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The effects of corporate governance and ownership on the innovation performance of Chinese SMEs


  • Daniel Shapiro
  • Yao Tang
  • Miaojun Wang
  • Weiying Zhang


We investigate the degree to which corporate governance and ownership affect the innovation performance of firms in China with a particular focus on privately owned small and medium enterprises. Using the appropriate theoretical frameworks, we derive hypotheses regarding the impact of ownership concentration, board size and composition, and the background of the CEO on innovative activity. These hypotheses are tested using a unique sample of 370 mostly private and relatively small Chinese firms in Zhejiang province, for the period 2004--2006. Using two measures of innovation, invention patents and new product sales, and a variety of estimation methods appropriate to each measure, we find limited evidence that corporate governance affects innovation performance, but the results do depend on the measure of innovation. In general, the results suggest that for this sample, corporate governance and ownership affect innovation activity more strongly when innovation is measured by patenting activity, rather than new product sales. We conclude with a discussion about why this might be.

Suggested Citation

  • Daniel Shapiro & Yao Tang & Miaojun Wang & Weiying Zhang, 2015. "The effects of corporate governance and ownership on the innovation performance of Chinese SMEs," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 13(4), pages 311-335, November.
  • Handle: RePEc:taf:jocebs:v:13:y:2015:i:4:p:311-335
    DOI: 10.1080/14765284.2015.1090267

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    References listed on IDEAS

    1. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588.
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    Cited by:

    1. Lutao Ning & Martha Prevezer & Yuandi Wang, 2014. "Top Management Turnover and Corporate Governance in China: effects on innovation performance," Working Papers 53, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
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    5. repec:eee:respol:v:46:y:2017:i:9:p:1533-1551 is not listed on IDEAS
    6. Rong, Zhao & Wu, Xiaokai & Boeing, Philipp, 2017. "The effect of institutional ownership on firm innovation: Evidence from Chinese listed firms," Research Policy, Elsevier, vol. 46(9), pages 1533-1551.
    7. repec:wsi:jicepx:v:08:y:2017:i:03:n:s1793993317500156 is not listed on IDEAS
    8. repec:eee:iburev:v:26:y:2017:i:3:p:579-591 is not listed on IDEAS

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