The impact of gender and political embeddedness on firm performance: evidence from China

Abstract

PurposeThis study explored the mediating effect of political embeddedness on the relationship between gender and performance of private enterprises in the emerging economy of China. Political embeddedness is examined in terms of personal characteristics of owners and their firm.Design/methodology/approachSecondary data were collected from the Chinese Private Enterprises Survey for the years 2002, 2006, 2014 and 2016 using responses to identical questions. Tobit models were implemented to examine hypotheses related to the gender gap. A bootstrapping approach was applied to examine hypotheses related to mediation through political embeddedness.FindingsThe gender effect on enterprise performance was found to be partially mediated by political embeddedness at the personal level and even more strongly by political embeddedness at the firm level, which is beyond the well-known mediation effect of bank loans.Research limitations/implicationsThe Chinese sample, in which guanxi plays a significant role with respect to women-led firms, may limit the generalizability of the findings to other emerging economies.Practical implicationsGiven the mediating effects on firm performance of political embeddedness at the personal and firm levels, women business owners in China should pursue political involvement, possibly with the support of policymakers and mentors.Originality/valueThe relationship between businesswomen and political embeddedness is underexplored. This study innovates by applying the gender lens to the notion of political embeddedness and extending the construct of personal political embeddedness to the firm level.