State-owned Enterprises In China Research Articles

Origin matters: Privatization of state‐owned enterprises and family business internationalization

AbstractThe impact of a firm's origins on its strategic decision‐making has attracted scholarly attention in recent years. Focusing on firms' origins, this paper explores the relationship between the privatization of state‐owned enterprises (SOEs) and family business internationalization. Based on data from listed family businesses in China from 2003 to 2022, we find that compared to entrepreneurial family businesses, restructured family businesses have a lower internationalization degree. Moreover, high trade policy uncertainty strengthens the negative relationship between the privatization of SOEs and family business internationalization, while high family involvement plays a weakening role. Several robustness tests later, the findings remain valid. This study introduces the firm's origin as a vital determinant, which may contribute to the prior studies on family business internationalization. Besides, this paper complements research on the economic consequences of the privatization of SOEs in China. Finally, this paper may help Chinese family businesses actively participate in the international cycle to achieve competitive advantage and high‐quality development.

Effective Performance Climate for State-Owned Enterprises: A Case Study of BEI’s Performance Management System

Using BEI’s performance management system as a case study, this study investigates the creation of an efficient performance environment within the context of a state-owned enterprise in China. The company utilizes goal orientation and skills, competence, and knowledge orientation as primary components, underlining the importance of tracking and managing the performance process. This optimizes the application of performance outcomes, transforming employees' generalized knowledge, skills, and abilities (KSAs) into specific KSAs. This ensures a consistent performance climate with the strategy and thus improves organizational performance. Additionally, technical term abbreviations are explained upon first use. Focusing on KSAs and creating a performance climate that aligns with the strategy is necessary to improve organizational performance. This study outlines the implementation of a goal-oriented performance appraisal process and a corresponding performance appraisal system based on KSAs. Through a case study of BEI's performance management system, the research demonstrates its beneficial effect on corporate performance and thoroughly investigates its characteristic features, including legitimacy, effectiveness, relevance, fairness, and content environment. The study outlines the practical and enlightening effects of implementing an appropriate performance climate that aligns with Chinese state-owned enterprises’ cultural values. It also emphasizes the need for diverse organizations and industries to perform climate models that cater to their unique needs.

Domestic macroeconomic sources of the USA–China trade conflict

PurposeTrade relations between China and the USA have been marked by conflict, especially since China’s membership in the World Trade Organization (WTO). These conflicts have been analyzed from a variety of perspectives, including the loss of jobs in the USA due to Chinese imports, competition in high technology sectors and the balance of trade. Conceptual frameworks have employed models of domestic differences as well as models of international power distribution. Among domestic differences examined are the existence of state-owned enterprises in China compared to the domination of the USA economy by private firms, the large role of the Communist Party in China and the influence of labor and environmental and labor groups in the USA. Power distribution theories focus on the systemic effects of the distribution of power on trade openness and on the pattern of intra-bloc versus between-bloc trade. This paper aims to examine the role of macroeconomic policy factors in China and the USA, in particular, the role of national patterns of savings, investment and consumption (both private and government). The paper concludes that insofar as the balance of trade is an important component of the trade conflict, domestic macroeconomic factors continue to be important. The resolution of the conflict will have to take into account the respective macroeconomic policies of China and the USA.Design/methodology/approachThe design is an analytic case study of US–China trade relations with a particular focus on the balance of trade. The conceptual framework employed involves an analysis of macroeconomic policy categories, especially the overall pattern of savings (household, firm and government), investment and consumption. Process tracing over time since China's membership in the WTO is carried out with an eye toward the relationship between the balance of trade and macroeconomic policy.FindingsThe main findings are that there is a strong relation between the respective macroeconomic policies of the USA and China and their trade relations. The domestic political economy of the USA encourages consumption and a low rate of savings. The opposite is true of China where household income is low by design and national savings are high. China depends on the USA to consume what is not consumed domestically. The USA depends on Chinese imports for additional consumption encouraged by its low rate of savings. The two economies are locked in a mutual dependence.Research limitations/implicationsKey research implications are that there should be more focus on domestic macroeconomic policies since these are the root causes of the trade imbalance. This is not to say that trade frictions centering on jobs, subsidies and competition in high technology are unimportant. However, without the resolution of differences in the management of macroeconomic policies, trade conflicts between the USA and China will continue.Practical implicationsPractical implications are huge, in some ways much more important than the academic implications. Macroeconomic policy differences in savings, investment, government spending, taxation and infrastructure are important. Furthermore, there are available tools in both China and the USA to manage the macroeconomy, particularly, monetary and fiscal policy.Social implicationsOne implication of this paper is that satisfaction or dissatisfaction of workers is dependent on income distribution which in turn affects trade. Treatment of people in different socioeconomic categories, such as the elderly, the young, and those at working age are a function of macroeconomic policies.Originality/valueMany people have written about macroeconomics. It is a conventional subfield of economics. The originality of this paper lies in its advocacy of a shift of focus and attention and in the argument that traditional macroeconomics is related to trade. Despite its importance, macroeconomics has not been the center of attention for most political scientists, though economists have made it more central.

