Chinese SOEs Research Articles

Chinese investment in Central and Eastern Europe: Studying the evolution of industrial relations after the takeover of a Slovenian company

The article studies the approach Chinese investors apply to industrial relations at the company level in Central and Eastern Europe. The takeover of a home appliances producer in Slovenia by a Chinese state-owned enterprise and the trajectory of company-level industrial relations are analysed. Adopting a political economy approach, we examine the role played by market-related factors (especially FDI motivation), institutional context, trade union power resources and the Chinese state as an investor. The study contributes in two ways. First, it shows the inadequacy of market-based explanations as host institutions and actors modify transfer outcomes, blurring the ideal types, such as the ‘latecomer’ model and its apparent CEE counterpart. Second, the strategic interests of Chinese SOEs may unwillingly empower local actors struggling to influence transfer outcomes.

Identity Divergence and Convergence:Organization Hybridity and Corporate Misconduct in Chinese SOEs

Identity Divergence and Convergence:Organization Hybridity and Corporate Misconduct in Chinese SOEs

Non-state shareholder governance and corporate innovation efficiency under the background of mixed ownership reform: evidence from China

ABSTRACTBased on data from Chinese SOEs that participated in the mixed ownership reform between 2013 and 2020, mixed OLS and fixed effects models are used to empirically test the impact of non-state-owned shareholders’ participation in board governance on the innovation effectiveness of SOEs in the mixed ownership reform. The empirical results show that: the proportion of non-state shareholder-appointed boards can significantly improve the innovation efficiency of SOEs, and the findings still hold after a series of robustness tests. The impact of the governance of non-state shareholders on the innovation efficiency of SOEs is heterogeneous in two aspects: equity incentives for managers and knowledge absorption capacity. This paper enriches the research on the governance of non-state shareholder boards under mixed ownership reform. It provides empirical evidence and policy implications for optimising the innovation efficiency of SOEs.

Company ESG performance and institutional investor ownership preferences

AbstractHeterogeneous institutional investors' shareholding preferences have been driven to change by the deepening of ESG investment philosophy. Therefore, we examine the impact of corporate ESG performance on institutional investors' shareholding preferences and its mechanism of action. We conduct mixed OLS and mediation effect tests using data on ESG responsibility scores and institutional investors' shareholding ratios of A‐share listed companies in China from 2010 to 2020 as samples. We find that corporate ESG performance can significantly and robustly increase institutional investors' shareholdings; the mediation effect analysis shows that overall corporate ESG performance contributes to increases in corporate book and market values, thus encouraging institutional investors to increase their shareholdings. The heterogeneity analysis shows that independent institutional investors attach more importance to corporate ESG responsibility performance, and long‐term institutional investors attach more importance to corporate environmental performance; moreover, institutional investors have more significant ESG shareholding preferences for Chinese SOEs. Our study can strengthen the encouragement of institutional investors to integrate ESG investment concepts from multiple perspectives, such as research and analysis, portfolio management, risk control, and due diligence management, to design and develop targeted ESG investment tools, give full play to the role of shareholders and guide the sound development of listed companies from the perspective of investment strategy objectives.

Design and Incentives of Equity Incentives in Chinese SOEs in Response to Environmental Uncertainty -- Case study of Hikvision based on grounded theory

High-tech companies are the most affected by restrictions on their ability to innovate. As the epitome of high-tech enterprise development in China, Hikvision actively explores and boldly innovates the equity incentive method and is always adapting to cope with internal and external environmental instability. This paper analyzes and compares the first four equity incentives based on the uncertainty factors and motivations of the internal and ex-ternal environment of the enterprise, takes this as the starting point, starts from the environmental motivations, and according to the constructively-rooted theory proposed by Glaser and Strauss, carries out programmed coding for the three dimensions of environmental factors, equity incentive plan selection and overall enterprise value enhancement. In this paper, we investigate the rationality of Hikvision's equity incentive policy setting, evaluate the effectiveness of the equity incentive policy, and predict the likelihood of equity lock-up under future environmental trends through tools such as excess return and return on equity. Based on the advantages and disadvantages, this paper puts forward the improvement of the equity incentive policy already implemented, and puts forward the universal suggestions on the application of equity incentive to deal with the environmental uncertainty, and establishes the equity incentive model for enterprises to deal with the uncertain environment to help enterprises make better management decisions.

