This study investigates the complex relationship between political connections and firms’ internationalization by focusing on the effects of political disconnection, particularly regarding the location choices for outward foreign direct investment (FDI). Grounded in resource dependence theory, we hypothesize that political disconnection results in a dynamic decrease in resource dependence on the home country, thereby influencing firms' risk preferences. Leveraging the policy enacted by China at the end of 2013, which prohibits government officials from serving as independent directors, we conduct a quasi-natural experiment utilizing panel data from Chinese listed firms from 2009 to 2019. Our findings suggest that political disconnection promotes reinvestment in countries where firms have previously operated, with this relationship positively moderated by the overseas backgrounds of directors. Furthermore, our post hoc analysis reveals that political disconnection constrains investments in new markets under certain institutional boundary conditions. By examining the implications of political disconnection, this research contributes to reconciling the discrepancies between political connections and internationalization while clarifying the boundary conditions of this relationship.