Governance of nonstate shareholders and short-term debt for long-term investments

ABSTRACT We study the relationship between nonstate shareholder governance and short-term debt for long-term investment of state-owned enterprises in China from 2009 to 2021. Drawing on a novel, hand-collected database, we find that nonstate shareholder governance has a significantly negative effect on short-term debt used for long-term investments. Our study provides a new analytical perspective for maturity mismatch and theoretical support for deepening the reform of state-owned enterprises.

Understanding mechanisms of digital transformation in state-owned enterprises in China: An institutional perspective

In recent years, organizations across myriad industries have begun adopting novel digital technologies and, in doing so, fostered their digital transformation. This study examines the digital transformation in state-owned enterprises (SOEs) in China. We conducted comparative case studies on China Mobile and China Unicom, two typical and leading SOEs in China's telecommunications industry, to identify the company's transformation characteristics and how key factors impact the transformation process. This research also contributes to digital transformation literature and to the institutional theory. We develop a conceptual framework for analyzing enterprise digital transformation, and generate some theoretical prescriptions. The research findings conclude that, based on innovation in digital technology by generations, enterprise digital transformation on strategic positioning, value proposition (services and products), and value creation (assets and organizational structure) presents a process by stages; both institutional pressures and technological attraction impact how SOEs carry out digital transformation; different SOEs with different characteristics in value creation present different transformation process. Future research could use the framework as an analytical tool and draw upon the theoretical prescriptions to examine digital transformation in different kinds of organizations. At last, this research also offers practical insights for SOEs to carry out digital transformations and for governments to offer supportive institutional environment for this process.

A predictive study on the impact of board characteristics on firm performance of Chinese listed companies based on machine learning methods

Purpose This study aims to examine the impact of board characteristics on firm performance while also exploring the influential mechanisms that help Chinese listed companies establish effective boards of directors and strengthen their corporate governance mechanisms. Design/methodology/approach This paper uses machine learning methods to investigate the predictive ability of the board of directors' characteristics on firm performance based on the data from Chinese A-share listed companies on the Shanghai and Shenzhen stock exchanges in China during 2008–2021. This study further analyzes board characteristics with relatively strong predictive ability and their predictive models on firm performance. Findings The results show that nonlinear machine learning methods are more effective than traditional linear models in analyzing the impact of board characteristics on Chinese firm performance. Among the series characteristics of the board of directors, the contribution ratio in prediction from directors compensation, director shareholding ratio, the average age of directors and directors' educational level are significant, and these characteristics have a roughly nonlinear correlation to the prediction of firm performance; the improvement of the predictive ability of board characteristics on firm performance in state-owned enterprises in China performs better than that in private enterprises. Practical implications The findings of this study provide valuable suggestions for enriching the theory of board governance, strengthening board construction and optimizing the effectiveness of board governance. Furthermore, these impacts can serve as a valuable reference for board construction and selection, aiding in the rational selection of boards to establish an efficient and high-performing board of directors. Originality/value The study findings unequivocally demonstrate the superiority of nonlinear machine learning approaches over traditional linear models in examining the relationship between board characteristics and firm performance in China. Within the suite of board characteristics, director compensation, shareholding ratio, average age and educational level are particularly noteworthy, consistently demonstrating strong, nonlinear associations with firm performance. Within the suite of board characteristics, director compensation, shareholding ratio, average age and educational level are particularly noteworthy, consistently demonstrating strong, nonlinear associations with firm performance. The study reveals that the predictive performance of board attributes is generally more robust for state-owned enterprises in China in comparison to their counterparts in the private sector.

