Chinese State-owned Enterprises Research Articles

The dance of power and responsibility: understanding the multilevel government influence on CSR practices in Chinese state-owned enterprises

ABSTRACT This study investigates how multilevel government influences the corporate social responsibility (CSR) practices of state-owned enterprises (SOEs). Using the control rights theory, we illustrate how the supervisor (the provincial government) utilizes residual control rights allocated by the principal (the central government) to exert both top-down binding and bottom-up buffering effects on the CSR practices of their agents (local governments and SOEs). Our findings reveal a U-shaped relationship between government control levels and SOEs’ CSR practices, with administrative intervention reinforcing this trend and fiscal decentralization leading to an inverted U-shaped relationship. These insights highlight complex inter-governmental dynamics influencing SOEs’ CSR practices.

Does symbolic AI-related disclosure influence CEO promotion? Evidence from state-owned enterprises in China

ABSTRACT This paper considers firms’ artificial intelligence (AI)-related discretionary disclosure to examine whether symbolic communications of AI influences a CEO’s chance of career advancement in Chinese state-owned enterprises (SOEs). We find a positive relationship between symbolic AI disclosure and the possibility of managers getting promoted. Our main finding is more salient when a firm’s achievement of policy goals is more crucial, its financial performance is relatively poor, and a manager has more urgent promotion needs. Results imply that CEOs engage in impression management via managerial discretionary disclosure to strengthen organizational legitimacy and build a favourable impression, which may increase their probability of getting promoted.

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.

Cocreation of social value: A tripartite game analysis with Chinese state-owned enterprises as an example.

In the context of the digital economy era, it is urgent for Chinese state-owned enterprises (SOEs) to engage in social value cocreation activities. The government and consumers' roles in SOEs' social value cocreation system cannot be ignored. Therefore, it is necessary to explore the tripartite social value cocreation model involving the government, SOEs, and consumers. In this respect, this study constructs a tripartite evolutionary game model of the government, SOEs, and consumers, and explores the influencing factors and evolutionary mechanism of the system overall. Matlab software is used to analyze the simulation data. The results reveal that the prerequisite for SOEs' successful social value cocreation is that consumers receive additional social value benefits greater than the level of improvement in social welfare. The allocation coefficient of consumers' additional social value benefits, the degree of the government's digital empowerment subsidy, and the level of the punishment for SOEs that violate the government's cocreation requirements will accelerate the achievement of equilibrium in the social value cocreation system, without affecting the final equilibrium result. By analyzing the strategic choices and interactive relationships among the government, SOEs, and consumers in social value cocreation in-depth, this study offers suggestions to promote the government, SOEs, and consumers' participation in social value cocreation. This research contributes to clarifying SOEs' social value cocreation model and has significant implications for promoting enterprises' high-quality development.

Executive pay restrictions, political promotion, and firm efficiency: Evidence from China

Using the mandatory reform in executive pay restrictions within Chinese state-owned enterprises (SOEs) as a quasi-natural experiment, we investigate the effects of compensation incentives and political promotion on firm efficiency. Our difference-in-differences analyses reveal that firm efficiency significantly decreases following the reform, and political promotion can attenuate this negative association. Firm risk-taking is a potential mechanism underlying this observed phenomenon. The negative relationship and mitigation effect are more pronounced for central SOEs and commercial class II SOEs. Furthermore, these findings exhibit variations based on distinctive attributes in compensation structures, CEO characteristics, and political promotion ranks. Overall, our study underscores the complementary roles of explicit and implicit incentives within SOEs, providing a strong rationale for government regulation and reform of executive compensation.

