Article Abstract
Previous research views political promotions of CEOs of Chinese state-owned enterprises (SOEs) as an incentive that compensates for weak monetary rewards. Taking a state capitalism perspective, we suggest that the government uses political promotions as a mechanism to reallocate human capital resources for its economic and political objectives. This approach entails potential trade-offs between macro-level gains and micro-level losses, as valuable and rare human capital is diverted from SOE management to political posts. Based on 1,077 CEO-year observations of 226 listed Chinese SOEs, we find that both financial and political performance have a positive effect on the political promotions of CEOs. However, when the SOE is more in need of the CEO’s managerial skills—specifically, when the SOE’s industry has a private-firm leader or the SOE holds higher prominence within its enterprise group—the positive relationship between financial performance and political promotion is weakened. In comparison, the positive relationship between political performance and political promotion is weakened to a lesser extent. Additional analysis reveals that SOEs whose former CEOs received political promotions tend to experience a decline in performance in the years following the promotions, compared to pre-promotion years, as well as to firms whose former CEOs have been demoted.
The Leadership Quarterly, September 2025
About the researcher
Helen Hu is Professor of Strategic Management in the Department of Management and Marketing, and she is also the Director of the Centre for Asian Business and Economics (CABE) at the University of Melbourne. Helen’s research interests are corporate governance with focuses on board of directors, CSR, ESG, strategic leadership, innovation, and internationalization of Asian firms. Her research has been published in top-tier management journals, including Academy of Management Journal, Entrepreneurship Theory and Practice, Journal of International Business Studies, Journal of Management, Journal of Management Studies, and Strategic Management Journal.
Helen has received a variety of awards internationally, and she is a recipient of both the Deans' Prize for Exceptional Distinction in Research and Deans' Prize for Exceptional Distinction in Research Training (PhD Supervision) at the University. She is also a regular commentator on Sky News, SBS and China Radio International on issues relating to business in China and Asia.