Would behaviors of state-owned enterprises impact the performance of downstream industries in China?

The inefficiency of state-owned enterprises (SOEs) not only affects their own performance but also has implications for downstream enterprises. However, existing literature has not been able to accurately assess the impact of SOEs on the downstream sector. This study presents an innovative approach by combining input-output technologies and econometric models to construct Pair-Weighted Least Square (PWLS) estimations using a dataset of 20,403,924 firm-level pairs. The analysis examines the impact of SOEs on downstream performance and provides evidence of their negative influence as well as the effectiveness of SOEs reform in China. The findings indicate that SOEs have exerted a detrimental effect on downstream performance between 2008 and 2019. Medium-sized SOEs, due to their larger scale and relatively lower regulation, exhibit a particularly negative impact. However, as the reform of SOEs in China has progressed, the negative effect of SOEs on downstream enterprises has gradually diminished. Important factors indicative of SOEs reform, such as efficiency, equity concentration, and scale, play crucial roles in mitigating the harmful effects on the downstream sector. The reform of SOEs in China can offer valuable insights for the reform of state-owned enterprises worldwide.

Research on the Influence of Depth and Breadth of Equity Reform on the Performance of State Owned Enterprises Based on Dynamic Panel Data Model

In order to explore the necessity of mixed ownership reform of state-owned enterprises and clarify the direction of mixed ownership reform of state-owned enterprises in China, this paper uses dynamic panel data model and bootstrap-DEA method to study the impact of “depth” and “breadth” of equity reform of state-owned enterprises in China on the performance of state-owned enterprise. The results show that there is an inverted U-shaped relationship between performance and the level of equitable reform of state-owned enterprises. When the depth of equity reform is 36.6%, the performance of mixed reform enterprises is the best. There is a positive U-shaped relationship between the breadth of equity reform and the performance of state-owned enterprises. When the breadth of equity reform is 12.47%, the performance of mixed reform enterprises is the worst. At the same time, it is found that the average performance of the sample enterprises shows an obvious downward trend, while the performance variance of the sample enterprises shows an obvious upward trend, and this trend has not changed significantly after China launched a new round of state-owned enterprise reform in 2015. According to the above research findings, this paper believes that the intervention of government forces is conducive to promoting the survival of the fittest of state-owned enterprises and the overall optimal allocation of social resources, but we should pay attention to the adoption of market-oriented means and should not directly interfere with the mixed reform of state-owned enterprises. At the same time, the mixed reform of state-owned enterprises in China is either relatively thorough, giving up the dominance of the largest state-owned shareholder, giving other shareholders a greater say, or not to carry out mixed reform, or symbolic mixed reform, otherwise it may aggravate the internal friction of the mixed reform state-owned enterprises, resulting in worse performance.

Mixed-ownership reform of SOEs and ESG performance: Evidence from China

Practicing the paradigm for sustainable environment, society, and governance (ESG) in the mixed-ownership reform (MOR) of state-owned enterprises (SOEs) is a new opportunity for emerging economies to participate in global governance. Therefore, the impact of the MOR on the ESG performance system of SOEs was studied from different measurement perspectives using the panel data (2009-2020) of 643 listed SOEs in China. The results show that the MOR significantly improves the comprehensive ESG performance and that in different branches of SOEs, especially SOEs with large capital scale, large numbers of employees, low degree of financialization, and high environmental sensitivity. In addition, mechanism analysis results show that MOR could stimulate ESG performance through the dual-resource path of capital and labor. However, the management greatly increases its incomes from the improved payroll cost, widening the salary gap within SOEs and leaving the social stratification trap. Further analysis found that the “tunneling” behavior by state-owned major shareholders during the MOR have a U-shaped or J-shaped influence on ESG performance in multiple fields. At the same time, the incentives for ESG performance by non-state shareholders were weakened by financialization, while their appointed directors, supervisors, and senior executives (ADSE) did not stop the behavior of transforming the economy from substantial to fictitious. This paper not only provides empirical evidence on sustainable practices of SOE reforms in countries with emerging economies but also digs deeper into the root causes of risks and resistance. These studies with moral and ethical overtones are overlooked by scholars and stakeholders concerned with MOR.