A regional perspective on the privatisation of Chinese state-owned firms

ABSTRACT This study examines the impact of regional formal and informal institutions and the regional origins of private shareholders on the privatisation efficiency of Chinese state-owned enterprises (SOEs). Using a difference-in-differences method to examine 63,599 firm–year observations, we find that, on average, privatisation enhances the capacity utilisation efficiency of Chinese SOEs. That positive effect is stronger in regions with higher marketisation or more embedded in Confucianism. Interestingly, private shareholders from mainland China enhance capacity utilisation, but foreign shareholders exert no significant effect. Moreover, Hong Kong–Macau–Taiwan shareholders weaken the positive effect of privatisation on capacity utilisation in both low-marketised and high-Confucian regions.

State Institutions and Development in South Africa: The Case of Two State-Owned Enterprises

The debate on state institutions in the economic development of developing countries has been ongoing for the past three decades. In the 1980s, the debate was dominated by the importance of state-owned enterprises (SOEs) and transitioned to the privatisation of SOEs in the early1990s. The debate re-emerged in 2010 due to the increasing influence of Chinese SOEs in the global economy. While the corporatisation of SOEs led to financial results being the core measure of good governance and performance, balancing financial performance with societal socio-economic impact is necessary for developing nations as SOEs are established to stimulate social and economic development. This article uses secondary data to explore the social and economic impact of two South African SOEs—the Industrial Development Corporation (IDC) and the Development Bank of Southern Africa (DBSA)—to contribute to the ongoing debate on the importance of state institutions on the development of developing countries. The article demonstrates the criticalness of the IDC in stimulating the country’s industrial development capacity and structural transformation, whereas the DBSA provides infrastructure investment to enable structural transformation through an enabling development ecosystem. While contributing to the merits of the state and development, failures and areas of interventions are also discussed.

The Monkey King who wears a tight band: Executive accountability pressure and corporate investment

This paper examines the effect of the accountability system for illegal operations and investments on subsidiary-level investments in Chinese state-owned enterprises (SOEs). Using the accountability system as a policy shock, we find that SOEs reduced the establishment of subsidiaries after the implementation of the accountability system, especially subsidiaries in cross-industry businesses. Furthermore, we find that this disincentive effect is more pronounced (1) when the chairman is close to retirement and (2) when the company has political affiliation. Our findings provide important implications for improving the SOE capital supervision system and promoting the high-quality development of SOEs.

Restrictions on Chinese SOE Investments for Data Security Reasons: The Case of Australia

In the digital age, the proliferation of investments made by Chinese state-owned enterprises (SOEs) has raised concerns among host countries about the risks that the investments could provide the Chinese government access to sensitive data involved in the target businesses, posing threats to their national security. Consequently, countries with sophisticated foreign investment screening (FIS) regimes, such as Australia, have imposed entry restrictions on Chinese SOE foreign direct investment (FDI) on the grounds of data security concerns. This article takes Australia as an example to investigate whether this concern has become a ‘panacea’ to justify any restrictions imposed by host states on Chinese SOE FDI in the digital age. Through in-depth examinations of Australia's reformed FIS regime and its application to Chinese SOE investments, this article demonstrates that data security has increasingly become a preferred justification for imposing restrictions on Chinese SOE investments. It argues that the data security justification is legitimate because of Chinese SOEs’ strong political ties, which have been significantly strengthened in China's ongoing SOE reforms, as well as China's prominent policy emphasis on data protection in recent years. However, measures should be taken to mitigate data security becoming a ‘minefield’ impeding the restoration of Australia–China investment relations.

Information matters: The effectiveness of mixed-ownership reform in mitigating financial constraints

Due to the unhealthy principal-agent relationships prevalent in state-owned enterprises (SOEs), these enterprises often lack transparency in financial reporting and other critical information. Drawing on signaling theory, this study examines the impact of mixed-ownership reform (MOR) on financial constraints in Chinese SOEs. Using data from listed manufacturing SOEs between 2009 and 2019, we find that every 0.1 increase in the proportion of non-state shareholders, a proxy for MOR intensity, is associated with an average 2.34 ‰ reduction in financial constraints. This mitigation in constraints primarily arises from decreased information asymmetry between enterprises and the external capital market. Specifically, MOR promotes corporate information disclosure, which sends quality signals to investors, while simultaneously reinforcing corporate governance, which projects intention signals to capital markets. Notably, the effectiveness of MOR in alleviating financial constraints is more significant in capital-intensive and information-sensitive industries, as well as in central SOEs. These findings not only highlight the critical role of MOR in alleviating information asymmetry within SOEs, but also provide valuable insights for similar reforms aimed at advancing sustainable development of SOEs in other countries.

