The Interactive Effects of Political Ties and Legal Registration on New Venture survival

Political ties are widely viewed as essential for entrepreneurs in emerging economies, yet evidence of their influence on firm survival remains inconsistent. Some ties provide immediate protection and access to resources, whereas others fail to secure such advantages, while legal registration further shapes the value of political ties. Drawing on an institutional perspective and resource dependence theory, this study examines how political ties at different levels of government shape new venture survival and how legal registration moderates these effects.

Using panel data on 10254 Jordanian ventures founded between 2003 and 2010, we find that local political ties reduce the likelihood of failure by mitigating the liability of newness, whereas central ties offer no significant survival benefits during the first two years of a venture’s existence. We further show that registration diminishes the value of local ties by increasing rigidity, while leaving the effects of central ties unchanged. These findings suggest that the nature of political ties and registration decisions critically shapes early survival outcomes and offers practical implications for entrepreneurs and policymakers in developing economies.