Achieving stability and prosperity: The Chinese way

State governance in corporations controls the economy and employment to develop prosperity in China. Does privatization achieve both objectives? Privatization theory views that giving up state control benefits firms economically but is quite silent on the value of employment benefits. However, market mix theory (Sappington and Stiglitz, J Policy Anal Manag 6(4):567–582, 1987; Stiglitz, Whither Socialism? MIT Press, Cambridge, MA, and London, England, 1994) views that state control of firms to provide employment is valuable. It further implies that corporate performance and employment objectives can co-exist well together. We formalize Market Mix Theory to reveal its testable implications on dual objectives and performance. We test the notion that Chinese corporations pursue two objectives: maximizing economic value and employment, unlike the singular objective of value maximization in Western firms. As well, we test the benefit of partial privatization. First, we test the market mix theory by studying the relationship between state ownership and employment and financial performance as a combined objective. We show that mixed firms have the highest performance in wealth maximization and employment compared to private and state-controlled firms. Second, we examine Chinese SOEs’ Employment with a large sample of 2536 public firms using panel regressions. We find that state ownership and firm employment have a positive relationship. State ownership is positively related to employment stability. Moreover, performance has a negative relationship with state ownership–employment. This result supports our over-employment hypothesis, meaning that economic performance is sacrificed to provide employment. Lastly, we show executive pay for SOE managers is positively related to employment. The employment objective is real in determining state control in Chinese corporations without conflicting to maximize shareholder wealth. Rather, the mixed form of ownership is optimal and vitally contributes overall to the stability and prosperity of China. Our formalization of market mix theory better reflects the reality of motivation, performance and benefits of partial privatization as exemplified in Chinese state-owned enterprises.

State, capitalism and infrastructure-led development: A multi-scalar analysis of the Belgrade-Budapest railway construction

The 2008 financial crisis allowed for the rising power of China to expand deeper into more (semi-)peripheral regions: in the past decade, the role of China and Chinese SOEs has increased markedly in Eastern Europe. This has been in step with China's geopolitical and geoeconomic expansion, hallmarked by the Belt and Road Initiative; the reconstruction of the Belgrade-Budapest railway line constitutes one of its flagship projects in Europe. This paper aims to explore the complexities of the current reconfiguration of state-capital nexus through an empirical analysis of this particular development project; in doing so, we hope to contribute to the scholarly debate about the heuristic use of ‘new’ state capitalism in three specific ways. First, instead of conceptualizing the state as a territorially confined power container, we propose to scrutinize the state-capital nexus from a multi-scalar and relational perspective. Second, we claim that the study of funding, financing and governing of large-scale infrastructural investments is a fruitful analytical entry point to theorize the changing relations between ‘state’ and ‘capital’. Finally, we argue that from the perspective of contemporary shifts in global power structures, the emergence of state capitalist modalities in the Eastern peripheries of Europe should be understood as a ‘co-production’ of the geopolitical rivalry and elite capture of domains of infrastructure. In terms of methodology, in order to show how state-capital relations are produced, enacted and redrawn, the study builds on the analysis of media sources, policy documents, company networks, semi-structured interviews, and non-participant observations.

The State-Owned Enterprises of China: Reform Process

In 1978 China promulgated national policy, Reform and Opening. Chinese economy began transformation. Social market economy with Chinese characteristics was established replacing plan economy and had been improved continuously in 40 years. During the process of Reform and Opening, the State-Owned Enterprises as backbone of Chinese economy had also experienced a lot of changes. After the establishment of market, some SOEs was granted autonomy, and some SOEs experienced privatization or merger and acquisition. Now Chinese SOEs are divided into commercial SOEs and strategical SOEs. Their size is getting bigger and financial performance is improved continuously. However, SOEs are still facing many problems. The reform of SOEs still has a long way to go. Therefore, this article mainly describes the reform process of China's state-owned enterprises, the problems faced at each stage, and the current reform direction.

The Emerging Chinese SOE Model of Infrastructure Financing and Development: Is there Institutional Convergence in Asia?

The Emerging Chinese SOE Model of Infrastructure Financing and Development: Is there Institutional Convergence in Asia?

