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Article
Publication date: 1 June 2010

Xiaohua Lin

The purpose of this paper is to develop initial conceptualizations on two types of Chinese multinational corporations (MNCs), that is, state‐ and privated‐owned MNCs, in…

Abstract

Purpose

The purpose of this paper is to develop initial conceptualizations on two types of Chinese multinational corporations (MNCs), that is, state‐ and privated‐owned MNCs, in terms of internationalization motivation, entry strategy, and managerial capabilities.

Design/methodology/approach

This is a conceptual paper. Existing case studies are cited as illustrations.

Findings

Compared to Chinese private MNCs, state MNCs are more likely to be driven by internationalization motives that are not based on economic rationality, to adopt an integrated entry strategy, but less likely to contain dynamic capabilities necessary for competing internationally. In the short run, Chinese private MNCs should outperform their state counterparts, which however does not necessarily translate into better survival rate.

Research limitations/implications

The conceptualizations advanced in this paper should be tested empirically in future studies.

Practical implications

Given the differences between state and private Chinese MNCs, it would be a mistake for Western governments and the private sector to treat all Chinese MNCs as equals. Particularly, the concern about the private Chinese firms should place more emphasis on their capabilities to compete and collaborate as autonomous economic entities.

Originality/value

While much research attention has been given to “Chinese MNCs,” the author makes a distinction between state versus private MNCs from China and compares the two types with regards to internationalization motives, entry strategy, managerial capabilities, and performance potentials.

Details

International Marketing Review, vol. 27 no. 3
Type: Research Article
ISSN: 0265-1335

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Book part
Publication date: 8 March 2011

Galina Hale and Cheryl Long

In this chapter we study internal and external, formal and informal, financing sources of Chinese firms during the period 1997–2006, by analyzing balance sheet data from…

Abstract

In this chapter we study internal and external, formal and informal, financing sources of Chinese firms during the period 1997–2006, by analyzing balance sheet data from the Chinese Industrial Surveys of Medium-sized and Large Firms for 2000–2006 and survey data from the Large-Scale Survey of Private Enterprises in China conducted in 1997, 2000, 2002, 2004, and 2006.

The following stylized facts emerge from our analysis: (1) State-owned firms continue to enjoy more generous external finances than other types of Chinese firms. (2) Chinese private firms have resorted to various ways of overcoming financial constraints, including reliance on the increasingly more mature informal financial markets, cost savings through lower inventory and other working capital requirements, and greater reliance on retained earnings. (3) Substantial variations exist in financial access among private firms, with small private firms facing more financial constraints whereas more established firms having financial access more equal to their SOE counterparts. (4) Although not as accessible as for SOEs, the Chinese formal financial sector does provide Chinese private firms with substantial financial resources, especially for their short-term needs during daily operations. (5) The most pressing financial constraint facing Chinese private firms is their limited ability to secure long-term funds to invest for growth, and resolving this issue should be one of the top goals of financial reforms in China.

Details

The Evolving Role of Asia in Global Finance
Type: Book
ISBN: 978-0-85724-745-2

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Article
Publication date: 25 January 2021

Youliang Yan and Xixiong Xu

The purpose of this paper is to investigate whether and how affiliation with the government-controlled business association, namely, China Federation of Industry and…

Abstract

Purpose

The purpose of this paper is to investigate whether and how affiliation with the government-controlled business association, namely, China Federation of Industry and Commerce (CFIC), affects corporate philanthropy in an emerging market.

Design/methodology/approach

Through an analysis of survey data gathered from Chinese private firms, this paper conducts multiple regressions to examine the impact of the CFIC membership on corporate philanthropy.

Findings

Empirical results show that the CFIC membership of private entrepreneurs is significantly positively associated with corporate philanthropy. Moreover, this study finds that the provincial marketization level and the firm Communist Party branch attenuate the positive association between CFIC membership and corporate philanthropy, indicating that the effect of CFIC on corporate philanthropy is more pronounced in regions with lower marketization level and firms without Communist Party branch. The findings are robust to various alternate measures of corporate philanthropy and remain valid after controlling for potential endogeneity.

Practical implications

Firms will be more active in corporate philanthropy to respond to the government’s governance appeal when they join the CFIC. This highlights the implications of political connections and in particular on the value of government-controlled business associations in the Chinese business world.

