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The purpose of this paper is to examine the relationship between working capital management (WCM) and firm performance in the context of the Chinese economy. Specifically, it investigates the effects of ownership structures as an internal factor and of institutional environments (IE) as an external factor shaping this relationship.

The study applies two-way fixed effect regression models to a sample of Chinese listed manufacturing firms for the period of 2010 to 2017. WCM is measured by cash conversion cycles (CCC); profitability is measured by core profit ratios; ownership structures are classified based on state-owned enterprises (SOEs) and non-SOEs; and IEs are measured from dimensions of factor markets (FM) and legal systems (LS).

First, the results show a negative relationship between CCC and firm performance. Second, the negative relationship between CCC and profitability is significant for non-SOEs but not for SOEs. Third, both the FM and LS strengthen the negative association between CCC and profitability. Fourth, the moderating effect of FMs and LSs is evident for non-SOEs only. The results hold when using alternative measures of WCM and profitability and while controlling for additional variables.

The current study shows that while WCM has a significant effect on the profitability of Chinese firms, such an effect greatly depends on the ownership structures and IE involved. The results thus offer important implications in helping the Chinese government create better IEs and in allowing manufacturing firms to improve upon their WCM practices.

As majority of studies of employee ownership (EO) take place in developed markets and primarily focus on the impact on firm performance, scholars have recently called for other markets, especially large developing markets to be considered, as well as alternative outcome measures.

Through the examination of the implementation of EO by Chinese listed firms during the period of 2011–2019 with total 3,473 firms and 21,204 observations, the authors provide empirical evidence on the positive effect of EO on firm R&D investment within the rapidly growing Chinese market.

The authors find that the adoption of EO promotes higher level of firm R&D investment. This positive relationship is more evident among small firms, non-state-owned firms and local state-owned-firms, compared with their counterparts. As for the plausible channels, the authors find that adopting EO provides a favorable institutional environment, which attracts more technical staff, improves workplace quality, and encourages job stability and greater employee effort, leading to greater R&D investment.

Though the connection between R&D investment/innovation and firm survival performance has been known for decades, the innovation side of outcomes has been ignored by EO research. Therefore, the authors explore the relationship between EO implementation and firm R&D investment within the rapidly growing Chinese market.