Study on the Purchasing Intention of Consumers Under Generation Z to Domestic Cosmetics Brands

This project explores the mechanism of country-oriented consumer's influence on domestic cosmetics consumption intention and its mediating role between brand identity and overall product effectiveness, taking "Era Z" as the research object. The research results will reveal the interaction mechanism of "national identity" on "Era Z" customers' social emotion and domestic cosmetics consumption intention, and explore the mediating effect of "brand self-identity" and "overall product effectiveness". According to the actual situation of state-owned enterprises in China, the corresponding management countermeasures are given. The findings of this study are as follows: (1) Patriotism and trade protectionism have a positive promoting effect on brand social sentiment, but have no positive impact on it. (2) Patriotism and trade protectionism positively affect consumers' consumption intention, but in this process, social and economic conservatism has no significant effect on consumers' consumption intention. (3) In the consumption behavior of "Generation Z", the social emotion of enterprises has a positive impact on their purchase intention, and the social emotion of enterprises regulates the moderating effect on consumption intention.

How Do Problem-Solving Demands Influence Employees’ Thriving at Work: An Explanation Based on Cognitive Appraisal

In globalized markets, it is important for companies to cultivate a thriving workforce that is motivated to grow and develop. Based on the transactional theory of stress, we discussed how the way people appraise their problem-solving demands, either as a challenge or a hindrance, impacts employees’ thriving at work. Data were collected from employees of a state-owned enterprise in China at two separate points with a 4-week interval. The results showed that problem-solving demands have a positive impact on employees’ thriving at work through challenge appraisal and a negative impact on employees’ thriving at work through hindrance appraisal. Additionally, we observed a moderated mediation effect in which organizational identity strengthened the positive effects of problem-solving demands on challenge appraisal, which in turn promoted employees’ thriving at work. The findings highlight the role of cognitive appraisal in interpreting employees’ responses to work stress.

Parent company board reform and subsidiary optimization of cash holdings: A quasi-natural experiment from central state-owned enterprises in China

This study finds that board reform of parent companies in central state-owned enterprise (SOE) groups in China has significantly optimized the cash holdings of subsidiaries, which is reflected in reducing the level of cash redundancy and cash shortage. Moreover, the optimization function manifests mainly in moderate pyramid hierarchy samples, longer geographic distance samples, and fewer vertical interlocks of executive samples between the parent company and subsidiaries. In addition, we examine whether the mechanism for optimizing cash holdings alleviates agency problems, reduces government intervention, and promotes power delegation. Board reform also improves corporate value by optimizing cash holdings. We argue that board reform of parent companies in SOE groups helps alleviate problems caused by the absence of owners, and it reconstructs the power relationship between the government and SOEs. It also facilitates SOEs making reasonable and market-oriented cash holding decisions.

Closing capability gaps for procuring infrastructure public-private partnerships: A case study in China

This paper explores how public sector owners (PSOs) close capability gaps between existing capabilities and required capabilities when first entering into infrastructure Public-Private Partnerships (PPPs). Drawing on the dynamic capabilities view and research on owner project capabilities, the paper presents an exploratory in-depth case study of a state-owned enterprise in China, as it was in the process of initiating PPP metro line projects for the first time. The findings show that PSOs closed capability gaps by obtaining owner strategic, commercial and governance capabilities at the initial phase of PPP procurement. This process was undertaken through a combination of acquiring capabilities externally and developing capabilities internally. The study contributes to the literesture on capability development and sheds light on the conditions when and where internal capability development and external capability acquisition are integrated to close capability gaps for procuring infrastructure PPPs.

