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The Effect of Ownership Structure and Jurisdictional Governance on Productivity in Chinese Enterprises

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  • Sean M. Dougherty

    ()
    (The Conference Board)

  • Robert H. McGuckin

    (The Conference Board)

Abstract

This study offers empirical evidence about how the structure of government and private ownership affects productivity in Chinese firms. It uses the microdata of China’s most recent decennial industrial census, covering all of the 23,000 large and medium industrial firms operating in China during 1995. The results show that government decentralization – “federalism” – plays an important role in improving the performance of not just collective firms, but also state-owned and mixed public/private ownership firms. This result is strongly confirmatory of much of the recent theoretical work on transition economies that posits a key role for government in the efficient operation of markets. Privatization makes a big difference in performance for firms administered at the federal level, especially state-owned enterprises. Private ownership also makes a large difference for wholly foreign-owned firms, nearly all located in special districts. In local jurisdictions, however, there is little difference in productivity across the various nonstate ownership types, supporting the argument that the regulatory environment played a critical role in successful business performance.

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File URL: http://www.conference-board.org/economics/workingpapers.cfm?pdf=E-0006-02-WP
File Function: Revised version, 2002
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File URL: http://www.isnie.org/ISNIE02/Papers02/dougherty.pdf
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File URL: http://www.blackwell-synergy.com/doi/pdf/10.1111/j.1740-8784.2007.00091.x
File Function: Revised version, 2008
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Bibliographic Info

Paper provided by The Conference Board, Economics Program in its series Economics Program Working Papers with number 02-01.

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Length: 31 pages
Date of creation: Dec 2001
Date of revision: Jan 2002
Publication status: Published in Management and Organization Review, Vol. 4, No. 1, March 2008, pp. 39-61.
Handle: RePEc:cnf:wpaper:0201

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Keywords: China; productivity; privatization; ownership; decentralization; federalism; transition;

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References

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  1. Alwyn Young, 2000. "The Razor'S Edge: Distortions And Incremental Reform In The People'S Republic Of China," The Quarterly Journal of Economics, MIT Press, vol. 115(4), pages 1091-1135, November.
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  17. Litwack, John M. & Qian, Yingyi, 1998. "Balanced or Unbalanced Development: Special Economic Zones as Catalysts for Transition," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 117-141, March.
  18. Li, David D., 1996. "A Theory of Ambiguous Property Rights in Transition Economies: The Case of the Chinese Non-State Sector," Journal of Comparative Economics, Elsevier, vol. 23(1), pages 1-19, August.
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Citations

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Cited by:
  1. Yanrui Wu, 2002. "Technical Efficiency and Its Determinants in Chinese Manufacturing Sector," Economics Discussion / Working Papers 02-15, The University of Western Australia, Department of Economics.
  2. Wenjing Li & Ran Zhang, 2010. "Corporate Social Responsibility, Ownership Structure, and Political Interference: Evidence from China," Journal of Business Ethics, Springer, vol. 96(4), pages 631-645, November.
  3. David Greenaway & Alessandra Guariglia & Zhihong Yu, . "The More the Better? Foreign Ownership and Corporate Performance in China," Discussion Papers 09/05, University of Nottingham, GEP.
  4. Peter Li, 2009. "The Duality of Crony Corruption in Economic Transition: Toward an Integrated Framework," Journal of Business Ethics, Springer, vol. 85(1), pages 41-55, March.

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