MARKET PERCEPTION: INTERACTION BETWEEN CORPORATE STRATEGY AND POLITICAL CONNECTIONS

Title: MARKET PERCEPTION: INTERACTION BETWEEN CORPORATE STRATEGY AND POLITICAL CONNECTIONS

Author: FITRIA ASAS

Affiliations: Masters Program in Accounting, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia

Publisher: Universitas Airlangga

Abstract

Management needs strategy as a tool to win competition and maintain company survival. Political connections are built by companies to provide added value and opportunities for companies to communicate with government regarding legality and public information. This research aims to prove whether cost leadership and differentiation strategies have a positive influence on market perception, and whether the interaction of political connections strengthens the positive influence of cost leadership and differentiation strategies on market perception. This research uses descriptive and multivariate analysis to test 852 samples of manufacturing companies listed on the Indonesia Stock Exchange in 2012-2017. The results of this research prove that the cost leadership strategy has a positive effect but differentiation has a negative effect on market perception. This is because the differentiation strategy is seen as more unprofitable by incurring several costs to innovate the products produced, such as research and development costs and thus incurring large costs. The results of this research also show that political connections strengthen both strategies regarding market perception, this is because connections can help companies in the network gain benefits related to legality and regulations.

Keywords: Differentiation, Cost Leadership, Political Connection

Sources: http://repository.unair.ac.id/80361/