Research on the Governance of the State-owned Proprietorship Companies

As a symbol of the innovation of modern enterprise system in China, the state-owned proprietorship company is a unique corporate form designed by the Company Law for the corporatization reform of all state-owned large and medium-sized enterprises. A solely state-owned company is a limited liability company established by the state with separate investment. Its unique equity structure and traditional governance experience of state-owned enterprises determine the uniqueness of its governance structure. In the process of establishing and improving modern enterprise systems, state-owned proprietorship companies have exposed many problems in governance, such as unclear responsibilities of investors, indistinguishable governance between government and enterprises, and incomplete corporate governance structure. The corporate governance structure is the core of a company, and without a sound corporate governance structure, it is not an excellent company, which directly affects its competitiveness. Improving the governance structure of state-owned proprietorship companies provides useful reference for the reform of state-owned enterprises in China, and is of great significance for enhancing the market competitiveness of state-owned enterprises and achieving the preservation and appreciation of state-owned assets. Based on the analysis of the current situation and existing problems of the governance structure of state-owned proprietorship companies, countermeasures are proposed to improve the governance structure of state-owned proprietorship companies in China.

Value Creation and Sustainable Project Management

The literature emphasizes the crucial role of state-owned enterprises (SOEs) in fostering economic growth and addressing public demands. However, ensuring the sustainable development of SOEs requires further research to investigate sustainable project management with a focus on value creation. Accordingly, the authors conducted a case study of a prominent real estate SOE in China to examine how SOEs can alter their project management practices and achieve a more sustainable business model. The findings reveal that adopting a whole life-cycle management system can promote value refinement, optimization, and co-creation, enabling SOEs to achieve value creation through sustainable management. This study offers useful insights for policymakers and business executives in China and contributes to the literature on sustainable project management and value creation.

A new broom sweeps clean? Evidence from CEO tenure and global reporting initiative adoption in China

PurposeThis paper aims to explore the relation between chief executive officer (CEO) tenure and the propensity to adopt the global reporting initiative (GRI) for corporate social responsibility reporting in Chinese firms.Design/methodology/approachThis study used Chinese A-listed firms as sample during 2010–2020. Considering the binary nature of dependent variable, logistic regression model is applied. For robustness, lagged value of independent and control variables, additional control variables and two stage least square regression are used.FindingsThis paper finds that CEO tenure is negatively related to the adoption of GRI reporting standards. Furthermore, this paper finds that this association is less pronounced when CEOs are female and when CEOs have foreign experience. Furthermore, this paper finds that this association is not significant when CEOs are female and when CEOs have foreign experience. This paper also finds that the relationship between CEO tenure and GRI adoption is more pronounced in state-owned enterprises in China. The findings in this paper are robust after controlling for endogeneity.Practical implicationsThe study results are important for understanding the development and implementation of GRI framework especially in China.Originality/valueTo the best of the authors’ knowledge, this is the first study to deeply investigate how CEO tenure can affect adoption of GRI in Chinese firms.

ESG Investment Scale Allocation of China's Power Grid Company Using System Dynamics Simulation Modeling.

In recent years, with the global recognition of the concept of sustainable development, the international market attaches great importance to the Environment, Society, and Governance (ESG) investment performance of enterprises. The "carbon peaking and carbon neutrality" goal puts forward requirements for Chinese enterprises to carry out ESG investment. As a large state-owned enterprise in China, power grid companies need to take the lead in ESG investment. Based on the System Dynamics (SD) theory, this paper establishes the simulation model of ESG-responsible investment of power grid companies, including the environmental investment sub-module, social investment sub-module, and governance investment sub-module. Taking a provincial Power Grid Company as an example, the numerical simulation of ESG investment of power grid companies is carried out. The actual input-output efficiency of ESG investment of power grid companies is reflected through the mapping relationship between key indicators and investment amount, and the ESG investment scale and investment weight of the Power Company in the coming years are predicted. Compared with the traditional static analysis method, this model can provide a theoretical basis for power grid companies to carry out ESG investment decisions.