Originality/value

This study extends the literature on the determinants of corporate philanthropy and deepens the theoretical understanding of the governance role of business association with Chinese characteristics.

Details

Chinese Management Studies, vol. 15 no. 2
Type: Research Article
ISSN: 1750-614X

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Book part
Publication date: 12 November 2016

Hao Liang, Luc Renneboog and Sunny Li Sun

We take a state-stewardship view on corporate governance and executive compensation in economies with strong political involvement, where state-appointed managers act as…

Abstract

Purpose

We take a state-stewardship view on corporate governance and executive compensation in economies with strong political involvement, where state-appointed managers act as responsible “stewards” rather than “agents” of the state.

Methodology/approach

We test this view on China and find that Chinese managers are remunerated not for maximizing equity value but for increasing the value of state-owned assets.

Findings

Managerial compensation depends on political connections and prestige, and on the firms’ contribution to political goals. These effects were attenuated since the market-oriented governance reform.

Research limitations/implications

Economic reform without reforming the human resources policies at the executive level enables the autocratic state to exert political power on corporate decision making, so as to ensure that firms’ business activities fulfill the state’s political objectives.

Practical implications

As a powerful social elite, the state-steward managers in China have the same interests as the state (the government), namely extracting rents that should adhere to the nation (which stands for the society at large or the collective private citizens).

Social implications

As China has been a communist country with a single ruling party for decades, the ideas of socialism still have a strong impact on how companies are run. The legitimacy of the elite’s privileged rights over private sectors is central to our question.

Originality/value

Chinese executive compensation stimulates not only the maximization of shareholder value but also the preservation of the state’s interests.

Details

The Political Economy of Chinese Finance
Type: Book
ISBN: 978-1-78560-957-2

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Article
Publication date: 7 June 2011

Ting Ren and Zheng Wang

This paper proposes an examination of the relationship between female participation in top management teams and firm performance in the emerging Chinese private economy…

Abstract

Purpose

This paper proposes an examination of the relationship between female participation in top management teams and firm performance in the emerging Chinese private economy. It aims to examine the direct link between female participation in top management teams and firm performance. This is examined in the context of human capital and social capital associated with female top executives to investigate the origins and the contingencies of the linkage.

Design/methodology/approach

Drawing on resource dependence theory, the study develops and tests a set of hypotheses regarding the key relationships, using the data of listed private‐owned companies in China's security exchanges in 2008, with critical information on financial performance, corporate governance structure and the top management team composition of the companies. Regression analyses are conducted to test the direct relationship and the moderating effects.

Findings

The empirical analysis supports a positive relationship between the degree of female participation and firm performance in Chinese privately owned companies. The positive relationship is further strengthened by female top executives' human capital and social capital, consistent with the hypotheses.

Research limitations/implications

The present study gains consistent results with research conducted in the Western context, suggesting that the top management behavior of Chinese private enterprises is similar to that of their Western counterparts, possibly due to the fact that they are less influenced by direct governmental control and are more profit‐driven than state‐owned companies.

Practical implications

The results of the study suggest that Chinese private companies can gain competitive advantages through identifying, attracting, and developing female managerial talents. And the female executives in the new era should be ones with systematic education and strong social connections. Both factors facilitate female executives to contribute better to their companies' performance.

Originality/value

The contribution of the present study is twofold. First, drawing on extant literature in the Western business context, the present study is the first to examine how female participation in top management influences firm performance in the context of the Chinese private sector, which contributes to the understanding of and offers insights to Chinese managerial practices. Second, the study enriches the extant literature by examining the moderating effects of female executives' human and social capitals.

Details

Nankai Business Review International, vol. 2 no. 2
Type: Research Article
ISSN: 2040-8749

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Article
Publication date: 23 May 2008

Fang Lee Cooke

The purpose of this paper is to analyse the key elements in the strategy of leading Chinese private firms in order to identify the key factors that are associated with the…

Abstract

Purpose

The purpose of this paper is to analyse the key elements in the strategy of leading Chinese private firms in order to identify the key factors that are associated with the success of these firms.

Design/methodology/approach

Secondary data source from the self report of 30 of the top 50 private enterprises of 2004 in China as the basis for analysis. In analysing these self reports, a table was compiled that records the name of each case study firm, nature of its businesses, its ranking in the top 50 in 2004, background of the owner entrepreneur/CEO, history of the firm, and key elements of strategies.

