Chinese Small Firms Research Articles

Research on Compliance Challenges and Countermeasures of Chinese Small Accounting Firms

Research on Compliance Challenges and Countermeasures of Chinese Small Accounting Firms

Unlocking sustainable success: Strategic approaches to carbon neutrality

This study aims to fill a significant research gap by examining the relationship between resource bricolage, dynamic capabilities (DC), stakeholder engagement, and carbon neutrality (CN) commitment in organizations facing resource constraints. While previous studies have explored various factors influencing CN commitment, limited attention has been given to the role of bricolage and the mediating role of DC in this relationship. Additionally, the boundary conditions of environmental justice orientation (EJO) and stakeholder responsiveness toward environmental uncertainty (SREU) in achieving CN commitments have yet to be extensively investigated. We developed a comprehensive conceptual model based on the resource-based view (RBV), DC theory, and stakeholder theory to address these gaps. Collecting data from 342 Chinese small and medium-sized enterprises (SMEs) firms using a time-lag approach, we empirically tested the proposed associations using structural equation modeling (SEM). Our findings reveal several noteworthy insights. First, contrary to expectations and prior studies, we found no direct association between bricolage and CN commitment. However, DC mediates the indirect effect of bricolage on firm CN commitment. Second, we identified a significant interaction effect, indicating that a proactive EJO enhances a firm's ability to navigate a changing environment and strengthens its CN commitment. Third, we discovered that SREU negatively moderates the relationship between DC and CN commitment. Overall, this study contributes to the existing literature by shedding light on the multifaceted nature of achieving CN commitments and the importance of DC, stakeholder engagement, and EJO. The practical implications of our findings highlight the need for organizations operating under resource constraints to integrate bricolage and DC while considering stakeholder concerns and fostering environmental justice principles.

A two-stage credit scoring model based on random forest: Evidence from Chinese small firms

Small firms are major contributors to most economies, often supported by government policies. However, the credit scoring of small firms is complicated and costly, making it a challenging field of research. Using loan data from 3045 small firms in China, we design a two-stage expert system for default prediction that quantifies the variables and thresholds that have a key impact. Firstly, we use SMOTE to deal with the imbalanced data and secondly, we employ random forest to build predictive credit features. Dominance analysis shows that, when making default assessments on Chinese small firms, it is important to consider not only financial factors, but also non-financial and macroeconomic factors. In particular, the net cash profit, the firm's legal disputes and the per capita disposable income of urban residents are key factors in credit scoring. Robustness tests show that our proposed methodology performs better than other machine learning models, and this result is robust with observations from other countries.

Chinese auditor inspection access challenges: The market’s response to integrated US regulatory and legislative action

We examine the impact of mounting regulator interest in US-listed Chinese firms facing PCAOB inspection access challenges. Our study provides evidence of the market’s response to five events taking place from 2018 to 2020. Collectively, these events mark the first-ever integrated regulatory and legislative response from the PCAOB, SEC, and US legislature since initiation of the PCAOB’s international inspection program. First, we consider whether the PCAOB’s eighth annual update of inaccessible jurisdictions is newsworthy to investors. Next, we consider investors’ perceptions of audit quality risks and delisting risks among Chinese firms. We find that the market does respond negatively towards cross-listed Chinese firms following PCAOB, SEC, and US legislative action. Results further suggest that market reactions are motivated by investors’ perception of a delisting risk among Chinese firms. This observation is most salient among small Chinese firms having fewer listing alternatives outside of the US.

The Impact of Multi-Level Capital Markets on The Business Transformation of Small and Medium-Sized Investment Banks Under the Beijing Stock Exchange Policy

The Beijing Stock Exchange (BSE) was incorporated on 3 September 2021 as the first corporate stock exchange in China, approved by the State Council and supervised by the China Securities Regulatory Commission. The BSE is designed to serve innovative small and medium-sized enterprises (SMEs), especially the "specialized and new" small giants, and to develop and interconnect with the Shanghai and Shenzhen Stock Exchanges and regional equity markets to form an institutional arrangement that suits the characteristics of SMEs and to explore the path of financial inclusion through capital market support for technological innovation of SMEs. Building a multi-level capital market so as to better serve the real economy is an important goal in the construction of China's capital market, and the establishment of the BSE is an important milestone. In the future, how small and medium-sized brokerage firms will make use of the policy opening brought by the BSE to strengthen the expansion of the corresponding business segments has become a key research direction. This paper will focus on the construction of China's multi-level capital market, compare it with the establishment of the US capital market, study the development path of China's capital market, and thus analyse the transformation path of Chinese small and medium-sized brokerage firms to seize the opportunities of the times.