Unveiling Entrepreneurship in Chinese State-Owned Enterprises: A Computational Linguistic Analysis

Unveiling Entrepreneurship in Chinese State-Owned Enterprises: A Computational Linguistic Analysis

High-Speed Railway Project of a Chinese State-Owned Enterprise in Indonesia: A Cross-Cultural Management Assessment

This study examined cross-cultural management in a diverse organization. Employees (varying in age, sex, background, etc.) disagreed on the company's cultural competence, particularly in communication, trust, and leadership. Further analysis revealed discrepancies in communication styles, values, business practices, and navigating regulations. Interestingly, age seemed to influence how employees viewed these issues. While cultural intelligence, communication, and open-mindedness on their own didn't necessarily improve specific areas, a more positive and collaborative work environment with increased trust did bridge cultural divides. Based on these findings, the study proposes a comprehensive Cross-Cultural Management Plan including diversity training, improved communication initiatives, leadership development focused on inclusivity, and activities fostering a positive workplace culture. This plan aims to address the identified challenges and create a more inclusive and successful organization.

Chinese SOEs’ technological upgrading through OFDI: The impact of political ties and subnational institutions. A survey of literature

This paper presents a systematic literature review on the relationship between outward foreign direct investment (OFDI) and technological upgrading in Chinese state-owned enterprises (SOEs), emphasizing the moderating role of political ties and subnational institutions. Analyzing 51 core papers from 2011 to 2022, the study synthesizes key theories on how political ties influence Chinese SOEs’ technological upgrading through OFDI. It also finds that political ties affect motivations and resources of SOEs with various types of state ownership and thus affect their OFDI strategies and innovation capabilities. This research further explores the impact of subnational institutions and their interactions with political ties. The findings underscore the perspective that subnational institutions shape a firm’s learning capability, and their impact is moderated by SOEs’ political ties. Finally, the study identifies key issues in SOEs’ technological upgrading through OFDI and offers valuable insights for policymakers and SOE managers. Future research directions are outlined to understand the impact of OFDI on the technological upgrading of Chinese SOEs.

Construction of Overseas Social Responsibility Image of Chinese State-Owned Enterprises Based on Corpus: Overseas Social Responsibility Image of Chinese State-Owned Enterprises

As the "cornerstone" of the socialist economy with Chinese characteristics and the "pioneer" in expanding international markets, state-owned enterprises' overseas social responsibility image directly affects the nation's image and reputation. Drawing on the latest achievements in discourse analysis, this study constructs a multidimensional analytical framework for the overseas social responsibility image of Chinese state-owned enterprises based on a corpus. Using state-owned enterprise social responsibility reports as the corpus, the study examines the linguistic features of the texts and the constructed social responsibility image from the perspectives of thematic words and phrases, intertextuality and interdiscursivity, modal verbs, and explores the underlying socio-cultural context. The findings of the research are as follows: 1) State-owned enterprise social responsibility reports construct multiple social responsibility images, including those of loyal party patriots, guardians of social stability and sustainability, practitioners of shared prosperity, industry leaders, and promoters of firm theoretical beliefs, thereby promoting traditional culture. 2) Furthermore, the reports exhibit positive traits such as openness, diversity, innovation, inclusivity, moderation, and friendliness. The research also indicates that the multifaceted and three-dimensional corporate social responsibility image of state-owned enterprises is closely related to their unique mission and status, as well as China's distinctive cultural context. This study also aims to provide insights into the construction of social responsibility images for non-state-owned enterprises.

