 464–76.Google Scholar
Uzzi, B. 1999. “Embeddedness in the Making of Financial Capital: How Social Relations and Networks Benefit Firms Seeking Financing.” American Sociological Review 64(4): 481–505.Google Scholar
Wang, G., Jiang, X., Yuan, C.-H., and Yi, Y.-Q.. 2013. “Managerial Ties and Firm Performance in an Emerging Economy: Tests of the Mediating and Moderating Effects.” Asia Pacific Journal of Management 30: 537–59.Google Scholar
Wang, K. Y. 2007. “The Contextual Balance of Social Capital within Hierarchical Relations.” In China: Benefits and Risks, in Business Networks and Strategic Alliances in China, edited by Clegg, S., Wang, K., and Berrell, M.. London: Edward Elgar.Google Scholar
Wang, K. Y., Wang, Y., Huang, K. P., and Deng, J. S.. 2012. “Heterogeneous Networks and Resource Acquisition of SMEs in Emerging Economies.” Quality & Quantity: International Journal of Methodology 46(5): 1643–57.Google Scholar
Wang, Y., Zhang, X. S., and Goodfellow, R.. 2003. Chinese Business Culture: Strategies for Success. Oxfordshire, United Kingdom: Thorogood.Google Scholar
Warren, D. E., Dunfee, T. W., and Li, N.. 2004. “Social Exchange in China: The Double-Edged Sword of Guanxi.” Journal of Business Ethics 55: 355–72.Google Scholar
Weber, Max. 1978. Economy and Society. Berkeley, CA: University of California Press.Google Scholar
Wu, J. and Huang, S.. 2008. “Innovation or Rent-seeking: The Entrepreneurial Behavior during China's Economic Transformation.” China & World Economy 16(4): 64–81.Google Scholar
Wu, X. 2009. “Determinants of Bribery in Asian Firms: Evidence from the World Business Environment Survey.” Journal of Business Ethics 87: 75–88.Google Scholar
Xinhua News Agency. 2005. “The Criminal Law Amendment (six) Draft.” The Nineteenth Meeting of the Tenth National People's Congress. Beijing.Google Scholar
Yeung, I. and Tung, R. L.. 1996. “Achieving Business Success in Confucian Societies: The Importance of Guanxi (Connections).” Organizational Dynamics 25(2): 54–65.Google Scholar
Yiu, D. W. and Lau, C. M.. 2008. “Corporate Entrepreneurship as Resource Capital Configuration in Emerging Market Firms.” Entrepreneurship: Theory & Practice 32(1): 37–57.Google Scholar
Zhou, W. B. 2013. “Political Connections and Entrepreneurial Investment: Evidence from China's Transition Economy.” Journal of Business Venturing 28(2): 299–315.Google Scholar
Zhou, X. Y., Han, Y. R., and Wang, R.. 2013. “An Empirical Investigation on Firms’ Proactive and Passive Motivation for Bribery in China.” Journal of Business Ethics 118: 461–72.Google Scholar