Текущее развитие рынка аудита в Китае

The subject matter of this article is the stages of development of the audit market in China, including the four stages of wild development, regulated development, institutional innovation, and international development. The objective of this article is to analyse the characteristics and different strategies of the Chinese audit market at each stage of development, and to propose feasible recommendations for maintaining a stable development trend of the Chinese audit market in the future. In the course of the research, the author used general scientific methods such as analytical evaluation, comparative analysis, comprehensive evaluation and generalization. Through a comparative analysis of the indicators related to the development of the audit market in China from 1980 to 2020, the results of this article show that each stage of the audit market in China has a focus of development and different strategies. This is mainly reflected in the establishment of industry legislation, the development and growth of accounting firms, exchanges and cooperation with international and regional related organizations, the growth of the audit team, and the rapid growth of audit organizations' business revenues. The conclusion of this article is that the audit market in China has a trend of stable and rapid development. However, in order to maintain the stable and rapid development of the audit market in the future, Chinese small and medium-sized accounting firms need to improve the quality of audit services, enhance brand building, strengthen the professionalism of the audit team, as well as improve the international competitiveness of Chinese local firms.

A Comparative Study of Antecedents to Contracting Practice in Buyer-Seller Relationships in Egypt and China

The purpose of this study is to analyze the influences of transaction factors on inter-firms relationships in different businesses. The study focuses on the comparison between the Chinese and Egyptian business with regarding to buyer and seller relationships in textile industry in order to find out the differences in buyer-seller relationships between Egypt and China and how the cultural factors influence the contracting practice between these two countries. Therefore, transaction cost analysis (TCA), relational contracting theory (RCT) and resource dependence theory (RDT) would act as the important tools to find out how the business relationship works in different culture background. Combining the three theories, we can conclude the general view about the transaction mechanism in the two countries. Chinese market situation, weak legal system and informal institutions combining with the “guanxi” embedded business environment make the Chinese small firms rely on the relational contracting more than formal contracting. Meanwhile, the high value for law makes Egyptians prefer to formal contracting. The findings highlight the fact that the level of contracting mechanism was found to be more positive in Egypt than in China and was statistically significant. In other words, the Egyptians tend to use the formal transactional mechanisms which emphasize legal conditions and incentive systems, whereas the Chinese prefer the relational mechanisms that govern exchanges through moral control and trust in the relationships between the buyers and suppliers. A hierarchical multiple regression approach employing the OLS regression model was carried out and the findings show that almost 30% of contracting mechanisms can be explained by the model, while the remaining percentage (70%) can be explained by other factors not included in the research model. In addition, the findings revealed that the association between supplier specific investments and contracting becomes significantly more enforced in Egypt than in China when the size of the buying firm increases. Furthermore, contracts have a control effect on buyer-supplier relationships in case of unanticipated eventualities.

Raising capital for the family firm for sustainability: Whence the advantage?

Using a sample of Chinese small and medium-sized firms, we compare financing costs for family and nonfamily firms. We find that family firms enjoy relatively lower average financing costs through mitigating agency problems, the provision of more collateral, and the greater reliance on cheaper internal finance. Family firms also make use of their advantage in the pledged assets of family members, thereby making them less subject to financing constraints. We also find that the apparent inconsistency between the willingness and likeliness to rely on internal finance for family firms largely reflects the financial constraints of smaller firms.

Opportunity recognition efficiency of small Chinese firms: findings from data envelopment analysis