The Importance of Tax Policies on Innovation - A Reassessment Using Chinese National Statistics Data

This study evaluates the effects of Chinese research and development (R&D) tax credit policies enforced around 2008 on corporate profit and patent activity. Compared with governmental direct tax subsidies, R&D tax credit more positively relates to corporate patent activity and profit. This paper separately examines samples of Chinese state-owned enterprises (SOE), privately-owned enterprises (POE), and foreign invested enterprises (FIE), and find that stimulating effect is the strongest for POEs. This study not only increases our understanding of China’s R&D policy, but also adds to the R&D tax credit literature and a stream of R&D effectiveness literature.

Vertical pay disparity, traditional Chinese culture, and employee productivity

We examine how traditional Chinese culture interplays with pay disparity to affect employee productivity. In particular, we leverage an exogenous regulatory reform in Chinese state-owned enterprises (SOEs) to reduce vertical pay disparity (i.e., the difference between executive and average employee pay within a firm). Our results show that in a cultural context characterized by high levels of power distance and masculinity, a sudden reduction in vertical pay disparity is accompanied by a notable decline in employee productivity. Furthermore, the decline in productivity is more pronounced when employees are exposed to greater cultural traditionality. We also show that executive compensation declines after the Reform while employee pay stays unchanged. Importantly, our additional results show that neither managerial efficiency nor the departure of high-performing executives changed significantly after the Reform, and the performance effects of pay disparity are not primarily attributable to economic incentives for SOE executives or employees. Overall, our findings suggest that imposing pay restrictions without taking cultural context into account can have adverse effects on firm performance.

Drifting towards multidimensional collaborative innovation: the co-evolution of collaboration networks and policy in China’s nuclear power industry

Purpose Nuclear power is a stable and reliable energy source that can improve energy structure while reducing carbon emissions, which is of great significance for environmental protection and combating climate change. As a unique industry, it is facing rare development opportunities in China and has broad market prospects. However, the characteristics of technical difficulty, loose organizational structure and uneven regional distribution limit the expansion of the nuclear power industry. This paper aims to a better understanding of the accumulation process for innovation capability from the perspective of network evolution and provides policy guidance for the market development of the nuclear power industry (NPI). Design/methodology/approach Methodologically, social network analysis is used to explore the co-evolution of multidimensional collaboration networks. First, the development and policy evolution of the NPI is introduced to divide the evolution periods. Then, the authors identify and analyze the core organizations, technologies and regions that promote nuclear power patent collaboration. Furthermore, three levels of collaboration networks based on organizations, technologies and regions are constructed to analyze the coevolution of patent networks in China’s NPI. Findings The results show that nuclear power enterprises always play the foremost role in the organizational collaboration network (OCN), and the dominance of foreign enterprises is replaced by Chinese state-owned enterprises in the third period. The technology hotspot has shifted from nuclear power plant construction to the control system. The regional collaboration network was initially formed in the coastal areas and gradually moved inland, with Guangdong and Beijing becoming the two cores of the network. The scale of three collaboration networks is still expanding but the speed has slowed down. Originality/value In response to the pain points of the NPI, this research focuses on multidimensional collaborative innovation, investigates the dynamic evolution process of collaborative innovation networks in China’s NPI and links policy evolution with network evolution creatively. The ultimate result not only helps nuclear power enterprises integrate innovative resources in complex environments but also promotes industrial upgrading and market development.

The influence of non-state-owned shareholder governance on the governance level of state-owned enterprises--Based on the perspective of board resolution behavior and party organization governance.

