How political connections affect entrepreneurial risk-taking in SMEs: A symmetric assessment and a configurational approach

Abstract

Drawing on resource dependency theory and the resource-absorbing perspective of risk-taking, this article examines how political connections provide firms with opportunities to gain government funding support to enhance financial slack, which can in turn benefit their entrepreneurial risk-taking. We employ both symmetrical (partial least squares structural equation modelling (PLS-SEM)) and configurational approaches (fuzzy-set qualitative comparative analysis (fsQCA)) using a sample of 202 small and medium-sized enterprises (SMEs) in China. Our results from PLS-SEM suggest government financial funding support and financial slack play sequential mediating roles in the relationship between political connections and entrepreneurial risk-taking. The results of fsQCA further highlight the importance of political connections and financial slack as core conditions for entrepreneurial risk-taking and uncover the multiple pathways through which political connections influence entrepreneurial risk-taking. These findings advance our understanding of how entrepreneurial risk-taking in SMEs may require configurations of different resources.