Abstract Using samples of listed China’s state-owned enterprises(SOE), this paper examines the relationship between political connection and SOEs’ administrative hierarchy, and effect of SOEs’ administrative hierarchy on the relationship between political connection and performance. We find that there are more political connections in SOEs of higher administrative hierarchy and the relationship between political connection and performance is affected by SOEs’ administrative hierarchy. For central SOEs, political connection has no effect on their performance, but for local SOEs, political connection has positive effect on their performance. Difference in formation and influence of SOEs’ political connection implies that government of different levels has different political incentive and capability of deploying economic resources.
2014, Vol. 31 