With an increasing number of heterogeneous shareholders participating in corporate governance in reality, the assumption of shareholder homogeneity in agency theory is gradually relaxing in the modern field of corporate governance. The policy of mixed ownership reform in China provides empirical evidence for studying heterogeneous shareholder governance. To fully understand the governance effects of non-state shareholders, we employ the ownership proportion held by non-state shareholders among the top ten shareholders and the appointment of directors as measures for non-state shareholder governance. Using a panel fixed-effect model from the perspective of state-owned enterprises (SOEs) party organizations, we examine the impact of non-state shareholder governance on the governance level of SOEs. The study reveals that non-state shareholder governance positively affects the governance level of SOEs, with board resolutions playing a crucial role in this relationship. When party members serve as directors, the governance effect of non-state shareholders is more significant. Based on the aforementioned research findings, we recommend further refining corporate governance measures for SOEs within the context of SOE reforms. It is advisable to optimize the party organizational governance structure and leverage the synergistic effects of non-state shareholder governance and party organizational governance. Advancing reforms along the Pareto improvement path will contribute to establishing a distinctive corporate governance system for Chinese SOEs.

Construction of "De-Capacity Reduction" financial performance index for Chinese coal industry enterprises ——based on Fisher discriminant analysis

In February 2016, the Chinese government focused on removing excess capacity in coal industry enterprises, and the research goal of the paper was to determine how much impact this will have on the financial performance of coal industry enterprises. The paper collected the financial performance indicators of Chinese state-owned coal industry enterprises from 2011 to 2021, and discriminant analysis was used to calculate the financial performance index evaluation system. The conclusions are: (1) From 2011 to 2016, the financial performance index of Chinese state-owned coal industry enterprises before De-Capacity continued to decline, from 2.062 in 2011 to 1.639 in 2016; In 2017–2021, the financial performance index of Chinese state-owned coal industry enterprises after De-Capacity continued to rise, from 1.482 in 2017 to 1.515 in 2021. (2) From 2011 to 2020, the cumulative financial performance index for the whole trade of state-owned coal industry in the past decade was 18.340, with state-owned large coal industry enterprises having the best financial performance, with a 10-year cumulative index of 20.618, followed by state-owned medium-sized coal industry enterprises, with a 10-year cumulative index of 17.944, and the worst among state-owned small coal industry enterprises, with a 10-year cumulative index of 17.271. (3) If the market adjustment started in 2012 is also considered as a component of "De-Capacity", two pressures from the market and the government have prompted the transformation of state-owned coal industry enterprises. The industry wide financial performance index has increased from 1.554 in 2012 to 1.559 in 2020, with an average annual increase of 0.04 %.

Roads to nowhere but the belt is Gucci: has China’s Belt and Road Initiative been successful so far and why?

This article assesses the success of China’s Belt and Road Initiative (BRI) with respect to three objectives: strengthening China’s geopolitical stance, spurring geo-economic development in the Western regions and instilling a spatial fix to overaccumulation and thirdly, providing profit opportunities to troubled state-owned enterprises. I find that the BRI has only delivered on the third aspect, with even the BRI’s signature white elephant projects providing windfall incomes to the state-owned enterprises (SOEs) constructing and operating them. My explanation of this phenomenon is two-fold. Firstly, I argue that tense, coercive competition (Crotty, 1993) has spurred Chinese SOEs to revert to rent-seeking activity in order to stay afloat and realise managers’ cadre ambitions. As the state-owned Asset Supervision and Administrative Council (SASAC) evaluates manager performance based largely on company performance, demanding numbers that cannot be achieved under coercive competition in an environment of overcapacity, managers reverted to guanxi practices and corruption to secure under-the-counter deals, relying on soft budgets and beneficial lending practices. Amid tightening domestic regulation and Xi’s anti-corruption campaign, these strategies are becoming less viable and sustainable to pursue at home. As managers’ incentive structure has not evolved, pressure to seek rents persists, pushing SOEs to pursue their strategies abroad via the BRI. Secondly, the export of the strategies to persist amid coercive competition is enabled by a fragmented institutional environment, allowing SOEs to abuse asymmetries in information and outmanoeuvre stringent evaluation of their proposed BRI projects by mobilising political support through networks.