IDEAS home Printed from https://ideas.repec.org/p/mos/moswps/2012-13.html
   My bibliography  Save this paper

Evolving Ownership Structures in Private Enterprises in China: the Case of Ningbo

Author

Listed:
  • Zhong Qin
  • Wenli Cheng

Abstract

This paper develops a theoretical model to study features of the spontaneous growth of private enterprises in China’s Zhejiang province. The model predicts that in a developing economy where the market environment is immature or unstable, the ownership structure of a typical private enterprise involves a cooperative arrangement between a party with management skills and another party with Guanxi (connections). As the market environment becomes more stable, the ownership share of the party with management skills increases. This result is confirmed by empirical evidence. Observations of the pattern of private sector growth suggest that ownership structures of private enterprises were strongly influenced by the market environment. Empirical analysis based on a survey of 296 firms in Ningbo city of China shows that the perceived importance of both government and family Guanxi declined with perceived improvements in market stability.

Suggested Citation

  • Zhong Qin & Wenli Cheng, 2012. "Evolving Ownership Structures in Private Enterprises in China: the Case of Ningbo," Monash Economics Working Papers 12-13, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2012-13
    as

    Download full text from publisher

    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2012/1312evolvingownershipqincheng.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tian, Guoqiang, 2000. "Property Rights and the Nature of Chinese Collective Enterprises," Journal of Comparative Economics, Elsevier, vol. 28(2), pages 247-268, June.
    2. Shaomin Li, 2002. "Does east love guanxi more than west? The evolution of relation-based governance: Contemporary and historical evidences," Global Economic Review, Taylor & Francis Journals, vol. 31(1), pages 1-11.
    3. Laixiang Sun, 2000. "Anticipatory Ownership Reform Driven by Competition: China' Township-Village and Private Enterprises in the 1990s," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 42(3), pages 49-75, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Qin, Zhong, 2011. "Models of trust-sharing in Chinese private enterprises," Economic Modelling, Elsevier, vol. 28(3), pages 1017-1029, May.
    2. Xia, Jun & Li, Shaomin & Long, Cheryl, 2009. "The Transformation of Collectively Owned Enterprises and its Outcomes in China, 2001-05," World Development, Elsevier, vol. 37(10), pages 1651-1662, October.
    3. Sun, Laixiang, 2002. "Fading out of local government ownership: recent ownership reform in China's township and village enterprises," Economic Systems, Elsevier, vol. 26(3), pages 249-269, September.
    4. Da Teng & Douglas B. Fuller & Chengchun Li, 2018. "Institutional change and corporate governance diversity in China’s SOEs," Asia Pacific Business Review, Taylor & Francis Journals, vol. 24(3), pages 273-293, May.
    5. Bischoff, Ivo, 2002. "Efficiency-Enhancing Effects Of Private And Collective Enterprises In Transitional China," Discussion Papers 26467, University of Giessen, Center for International Development and Environmental Research.
    6. Zhong Qin & Vinod Mishra & Russell Smyth, 2016. "An empirical examination of endogenous ownership in Chinese private enterprises," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 21(4), pages 513-530, October.
    7. Druk-Gal, Bat-Sheva & Yaari, Varda, 2006. "Incumbent employees' resistance to implementing privatization policy," Journal of Economic Behavior & Organization, Elsevier, vol. 59(3), pages 374-405, March.
    8. Xu Wang & Xu Chu & Chien-Chiang Lee, 2023. "How does anti-corruption policy affect the sensitivity of green innovation to executive incentives?," Economic Change and Restructuring, Springer, vol. 56(1), pages 79-109, February.
    9. Lu, Jiangyong & Tao, Zhigang & Yang, Zhi, 2010. "The costs and benefits of government control: Evidence from China's collectively-owned enterprises," China Economic Review, Elsevier, vol. 21(2), pages 282-292, June.
    10. Wang, Chengqi & Kafouros, Mario & Yi, Jingtao & Hong, Junjie & Ganotakis, Panagiotis, 2020. "The role of government affiliation in explaining firm innovativeness and profitability in emerging countries: Evidence from China," Journal of World Business, Elsevier, vol. 55(3).
    11. Pei Sun & Kamel Mellahi & Guy Liu, 2011. "Corporate governance failure and contingent political resources in transition economies: A longitudinal case study," Asia Pacific Journal of Management, Springer, vol. 28(4), pages 853-879, December.
    12. Richard Sanders & Yang Chen, 2005. "On Privatisation and Property Rights: Should China Go Down the Road of Outright Privatisation?," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 3(3), pages 231-245.
    13. Wang, Xiaobing, 2007. "Labor market behavior of Chinese rural households during transition," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 42, number 92321.
    14. Lihui Tian & Saul Estrin, 2005. "Retained State Shareholding in Chinese PLCs: Does Government Ownership Reduce Corporate Value?," William Davidson Institute Working Papers Series wp750, William Davidson Institute at the University of Michigan.
    15. Chunrong Ai & Mei Wen, 2005. "Ownership and Sector Performance in Current China -- A Regional Study," Annals of Economics and Finance, Society for AEF, vol. 6(2), pages 303-317, November.
    16. Fei Zhong, 2001. ""The Fable of the Keiretsu: "Big Bang versus Gradualism : The Political-Economy of the Patterns in Transition"(in Japanese)," CIRJE J-Series CIRJE-J-39, CIRJE, Faculty of Economics, University of Tokyo.
    17. Che, Jiahua, 2002. "Rent Seeking and Government Ownership of Firms: An Application to China's Township-Village Enterprises," Journal of Comparative Economics, Elsevier, vol. 30(4), pages 787-811, December.
    18. Mei Wen, 2007. "Foreign direct investment, regional market conditions and regional development," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 15(1), pages 125-151, January.
    19. Ernest G. Raiklin, 2013. "On the Meaning of the PRC’s Development Since 1949," SAGE Open, , vol. 3(2), pages 21582440134, May.
    20. Sun, Pei & Xu, Haoping & Zhou, Jian, 2011. "The value of local political capital in transition China," Economics Letters, Elsevier, vol. 110(3), pages 189-192, March.

    More about this item

    Keywords

    Guanxi; ownership structure; quality of economic environment; private enterprises in China;
    All these keywords.

    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mos:moswps:2012-13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Simon Angus (email available below). General contact details of provider: https://edirc.repec.org/data/dxmonau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.