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Flexibility-efficiency tradeoff and performance implications among Chinese SOEs

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  • Tan, Justin
  • Wang, Liang

Abstract

This paper examines performance implications of the flexibility-efficiency tradeoff in the turbulent environment. We test the relationship between resource utilization and firm performance among the Chinese state-owned enterprises (SOEs) during China's economic transformation. The study finds that (1) overall efficiency enhances performance; (2) different measures of efficiency all exhibit curvilinear relationship with performance; and (3) differences exist between high efficiency and low efficiency subgroups of firms. The results reveal that efficiency as well as flexibility has a positive impact on firm performance only within a certain range. Beyond a certain point, the cost of maintaining flexibility overwhelms the benefit, causing performance to decline.

Suggested Citation

  • Tan, Justin & Wang, Liang, 2010. "Flexibility-efficiency tradeoff and performance implications among Chinese SOEs," Journal of Business Research, Elsevier, vol. 63(4), pages 356-362, April.
    • Handle: RePEc:eee:jbrese:v:63:y:2010:i:4:p:356-362
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