Abstract Using listed SMEs data in China, this paper analyses the ubiquitous relationship between political connection and enterprise performance, which is considered as a judgment whether political connection, a rent-seeking means, efficiently promotes or unfavorably blocks the scare resource allocation. Empirical testing result of the panel data shows that political connection of SEMs significantly and negatively correlates with both enterprise performance and market performance, especially, the lower degree of marketization is, the more resource the government allocates, and the lower degree of rule by law is, the stronger the negative performance effect is. The rent-seeking hypothesis of political connection is supported by the research result, that is, the non-producing rent-seeking cost caused by political connection establishment not only aggravates the burden of enterprise, but also distorts the allocation of social rare resource. In the long run, it is harmful for the enterprise performance promotion and sustainable development.
2013, Vol. 1 
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