'Yes-Man' Firms: Government Campaigns and Policy Positioning of Businesses in China

58 Pages Posted: 1 Mar 2017 Last revised: 26 Apr 2019

See all articles by Megumi Naoi

Megumi Naoi

University of California, San Diego (UCSD) - Department of Political Science

Weiyi Shi

University of California, San Diego - GPS (nee IR/PS); University of California, San Diego (UCSD) - 21st Century China Center

Boliang Zhu

Pennsylvania State University - Department of Political Science

Date Written: December 14, 2017

Abstract

We advance a theory of strategic preference expression in authoritarian systems, where business elites express dissent or conformity to the government based on material incentives. Their position-taking strategies vary depending on whether firms have the bargaining power to extract benefits or avoid punishment from the government. Using survey experiments with firm executives in China, we show that a government campaign treatment — a preface that signals the government’s commitment to opening further to inward foreign direct investment (FDI) — increases the percentage of firms reporting “benefit” from inward FDI between 14 and 36 percentage points. The executives of politically vulnerable firms (private owned) conform to the government’s position the most. Private firms with higher financial dependence on government conform more than their non-private counterparts. The executives of powerful firms (state-owned and foreign-owned) change their responses the least to induce policy concessions. We demonstrate a material origin of political desirability bias in autocracies.

Keywords: authoritarian systems, political desirability, China, survey experiments, policy campaigns, firms, foreign direct investment (FDI)

Suggested Citation

Naoi, Megumi and Shi, Weiyi and Zhu, Boliang, 'Yes-Man' Firms: Government Campaigns and Policy Positioning of Businesses in China (December 14, 2017). 21st Century China Center Research Paper No. 2017-03. Available at SSRN: https://ssrn.com/abstract=2925386 or http://dx.doi.org/10.2139/ssrn.2925386

Megumi Naoi (Contact Author)

University of California, San Diego (UCSD) - Department of Political Science ( email )

9500 Gilman Drive
Code 0521
La Jolla, CA 92093-0521
United States

Weiyi Shi

University of California, San Diego - GPS (nee IR/PS) ( email )

9500 Gilman Drive
La Jolla, CA 92093-0519
United States

University of California, San Diego (UCSD) - 21st Century China Center ( email )

9500 Gilman Drive #0519
La Jolla, CA 92093-0519
United States

Boliang Zhu

Pennsylvania State University - Department of Political Science ( email )

University Park, State College, PA 16801
United States

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