The Political Economy of Chinese-Style Privatization: Motives and Constraints

Liu, Guy S.; Sun, Pei; Woo, Wing Thye

doi:10.1016/j.worlddev.2006.06.001

Cited by 46 publications

(31 citation statements)

References 27 publications

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“…Thus, managers in local government-owned firms use resources to fulfil their personal agendas rather than work for state owners' interests. This view is consistent with evidence that local governments are reluctant to directly intervene business operation in partially privatized SOEs because the formal institutional setting is promoting a socialized market economy with a cut-off link between the government and the firm (Liu et al 2006). Therefore, we expect firms with local government ownership should unitize resources less productively.…”

Section: Hypothesis 2bsupporting

confidence: 87%

“…The institutional changes restructured and privatized SOEs based on a "grasp the large, release the small" strategy -retaining government control of large enterprises that operate in strategically important sectors and releasing small and medium-sized firms that are operating in unimportant sectors (Liu et al 2006). For large central government-owned SOEs, the government remains majority shareholding and exerts influences through SASAC over more than 100 firms.…”

Section: Hypothesis 2bmentioning

confidence: 99%

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Impact of ownership types on R&D intensity and innovation performance—evidence from transitional China

Teng

2017

Front. Bus. Res. China

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This paper examines the effects of ownership types on firms' R&D intensity and innovation performance, using a sample of 357,857 Chinese firms from 2005 to 2007. This study finds considerable divergence among Chinese domestic enterprises in terms of R&D intensity and innovation performance. We find that firms owned by the central government are the key drivers for firms' R&D activities, while local government, private and foreign ownerships are negatively related to both R&D intensity and innovation performance. This paper finds significant divergence within government ownership category and argues that China's institutional changes generate varied government ownership groups with different levels of resource endowment, which in turn influence firms' R&D activities.

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Section: Hypothesis 2bsupporting

confidence: 87%

Section: Hypothesis 2bmentioning

confidence: 99%

Impact of ownership types on R&D intensity and innovation performance—evidence from transitional China

Teng

2017

Front. Bus. Res. China

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“…In China, the government allocated a large share 1 3 of the fiscal budget to subsidize privatized firms to compensate redundant workers (Dong and Putterman 2003). According to a survey of 242 privatized firms' managers conducted by Liu et al (2006), their main difficulty is a lack of sufficient funds to compensate redundant workers. Once privatized firms themselves cannot afford compensation fees, local governments must reallocate their financial budget to subside redundant laid-off workers and become losers in privatization.…”

Section: The Puzzle Of Continued Subsidy Paymentsmentioning

confidence: 99%

“…Initially, China's government tried various measures to attempt to increase SOEs' performance, including retained profit (liu cun shou yi), tax instead of profit remittance (li gai shui), and contracting systems. Concerning the crush of the state-owned economy since 1986, the State Council published a new guideline for SOE reform, which proposed that they 'retain control of large enterprises and gradually retreat from small and medium-sized enterprises' (Liu et al 2006). The privatization of SOE was firstly implemented at Zhucheng City, Shandong Province, in 1993.…”

Section: Introductionmentioning

confidence: 99%

Solve the Problem or Escape Responsibility? The Politics of Chinese Privatization Reform

Huang

2018

Chin. Polit. Sci. Rev.

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This article investigates the Chinese privatization reform in the late 1990s, when the privatizations were implemented among small-and medium-sized state-owned enterprises and pushed by the local governments. Even though the Chinese privatization reform has been intensively discussed, few studies can fully explain how China's local governments could increase fiscal surpluses through privatization under the condition that the policy burden of redundant workers was persistent. Hence, this paper proposes three hypotheses that reflect different motivations of the local governments. Testing the hypotheses via the method of process tracing for causal inference, I find that due to comparatively fewer subsidy payments, China's local governments could have a fiscal surplus after privatization reform. By unveiling the mechanism, this article can help people to understand why China's central and local governments had conflicting interests in the process of privatization. More importantly, it re-evaluates the role of China's local government in the process of privatization. The original intention of the local government was to escape the responsibility of paying subsidies rather than solve the problem of bad performance in state-owned enterprises.

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“…Tsai (2002: 2;original emphasis) reported that "as of the end of 2000, less than 1% of loans from the entire national banking system had gone to the private sector." Even today it would be very hard for a private firm in China to obtain large bank funds without dedicated government support (Brandt, Li, & Roberts, 2005;Liu, Sun, & Woo, 2006).…”

Section: Case Study Findingsmentioning

confidence: 99%

Corporate governance failure and contingent political resources in transition economies: A longitudinal case study

2009

Self Cite

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This paper explores the dynamic relationship between politicians and entrepreneurs in the governance of business organizations in transition China. A longitudinal case study of Kelon (1984Kelon ( -2001, a product of politician-entrepreneur alliance in China's household appliance sector, reveals how certain political resources that once assisted the entrepreneurs in creating competitive advantages in transition economies may turn into political liabilities during the course of institutional transition. Drawing upon the resource-based view (RBV) of the firm, the rent appropriation literature, and the agency theory, this paper sheds light on the contingent impacts of political resources on corporate governance and firm performance in transition economies.Although prudence requires anonymity for government officials and business managers that cannot be publicly acknowledged, we are eternally grateful to the essential help they have offered for us to conduct fieldwork in China. Meanwhile, we are indebted to Garry Bruton (the Senior Editor) and the two anonymous reviewers for their insightful and constructive comments. We also acknowledge Andy Lockett, Mike Wright, Qiren Zhou, and the audience of our presentations on the Strategic Management Society

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The Political Economy of Chinese-Style Privatization: Motives and Constraints

Cited by 46 publications

References 27 publications

Impact of ownership types on R&D intensity and innovation performance—evidence from transitional China

Impact of ownership types on R&D intensity and innovation performance—evidence from transitional China

Solve the Problem or Escape Responsibility? The Politics of Chinese Privatization Reform

Corporate governance failure and contingent political resources in transition economies: A longitudinal case study

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