CEO’s Political Connection and Organization Efficiency: Evidence from Public Institutions in Korea

This paper investigates whether political connection of Chief Executive Officer (CEO) in public institutions is associated with organization efficiency. We utilize two types of public institutions in Korea, state-owned enterprises (SOEs) and quasi-governmental organizations (QUANGOs). Using the Data...

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Bibliographic Details
Published in:Public organization review 2021-09, Vol.21 (3), p.419-435
Main Authors: Shin, Hyejeong, Ahn, Ji-Young
Format: Article
Language:English
Subjects:
Chief executive officers
Data envelopment analysis
Economic Policy
Efficiency
Management
Political Science
Political Science and International Relations
Political Science and International Studies
Politics
Public Administration
Public Finance
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Summary:This paper investigates whether political connection of Chief Executive Officer (CEO) in public institutions is associated with organization efficiency. We utilize two types of public institutions in Korea, state-owned enterprises (SOEs) and quasi-governmental organizations (QUANGOs). Using the Data Envelopment Analysis (DEA), we find that CEOs with political connection are positively related to organization efficiency. Specifically, such association is largely driven by QUANGOs whose revenue resource is fully funded and owned by the government. It implies that politically connected CEOs can improve firm efficiency when the organizations are financially dependent on the government and are under its stringent monitoring by government.
ISSN:1566-7170
1573-7098
DOI:10.1007/s11115-020-00497-y