Findings

The paper identifies that the key success factors of these firms appear to be associated with firm growth through business diversification, development of international market, strong emphasis on product innovation and quality enhancement, strategic marketing, product and corporate branding, and importantly, entrepreneurship of owner managers/CEOs and reform of corporate governance. Also revealed that top‐performing Chinese private firms tend to adopt a high‐commitment model of human resource management which emphasizes training and development, promotion by competence, extensive employee welfare provision, and enterprise culture development and management.

Research limitations/implications

The secondary data came from company self reports with potential bias of self reporting. They were snap shots and anecdotal instead of longitudinal studies. They also contained top management's views only, which are not necessarily representative of the wider organisation. These methodological drawbacks mean that the data needs to be treated with caution and that more in‐depth empirical research is needed to shed more light on the subject that is of growing importance in understanding Chinese business and management.

Originality/value

This paper fills the gap in existing literature by revealing changes that have taken place in the privately owned businesses in China, key challenges they face and what strategic response they have adopted. The understanding of the business and management strategies of these firms is beneficial not only to scholars and students who are interested in China but also to organisational managers who wish to develop businesses with China.

Details

Competitiveness Review: An International Business Journal, vol. 18 no. 1/2
Type: Research Article
ISSN: 1059-5422

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Article
Publication date: 7 June 2021

Fabian Hänle, Stefanie Weil and Bart Cambré

This paper aims to use the institutional perspective to jointly explore the underlying motives that drive Chinese private small- and medium-sized enterprises (SMEs) to…

Abstract

Purpose

This paper aims to use the institutional perspective to jointly explore the underlying motives that drive Chinese private small- and medium-sized enterprises (SMEs) to invest in the developed economy of Germany and the role China’s institutional environment is playing in this context.

Design/methodology/approach

Given the lack of recent in-depth studies, the authors use multiple case study method to present rich insights from elite interviews with executives belonging to seven Chinese SMEs and industry experts, as well as the study of firm documents, social media and the latest governmental policies.

Findings

The results indicate not only market-, resource- and strategic asset-seeking motives, but contrary to the literature, also efficiency-seeking goals. Further driving factors are the integration in global value chains and high degrees of entrepreneurial orientation. The second major finding is that China’s institutional environment induces widely divergent effects. Its ministries established new outward foreign direct investments (OFDI) support measures that are beneficial for some SMEs’ post-entry operations. However, some firms are not aware of any support measures or suffer from discrimination that hinders innovation and from which they try to escape by investing abroad.

Originality/value

This paper considers different levels of analysis (firm, entrepreneur, institutional environment) to investigate Chinese SMEs’ motives in Europe’s largest market. By examining why and how these firms use OFDI to a developed economy, the authors address an essential question for China’s economy that is of primary political and academic concern (“How can China get that improved innovation that often seeds entrepreneurial growth?”). In addition, the study contributes to the growing discussion of institutional escapism in emerging markets by revealing five institutional hardships Chinese SMEs are facing and how this relates to their internationalization.

Details

Multinational Business Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1525-383X

Keywords

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Book part
Publication date: 31 October 2009

Susanne Sandberg

Purpose – To describe and analyze the situation prior to and during the initial stages of internationalization of Chinese SMEs, as well as analyzing the role of clusters…

Abstract

Purpose – To describe and analyze the situation prior to and during the initial stages of internationalization of Chinese SMEs, as well as analyzing the role of clusters as take-off nodes for such firms.

Methodology – A multiple case study is conducted based on semistructured interviews with five private-owned exporting Chinese SMEs. Also, data on Chinese industrial clusters are analyzed.

Findings – The findings complement the model presented with new knowledge. In the take-off situation, Chinese SMEs deviate from assumed paths due to disadvantages in the emerging Chinese market. In the initial stages of internationalization, the focus on indirect exports hinders the building of international relationships being the key for further international expansion. Cluster localization is a take-off node for individual dedicated exporters into international markets.

Research limitations – Few cases, co-location of firms in the advanced Yangtze River Delta region and issues of Chinese versus Western SME definitions limits the possibility to generalize the findings of the study.

Practical implications – Chinese as well as foreign firms can gain from this paper regarding, for example, that competitiveness built up abroad can be utilized for increasing the market share in an attractive domestic market, the pitfall of indirect exports can be overcome by developing direct international relationships, and cluster localization can spur the internationalization of (individual) Chinese SMEs.

