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Unlocking the myths of size expansion in China's large state‐owned enterprises: Theory and evidence

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  • Jim Huangnan Shen
  • Weiping Li
  • Chien‐Chiang Lee

Abstract

This research proposes a theoretical framework to illustrate the incentives behind the exponential growth in asset size of China's large state‐owned enterprises (SOEs) in the past few decades, with results presenting three types of incentives that led to their expansion. (1) The business empire building effect. (2) The state predatory effect. (3) A state benevolent effect in which the state is also concerned with “social welfare” in terms of increasing labor hiring through a larger asset size of SOEs for the sake of social stability. The empirical evidence is broadly consistent with the theories proposed herein.

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  • Jim Huangnan Shen & Weiping Li & Chien‐Chiang Lee, 2023. "Unlocking the myths of size expansion in China's large state‐owned enterprises: Theory and evidence," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1264-1284, March.
    • Handle: RePEc:wly:mgtdec:v:44:y:2023:i:2:p:1264-1284
    DOI: 10.1002/mde.3746
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