Political Connections and Firms : Network Dimensions
Business and politicians' interaction is pervasive but has mostly been analyzed with a binary approach, i.e. either a firm is connected to a politician or not. Yet the network dimensions of such connections are ubiquitous. This paper uses use...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/323581525356216199/Political-connections-and-firms-network-dimensions http://hdl.handle.net/10986/29834 |
| Summary: | Business and politicians'
interaction is pervasive but has mostly been analyzed with a
binary approach, i.e. either a firm is connected to a
politician or not. Yet the network dimensions of such
connections are ubiquitous. This paper uses use a unique
data set for seven economies that documents politically
exposed persons and their links to companies, political
parties, and other individuals. The data set is used to
identify networks of connections, including their scale and
composition. The analysis finds that all country networks
are integrated having a Big Island. They also tend to be
marked by small-world properties of high clustering and
short path length. Matching the data to firm-level
information, the paper examines the association between
being connected and firm-level attributes. The originality
of the analysis is to identify how location in a network,
including the extent of ties and centrality, is correlated
with firm scale and performance. In a binary approach, such
network characteristics are omitted and the scale and
economic impact of politically connected business may be
significantly mis/under-estimated. By comparing the results
of the binary approach with the network approach, the paper
also assesses the biases that result from ignoring network attributes. |
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