With whom to dance? Corporate Intermediary Strategies in Regulatory Flux

Political connections are widely recognized as critical assets for circumventing and navigating regulatory constraints, with enterprises historically relying either on their own political ties or on intermediaries to engage with governments. This study investigates the dynamic interplay between corporate political connections and intermediaries’ political ties across varying regulatory environments, focusing on the Chinese New Game License (NGL) system—an industry almost exclusively regulated by the National Press and Publication Administration (NPPA), characterized by significant fluctuations in regulatory intensity. Through fuzzy-set Qualitative Comparative Analysis (fsQCA) on all NGL data from 2010 to 2024, our findings reveal distinct pathways for state-owned gaming companies fully depend on state-owned intermediaries to receive NGL under stringent regulatory conditions —a reliance absent during periods of moderate or lax regulation. This indicates that while corporate political connections remain a key regulatory advantage, their effectiveness diminishes under heightened scrutiny, shifting firms’ dependence towards intermediaries’ political capital. Similarly, firms’ publishing capabilities—typically a competitive edge—lose significance under strict regulatory oversight, creating novel pathways where even companies with prior intermediary experience become fully reliant on state-affiliated intermediaries, a phenomenon not observed in less restrictive environments. Additionally, the NPPA’s regulatory preference for casual games precludes any pathway for casual game-focused companies to rely entirely on state-affiliated intermediaries, regardless of regulatory phases. By mapping the dynamic relationship between corporate and intermediary political connections under regulatory shifts and highlighting how institutional preferences reshape such strategic dependencies, this study contributes novel empirical insights to regulatory intermediary research and the Corporate Political Activity (CPA) literature. Our findings highlight the importance of adaptive regulatory frameworks that account for the shifting reliance on political connections, suggesting policymakers should consider the evolving role of intermediaries in shaping corporate strategies and ensure transparency in regulatory processes.