The Impact of Property Rights Structure on High-Quality Development of Enterprises Based on Integrated Machine Learning—A Case Study of State-Owned Enterprises in China

High-quality development of state-owned enterprises (SOEs) is of great significance to the transformation of the dynamic energy of the Chinese economy in the new development stage and the improvement of quality and efficiency. To this end, we selected 32 evaluation indicators based on three perspectives: social responsibility, effectiveness and efficiency, and independent innovation. Then, we applied the fixed-base efficacy coefficient method and the longitudinal and horizontal pull-out gearing method to obtain the indexes for measuring the level of high-quality development of SOEs by linear weighting. On this basis, a model constructed by an integrated machine learning algorithm was used to explore the impact of changes in the ownership structure of SOEs on the level of high-quality development of enterprises. The study shows that (1) the overall development quality of SOEs has been on an upward trend since 2008, among which the quality of competitive SOEs has been on an upward trend, while the performance of public welfare SOEs is slightly less; (2) the property rights reform of SOEs introduces the shareholding ratio of the largest non-state shareholder and the level of high-quality development as a sine function, keeping the nature of state property rights unchanged, while maintaining the ratio in the range of 25.2–50%; (3) the relationship between the ratio of the share capital of the employee stock ownership plan to the total share capital and the level of high-quality development of SOEs is increasing, then decreasing, and then stabilizing, the ratio is maintained at about 5%, and the marginal effect of the employees’ motivation on the improvement of the quality of enterprise development is stronger; (4) the implementation of an employee stock ownership plan by SOEs more than twice a year can play a positive role in improving the quality of enterprise development. This can provide theoretical guidance for measuring the level of high-quality development of SOEs, reforming the ownership structure of SOEs, and promoting the process of high-quality macroeconomic development.

When does a female leadership advantage exist? Evidence from SOEs in China

AbstractResearch Question/IssueWe approach the ongoing debate in the literature on when and why a female leadership advantage exists in the context of China. In particular, we examine whether female CEOs outperform male CEOs in state‐owned enterprises (SOEs).Research Findings/InsightsWe show that a female leadership advantage exists in SOEs. We find that the female leadership increased performance is attributed to improved profitability, capital structure, and operating efficiency. The magnitude of this gender effect is bigger in central state‐owned enterprises (CSOEs) than that in local state‐owned enterprises (LSOEs). The results are robust to additional tests that mitigate the sample selection and other endogeneity concerns.Theoretical/Academic ImplicationsWe use the role congruity theory to motivate and develop the hypotheses drawing insights upon the literature in psychology and leadership. Female CEOs are perceived as less congruent with their leadership roles given the gender role stereotypes. Thus, they face more challenges and difficulties than male CEOs. These obstacles take at least two forms which are significant in SOEs: shareholder activism and sex discrimination. Female CEOs have to outperform their male counterparts to alleviate the pressure from shareholder activism and showcase their managerial skills and abilities.Practitioner/Policy ImplicationsFor the state shareholders, the extra scrutiny in selecting female CEOs should be lifted given this outperformance. The evidence is also relevant for CEOs to choose their career paths among different types of firms, for boards of directors on their strategic decisions on CEO hiring, and for policy makers to promote the female leadership advantage.

The Enlightenment of Zhejiang’s "Future Community" Practice on the Management Transformation of State-owned Enterprises

Urban investment state-owned enterprises have made a lot of contributions to China’s urban infrastructure, but with the development of the economy and policy adjustments, the transformation of such enterprises has been the general trend. The community is the smallest unit of the urban fabric, not only carrying the people’s needs for a better life but also being the grassroots platform for urban management. Zhejiang has taken the lead in putting forward the concept of " future community " and started a pilot practice, which is regarded as one of the major innovative initiatives to promote the high-quality development of the Zhejiang economy. This paper summarizes the history and significance of Zhejiang’s " future community " construction practice and draws significant insights from the experience and practices that are beneficial to the business transformation of state-owned enterprises in China.