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Prior literature has long argued that knowledge networks contain great opportunities for innovation, and researchers can identify these opportunities using the properties of knowledge networks (PKNs). However, previous studies have examined only the relationship between structural PKNs (s-PKNs) and innovation, ignoring the effect of qualitative PKNs (q-PKNs), which refer to the quality of the relationship between two elements. This study aims to further investigate the effects of q-PKNs on innovation.

Using a panel data set of 2,255 patents from the Chinese wind energy industry, the authors construct knowledge networks to identify more PKNs and examine these hypotheses.

The results show that q-PKNs significantly influence recombinant innovation (RI), reflecting the importance of q-PKNs analysed in this study. Moreover, the results suggest that the combinational potential of an element with others may be huge at different levels of q-PKNs.

This study advances the understanding of PKNs and RI by exploring how q-PKNs impact RI. At different levels of PKNs, the potential of the elements to combine with others and form innovation are different. Researchers can more accurately identify the opportunities for RI using two kinds of PKNs. The findings also provide important implications on how government should provide support for R&D firms.

The purpose of this paper is to investigate the relative performance of state-owned enterprises (SOEs) and privately controlled firms in China, and whether related party transactions (RPTs) add to or subtract from their relative performance, measured by return on assets (ROA).

Univariate and multivariate analyses of a sample of 90 firms that were listed in China between 2007 and 2009 (comprising 45 SOEs and 45 privately controlled firms matched on industry and size).

The authors find that SOEs engage in more tunneling, but find no evidence that privately controlled firms engage to a greater degree in either tunneling or propping. During this period, SOEs outperformed privately controlled firms by almost 4.5 per cent in terms of ROA (unadjusted for RPTs), but their performance advantage was completely offset by tunneling by about 6 per cent of ROA such that they underperformed privately controlled firms by a net 1.5 per cent of ROA.

The research is limited by a relatively small sample size, and in measuring the value of RPTs as the total value of the transactions (which is observable) instead of the difference between the transaction prices and arms-length prices (which would be preferable but is not observable).

The economics of investing in Chinese firms with different controlling interests and RPTs may be of interest not only to investors and other stakeholders in Chinese firms listed domestically, but also to international investors in overseas and cross-listed Chinese firms.

This paper synthesizes research from ownership on performance and RPTs on performance, to disentangling the relative effects of ownership control and RPTs on the performance of Chinese publicly listed firms.