Originality – Empirical contribution of internationalization patterns of Chinese private-owned SMEs as well as pinpointing the importance of the domestic market as trigger for internationalization.

Details

Research on Knowledge, Innovation and Internationalization
Type: Book
ISBN: 978-1-84855-956-1

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Article
Publication date: 23 November 2018

Wenge Zhang, Jun Li and Yiyuan Mai

The purpose of this paper is to examine the relationship between industry association membership and firm innovation in Chinese private ventures. A secondary objective is…

Abstract

Purpose

The purpose of this paper is to examine the relationship between industry association membership and firm innovation in Chinese private ventures. A secondary objective is to investigate potential moderating effects of firm learning practices and founder characteristics on the above relationship, and to draw out implications for policymakers and practitioners.

Design/methodology/approach

The paper utilizes data from a sample of 567 Chinese entrepreneurial firms operating in 9 designated emerging industries. Hierarchical regression models were employed to analyze the effect of industry association membership on firm innovation, and the potential moderating effects. A 2SLS procedure was adopted to control for potential endogeneity issue. Supplemental analyses were conducted to ensure the robustness of the findings.

Findings

The paper provides empirical insights about how industry association membership, along with firm learning practice and founder leadership, affect firm innovation in Chinese private ventures in emerging industries. It suggests that industry association membership positively affects firm innovation. Further, there is a three-way interaction effect of industry association membership, learning practice and founder power on innovation.

Research limitations/implications

Due to the design of the data set, there are some limitations. First, the study only considered whether a firm belongs to an industry association, but not the nature of such membership (length, firm status in the association, etc.). Second, the cross-sectional design may limit the power of the study to make casual implications about the tested relationships.

Practical implications

The paper provides important practical implications for policymakers and entrepreneurs in China. In general, the results suggest that private ventures pursuing innovation in emerging industries can benefit from industry associations, and entrepreneurs shall actively engage in firm-level and personal-level learning. For policymakers, the study suggests that to foster innovation in an emerging industry, special attention shall be paid to building necessary institutional support to develop and to strengthen the role of industry association in the industry.

Originality/value

This paper fulfills an important gap in the literature in that it is one of the first, which investigates the role of the industry association in firm innovation, especially in a non-western context. This paper provides new insights into the role of industry association and firm innovation in an under-researched developing economy context.

Details

Management Decision, vol. 57 no. 9
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 7 November 2019

Xingqiang Du and Quan Zeng

The purpose of this paper is to investigate the influence of religious entrepreneurs on bank loans and further examine the moderating effect of entrepreneurial gender.

Abstract

Purpose

The purpose of this paper is to investigate the influence of religious entrepreneurs on bank loans and further examine the moderating effect of entrepreneurial gender.

Design/methodology/approach

In 2010, the Chinese national survey reported the different religious beliefs of private entrepreneurs. Using this set of survey data, the authors obtain a sample of 4,330 Chinese family firms and employ the Tobit regression approach to examine the relationship between the amount of bank loans and the religious background of entrepreneurs. In addition, the authors use the propensity score matching approach to address the endogeneity issue.

Findings

Based on the data from the 2010 national survey, the authors document that the amount of bank loans is significantly higher for Chinese family firms with religious entrepreneurs than for their counterparts. This finding suggests that religious individuals are inclined to be more ethical and honest and Chinese family firms with religious entrepreneurs transfer soft information to banks, and eventually lenders favor religious entrepreneurs with more bank loans. Moreover, the authors reveal that the amount of bank loans is significantly larger for firms with female entrepreneurs than for those without female entrepreneurs. In addition, entrepreneurial gender attenuates the positive relationship between religious entrepreneurs and bank loans.

Originality/value

This study is one of few studies to examine the influence of an entrepreneur’s religious belief on bank credit decisions and adds to previous studies about religious influence on corporate behavior by revealing a positive association between religious entrepreneurs and bank loans. Moreover, this study validates that female entrepreneurs exert positive effects on the amount of bank loans and attenuate the positive influence of religious entrepreneurs on bank loans.

Details

Asian Review of Accounting, vol. 27 no. 4
Type: Research Article
ISSN: 1321-7348

Keywords

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