CEO political organizational experience and firm productivity
Kai Xing, Panpan Qiu, Hanxiong ZhangPurpose
Drawing on upper echelons and imprinting theories, we examine whether chief executive officers’ (CEOs') political organizational experience is associated with firms' subsequent total factor productivity (TFP).
Design/methodology/approach
We conduct panel data analyses to examine the relationship between CEOs' military and political backgrounds and subsequent firm-level TFP. Using a sample of Chinese listed firms from 2004 to 2021, we distinguish Communist Party of China (CPC) or Communist Youth League of China (CYLC) committee experience from military experience and CPC school training.
Findings
CEOs with substantive CPC/CYLC committee experience are associated with higher subsequent TFP in SOEs, whereas military experience and CPC school training are not significantly associated with TFP. The association is also evident among firms with internal CPC organizations across ownership types. Reductions in agency costs and inefficient investment are potential mechanisms through which CPC/CYLC committee experience is associated with higher productivity in state-owned enterprises (SOEs). These findings underscore the importance of distinguishing substantive CPC/CYLC organizational experience from broader forms of political or military exposure, highlighting how political embeddedness within institutions and governance structures is associated with executive behavior and firm productivity.
Originality/value
This study contributes to the literature by showing the importance of distinguishing substantive CPC/CYLC organizational experience from broader forms of political or military exposure. It highlights how political embeddedness within institutions and governance structures is associated with executive behavior and firm productivity.