PurposeSmall firms in China anticipate entrepreneurial opportunities for continual growth. However, they may fail to recognize opportunities because of their inefficiency in managing their knowledge.Design/methodology/approachIn this explorative paper, the authors assess the opportunity recognition efficiency of 168 small Chinese firms using data envelopment analysis (DEA). Supplementary Tobit regressions were conducted for further exploring the factors that influence the firms’ efficiency in opportunity recognition.FindingsResults from the DEA suggest that most respondents recognize significantly fewer opportunities than those with equivalent knowledge stock. Moreover, many firms have low levels of pure technical efficiency but high levels of scale efficiency, indicating insufficient use of knowledge as a major reason for inefficiency in opportunity recognition. The Tobit regressions show that sales and research and development intensity are relevant to a firm’s opportunity recognition efficiency.Research limitations/implicationsThis study calls for the investigation of efficiency issues in opportunity recognition and suggests that managers guard against unwarranted loss of opportunities owing to inefficient use of existing knowledge elements.Originality/valueFirst, the authors introduce the concept of opportunity recognition efficiency within the entrepreneurial process. Second, they manifest the role of knowledge management in opportunity recognition. Third, they introduce DEA to investigate the relationship between knowledge stock and opportunity recognition. Fourth, this study reveals that inefficient use of knowledge is a disadvantage of small Chinese firms in terms of opportunity recognition.

A Chinese Model for Labour in Europe?

AbstractBased on long‐term fieldwork in multiple locations, our article questions the approach that posits a Chinese model of work and employment relations as increasingly exporting its form of labour management and dominating worldwide. It does so by focusing on Europe and discussing two labour regimes considered as typically Chinese: the Chinese fashion workshops in the Italian fashion industry, and the Foxconn electronics plants in the Czech Republic. Our findings bring new insights to bear on issues for which research is still thin on the ground and challenge the hypothesis of a ‘Chinesisation’ of work and employment practices in Chinese small firms and MNCs operating in Europe. We move the focus away from the simple analysis of firm management prevailing in the literature and suggest that, in order to understand the firm’s behaviours, the role of the state, the unions, the migrant workers and the role of temporary work agencies should all be taken into consideration.

The Impact of Space Delocalization and Time Delocalization on the CSR Strategy in a Transition Period ——A Case Study of Chinese Small and Medium-sized Export-oriented Apparel Firms

Since the 1990s, many Chinese small and medium-sized export-oriented firms have begun to accept higher corporate social responsibility (CSR) standards because of factory inspections. In recent years, firms have been facing greater market competition in a period of transition. Different firms have different attitudes toward CSR behavior in same external macroenvironment, and some firms have formed a CSR strategy. To further explore the issue, this paper studied the impact of space delocalization and time delocalization on the CSR strategy of Chinese small and medium-sized export-oriented firms based on social structure theory. Using the case study approach, the results showed the following: (1) space delocalization can stimulate the CSR behavior of firms, although some behaviors are the result of compromise, and CSR strategy will not be initiated because of passive CSR behavior; (2) the stimulation of space delocalization can stimulate endogenous changes, but the cultural background of time delocalization has a far-reaching impact on the formation of CSR strategy.

Chinese Firms’ Troubled Relationship with Market Transformation in North Korea

The coping strategies that small Chinese firms operating in North Korea have chosen involve insinuating themselves into North Korean political and social networks, and structuring their investments so as to minimize their exposure to North Korean infrastructure, workers, and institutions. As a result, it is unlikely that Chinese firms will be the main drivers of market transformation in North Korea.

Time Horizon Diversity, Competitive Repertoire Balance, and Firm Performance

Integrating competitive dynamics with temporal disposition research in psychology, we investigate how CEO polychronicicity (the tendency to engage in multiple activities simultaneously rather than sequentially) and procrastination (the tendency to postpone an intended course of action beyond the expected timeline) moderate the effect of TMT horizon diversity (variation in top management team members’ short- versus long-term focus) on a firm’s competitive repertoire balance with respect to the relative emphasis on strategic versus tactical actions in the firm’s entire set of actions. Conducting multiple surveys with a sample of 167 Chinese small and medium-sized firms, we found that CEO polychronicity and procrastination interact with TMT time horizon diversity in shaping the extent to which a firm has a balanced competitive repertoire, and that a more balanced competitive repertoire is associated with higher firm performance. These findings contribute to a refined understanding of how a firm’s temporal profile of competitive actions is developed. Our research also informs the CEO-TMT interface perspective by highlighting the interactive nature of TMTs’ and CEOs’ temporal dispositions.