Policy and media forces that shape the creation of Chinese state-owned enterprise policies

In this exploratory research, we examine the effect of policy and media indicators on the creation of Chinese state-owned enterprise policies. Using a VAR model, we show that Ministry of Finance policy and People’s Daily mention of small enterprises can explain, to some extent, the incidence of state-owned enterprise policies. We verify that non-government forces are less important in determining Chinese SOE policy incidence, as has been suspected by foreign observers, and that policy is indeed made through government agenda setting or consensus building. We also provide evidence to validate the theory of Leutert (2021), that SOE policy occurs in a feedback loop (it is self-reinforcing). These explanations of Chinese policy making can be applied to other government departments to further explain policy incidence.

Institutions and Innovation in China

Management scholars have been increasingly interested in how institutional factors, especially the government, affect innovation in emerging markets. This symposium brings together a unique set of papers exploring different ways governments contributes to firm and scientific innovation in the important emerging market of China. Specifically, the first paper investigates how government-led innovation policies can affect patent growth, including the absolute number of patents and patent novelty, and how policies can yield different results across the country. The second paper describes the effect of government industrial priorities on firm innovation, including targeted firms that lie in prioritized industries as well as non-targeted firms. The third paper examines the effect of talent returnee programs on scientific innovation and explains the performance gaps between returnee scientists and their overseas peers. The last study builds on the institutional view to investigate how the COVID-19 pandemic affects change in innovation between SOEs and non- SOEs and considers the contingent roles of regional R&D funding and firm digitalization. As a set, the papers offer new insights into how institutional factors contribute to the firm and scientific innovation in an emerging market, which can inform organization and management theories and strategic management research. The Limits of State-Led Innovation: Evidence from Chinese Patents Presenter: Yuen Yuen Ang; - Presenter: Nan Jia; U. of Southern California Presenter: Bo Yang; U. of Southern California Presenter: Kenneth Guang-Lih Huang; National U. of Singapore Government priorities and firm innovation in China Presenter: Christopher Marquis; Cambridge Judge Business School Presenter: Qian Wang; Cornell SC Johnson College of Business Can Brain Drain of Elite Scientists be Reversed? Evidence from China’s Young Thousand Talents Presenter: Dongbo Shi; Shanghai Jiao Tong U. Presenter: Weichen Liu; Shanghai Jiao Tong U. Presenter: Yanbo Wang; U. of Hong Kong COVID-19 Pandemic and Innovation of Chinese SOEs and non-SOEs Presenter: Kevin Zheng Zhou; U. of Hong Kong Presenter: Meitong Dong; HKU

How much of the world economy is state‐owned? Analysis based on the 2005–20 Fortune Global 500 lists

AbstractThis paper analyzes the share of state‐owned enterprises on the Fortune Global 500 lists from 2005 to 2020. The purpose is to answer two research questions—what is the share of SOEs among the world's largest companies, and is this share increasing over the years? Regarding studies of large sets of companies, the novelty of this article is the method in which SOEs were identified—based on the criterion of actual corporate control of the state and not the threshold of state ownership. The results show that the share of SOEs in the group of the world's largest companies is higher than indicated in previous similar studies, and this value has increased significantly over the last 15 years. In 2005, there were 64 SOEs on the list; in 2020, there were 141 (with the highest number—142—in 2015). In this period, the share of SOEs in revenues doubled (to almost 30%), in assets more than tripled and the total number of employees from SOEs from the list more than doubled. However, these increases were almost solely due to the growth of the Chinese economy, which resulted in more Chinese SOEs being included on the list.

Food security and power struggle in the Chinese ‘battle of the beans’

ABSTRACT The mid-2000s foreign headway over China’s soybean downstream complex, known as the battle of the beans, reinforced an uncritical nationalist discourse over food security based on a Sino-foreign dichotomy. This article demonstrates through an empirically rich analysis based on four crucial Chinese SOEs that such a discourse ignores diverging capitalist accumulation strategies as two SOEs (COFCO and Chinatex) took advantage of global soybean price fluctuations to grow in association with foreign agribusiness. Instead, I suggest that food security reflects dynamic state-capital relations in China evidenced by the political reaction of two state-owned competitors (Jiusan and Sinograin), endorsing its nationalist appeal.

