Political Hazards and Firms’ Geographic Concentration

Forthcoming in Strategic Management Journal

47 Pages Posted: 28 Oct 2015

See all articles by Nan Jia

Nan Jia

University of Southern California - Marshall School of Business

Kyle Mayer

University of Southern California - Management and Organization Department

Date Written: October 26, 2015

Abstract

We examine the relationship between the geographic concentration of a firm’s sales and the firm’s vulnerability to expropriation hazards. Although expanding outside the home location can initially increase a firm’s exposure to government expropriation, we find that this effect reverses when a firm’s sales outside its home location have reached a point at which it has sufficient resources to better influence government actions and to pose a credible threat to exit the market in which it is being targeted. We supplement this main result by identifying two moderating factors: the firm’s level of political capital and the effectiveness of institutional constraints on government behavior. We find support for these hypotheses from survey data on privately owned enterprises in China.

Keywords: Political hazards, geographic concentration, state incentives, mobility, China

Suggested Citation

Jia, Nan and Mayer, Kyle, Political Hazards and Firms’ Geographic Concentration (October 26, 2015). Forthcoming in Strategic Management Journal, Available at SSRN: https://ssrn.com/abstract=2680365

Nan Jia (Contact Author)

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA California 90089
United States

Kyle Mayer

University of Southern California - Management and Organization Department ( email )

Los Angeles, CA 90089
United States

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