Abstract
This study examines how political ties maintained by a firm with rival political parties affect the firm’s entry into new industries. Drawing on the social network research, resource dependence theory, and corporate political strategy literature, we argue that the impact of a firm’s portfolio of political ties on market entry depends on the distribution of political power among rival political parties and the concomitant interdependency between the focal firm and its political partners. A diverse portfolio of political ties may facilitate entries when the political parties are relatively evenly matched in political power, but may induce adverse effects when there is substantial power distance between political parties. Moreover, the impact of portfolios of political ties on market entry is contingent on the internal resources of politically connected firms. Using the context of political ties maintained by Taiwanese business groups from 1998-2004, we find strong support for the proposed effects. The findings have implications for research on the corporate political strategy, contingencies of social relationships, the expansion of multi-business firms, and the organization of government.