The history and present of Chinese SOE reform

The SOE reforms are pivot for Chinese economy. The future success of Chinese economy relies on the government’s ability to deepen SOE reforms today. Over forty years of SOE reforms have mitigated the unanimity problem, improved SOE efficiencies, and elucidated the relationship between SOE and the government. Even though misallocation, excessive social burdens, and bureaucratic culture within SOEs still exist, this reform has achieved staged success. The success originates from a strong and consistent government leadership, but future reforms can also go astray because of the overly centralized power. This paper summarizes the overview of China's planned economy and analyzes the reform measures of the leaders in different periods respectively.

CEO Overconfidence and Corporate Innovation Outcomes: Evidence From China.

This study examines how chief executive officer (CEO) overconfidence can influence the quantity, quality and direction of corporate innovation using Chinese firms for the period 2009–2016. Our results suggest that overall, CEO overconfidence has a positive impact on firm innovation productivity. Furthermore, this effect is significant for Chinese non-SOEs but not for Chinese SOEs. Specifically, an overconfident CEO can facilitate firm innovation in new technological areas but not in the firm’s existing areas. Additionally, we find that internal controls can regulate the relationship between CEO overconfidence and innovation. Interestingly, when the internal control level is too high or too low, the correlation between CEO overconfidence and innovation productivity is not significant.

Effects of Challenge-hindrance Stress on Employee Occupational Well-being in Chinese SOEs: The Chain Mediating Role of Psychological Capital and Self-regulated Learning

挑战性—阻碍性压力；心理资本；自我调节学习；工作幸福感

IMPACT OF INSTITUTIONAL ENVIRONMENT AND PYRAMIDAL LAYER ON COMPLETION OF CHINESE SOES’ MIXED-OWNERSHIP TRANSACTIONS

This paper utilizes Chinese SOEs that undertake mixed-ownership transactions in 2019 as its research objects and discusses the impact of institutional environment (including the degree of marketization and governmental hierarchy) on the completion of mixed-ownership transactions. In addition, this study explores the moderating effect of pyramidal layer and the munificence of payment on the above relationships. The empirical results show that the main effect hypothesis is supported. Furthermore, pyramidal layer weakens the positive correlation between the marketization and the completion of mixed-ownership transactions, and strengthens the negative correlation between governmental hierarchy and the completion of mixed-ownership transactions. The munificence of payment has no significant moderating effect on the relationship between marketization and completion of mixed-ownership transactions; however, it weakens the negative correlation between the governmental level and the completion of mixed-ownership transactions.

Institution-specific Skills and CEO Career Outcomes: A 20 year study of Chinese SOEs

This study introduces a new dimension of human capital, institution-specific skills, which captures the working experience under a specific institutional environment. We argue institution-specific skill is the fourth type of human capital in addition to generic, industry-specific, and firm-specific skills. Base on human capital theory, we argue that institution-specific skills extend CEOs’ understanding of the focal firms. Thus we propose that institution-specific skills decrease the risk of CEO non-routine departure, and increase the likelihood of internal and external promotions, especially for outsiders. Results based on analyses of CEO turnovers in Chinese state-owned enterprises during the 20 years period from 2000 to 2019 provide strong support for our theory.

Dehybridization in the Face of the Party-State: A Longitudinal Case Study of a Chinese SOE's Corporate Governance Responses to Institutional Change

Dehybridization in the Face of the Party-State: A Longitudinal Case Study of a Chinese SOE's Corporate Governance Responses to Institutional Change

Foreign direct investment along the Belt and Road: A political economy perspective

In 2013, China launched its ambitious Belt and Road Initiative (BRI), a large portfolio of infrastructure projects across 71 countries intended to link Eurasian markets by rail and sea. The state-led nature of the Initiative combined with its transformative geopolitical implications have conditioned the type of engagement that many governments and firms in host and third countries are willing to take in Chinese-funded BRI projects. Building on two theoretical streams that have originated in international political economy but have received growing attention in international business, varieties of capitalism and geopolitics, this perspective shows how a greater understanding of the institutional and geopolitical context surrounding BRI helps decipher the selection of host-country firms and third-country MNEs in Chinese-funded BRI projects. We portray firm selection in a BRI project as the outcome of a one-tier bargaining game between China and a host country. We show how institutions and geopolitics influence both the legitimacy gap of Chinese SOEs in a host country and the host country’s relative bargaining power, affecting the likelihood that host firms and third-country MNEs are selected in BRI projects. We also discuss the geopolitical jockeying strategies that these firms can adopt to influence the outcome of the bargaining game.