Ownership Types and Strategic Groups in an Emerging Economy*

Abstract

Existing strategic group studies have rarely examined ownership type as a variable to classify firms in an industry. Using Chinese firms of different ownership types, we suggest that ownership type can be a parsimonious and important variable that managers use to cognitively classify firms into different strategic groups. While ownership itself is an objective variable, we contend that different ownership types lead to different managerial outlook and mentality due to a number of macro and micro foundations giving rise to various managerial cognitions. Employing the Miles and Snow typology, we find that state‐owned enterprises (SOEs) and privately‐owned enterprises (POEs) tend to adopt defender and prospector strategies, respectively, while collectively‐owned enterprises (COEs) and foreign‐invested enterprises (FIEs) exhibit an analyser orientation that falls between defenders and prospectors on the strategy continuum. Three statistical tests suggest that ownership types can be used to successfully predict strategic group memberships in China's emerging economy.

State ownership effect on firms' FDI ownership decisions under institutional pressure: a study of Chinese outward-investing firms

“…Using a categorical rather than a continuous measure is in line with prior studies, which suggest that ownership type moderates environment-strategy configuration in the context of an emerging economy (Peng, Tan, & Tong, 2004;Tan & Li, 1996). To obtain the value of this dummy variable, we used Bureau van Dijk's ORBIS database to identify the ultimate owner of a firm.…”

Challenged and satisfied: the role of organisational ownership and employee involvement

“…We use organisational ownership to specify institutional conditions. In other words, organisational ownership is used as a proxy for differences in terms of competitive environment, organisational culture and management practices, because it has been well documented to influence management practices (e.g., for a review of China-based HRM-performance studies, see Kim, Wright, & Su, 2010;Peng, Tan, & Tong, 2004). Our focus on organisational ownership responds to recent calls (e.g.…”

“…Our decision to focus on two ownership types, SOEs and FIEs, reflects their distinctive and differing characteristics (Peng, 2003;Peng et al, 2004;Xu et al, 2014). SOEs tend to be large and complex and have access to nationally controlled economic resources, such as capital (Wei & Lau, 2008).…”

“…Empirically, studies highlight correspondingly significant differences in terms of HRM, organisational culture and individual attitudes and Page 6 of 41 behaviours between different ownerships (e.g. Braun & Warner, 2002;Gamble, 2006;Gamble & Huang, 2008;Jin, Fosh, & Chen, 2012;Zhu, Cooper, De Cieri, & Dowling, 2005).Our decision to focus on two ownership types, SOEs and FIEs, reflects their distinctive and differing characteristics (Peng, 2003;Peng et al, 2004;Xu et al, 2014). SOEs tend to be large and complex and have access to nationally controlled economic resources, such as capital (Wei & Lau, 2008).…”

“…In contrast, FIEs generally face fewer institutional constraints, adopt a more market-oriented approach to managing their employees and enjoy greater autonomy and flexibility in employment than SOEs (Law, Tse, & Zhou, 2003;Ngo, Lau, & Foley, 2008;Wei & Lau, 2008). Although China's SOEs have gradually adopted more Western style HRM practices, they are still less market-oriented than FIEs (Zhu et al, 2005).Given such well documented differences between SOEs and FIEs, we consider it worthwhile to operationalise organisational ownership type as a contextual factor which may affect employees' stress and its associated work outcomes (Kim et al, 2010;Peng et al, 2004;Wang, 2004). A few studies indicate that FIE employees feel more involved in decision making, more satisfied with their jobs and perceive them to be more demanding than those experienced by their SOE counterparts (Gamble, 2003(Gamble, , 2006Huang & Gamble, 2011).…”