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Flexibility-efficiency tradeoff and performance implications among Chinese SOEs

  • Tan, Justin
  • Wang, Liang
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    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.

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    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 63 (2010)
    Issue (Month): 4 (April)
    Pages: 356-362

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    Handle: RePEc:eee:jbrese:v:63:y:2010:i:4:p:356-362
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