Abstract:As an important alternative mechanism, executives' political relations play an more significant role in the market mechanism which is not sound. This paper analyzes the mechanism which executives' political relations affect the performance of private enterprises from the perspective of embedded systems. The institutional environment is the key and dominant variables to affect and promote executives' political relations in the private enterprises. Executives' political relations have effect on the short-term performance and long-term corporate performance by the corporate behavior, such as enterprise financing behavior, enterprise tax behavior, enterprise growth behavior, etc., as intermediary role.