Government impact on technology strategy and access to capital of SMEs in emerging markets

Previous research has shown that institutional environments affect firm strategic initiatives; however, few empirical studies investigate how government policies exert influences on firms’ entrepreneurial activities. In this study we attempted to explore the relationship of local governments “helping hand”, firms’ access to capital and strategic choices of technology development. By analyzing the data of 196 Chinese small firms in auto parts manufacturing industry, it was found that government policies have indirect relationship with firms’ technology strategies. Results showed that local government favorable tax, loan-related and industry support policies were significantly related to firms’ access to capital. In addition, firms with more access to capital were likely to choose technology development through internal development and research and development collaboration.

A Typology of Guanxi-Based Governance Mechanisms for Knowledge Transfer in Business Networks of Chinese Small and Medium-Sized Enterprises

Guanxi has strong implications for interactions among individuals in Chinese society. This study investigates guanxi-based governance mechanisms in the context of knowledge transfer among Chinese small and medium-sized manufacturing firms. We analyze, in-depth, qualitative interview data gathered from 78 Chinese engineers who work for Chinese small and medium-sized die-casting manufacturers. Our findings reveal that guanxi influences the production of three forms of guanxi-enabled trust: guanxi-enabled relational trust, calculative trust, and institutional trust. By combining these forms of trust, we generate a typology of seven guanxi-based governance mechanisms for knowledge transfer—“guanxi-hu,” “huibao,” “lun,” “gan-qing,” “jiao-qing,” “ren-qing,” and “mianzi.” We discuss the research and managerial implications of our findings.

Competitiveness of Chinese Small Firms in Nigerian Market

Competitiveness of Chinese Small Firms in Nigerian Market

The effects of corporate governance and ownership on the innovation performance of Chinese SMEs

We investigate the degree to which corporate governance and ownership affect the innovation performance of firms in China with a particular focus on privately owned small and medium enterprises. Using the appropriate theoretical frameworks, we derive hypotheses regarding the impact of ownership concentration, board size and composition, and the background of the CEO on innovative activity. These hypotheses are tested using a unique sample of 370 mostly private and relatively small Chinese firms in Zhejiang province, for the period 2004–2006. Using two measures of innovation, invention patents and new product sales, and a variety of estimation methods appropriate to each measure, we find limited evidence that corporate governance affects innovation performance, but the results do depend on the measure of innovation. In general, the results suggest that for this sample, corporate governance and ownership affect innovation activity more strongly when innovation is measured by patenting activity, rather than new product sales. We conclude with a discussion about why this might be.

Why do Small Chinese Firms List on Frankfurt Stock Exchange?

Recently, Chinese firms have become more active in attempting to go public on the Frankfurt Stock Exchange (FWB). This paper uses multivariate probit analysis to test the motivations of Chinese firms to list on the FWB. In general, Chinese firms are driven by the following motivations. Firstly, they pursue relatively more stringent listing standards and closer monitoring than the Hong Kong Growth Enterprise Market (GEM) and the London Alternative Investment Market (AIM). Secondly, they are motivated by emerging needs for external financing. Moreover, this paper also examines the post-issue performance of Chinese listings on the FWB. It turns out that Chinese firms listed on the FWB not only show bad operating performance but also bad stock performance. However, they are no exceptions since many Chinese firms listed on other foreign stock exchanges also under-perform the market average.

Internationalization of Chinese Entrepreneurial Firms

AbstractThis article uses the resource‐based and internationalization theories to explain the export behavior of Chinese entrepreneurial firms. Based on multiyear data on Chinese firms from the Global Entrepreneurship Monitor (GEM), we show that contextualized resource‐based theory can adequately explain some of the variation in export behavior among young Chinese firms. Exports by small Chinese firms are driven by the social and intellectual capital of the entrepreneur and their entrepreneurial proclivity, and the innovativeness/uniqueness of the product/offering. © 2013 Wiley Periodicals, Inc.

Intellectual property management and patent propensity in Chinese small firms

Based on a survey of local firms in Zhongguancun Science Park in Beijing, China, this paper examines the impact of intellectual property management practices on the patent propensity of small firms. With a particular focus on two aspects of intellectual property management, we find that R&D personnel-related management practices, such as training and rewarding mechanism, are more effective in enhancing a firm’s willingness to patent and encouraging the patenting behavior within the firm. Monitoring the R&D process in intellectual property right (IPR) management, such as proposal and outcome evaluation, is less influential in fostering manufacturing firms to patent. One implication emerged from the analysis is that a firm can speed up or intensify its generation of IPR assets by introducing well-developed management practices, even without reorienting its intellectual property strategies.