Doctoral Dissertation Research: State Intervention, Interfirm Relations and Firm Performance

University Of Minnesota-Twin Cities, Minneapolis MN

Investigators

Abstract

Doctoral Dissertation Research: State Intervention, Interfirm Relations and Firm Performance of Chinese Business Groups in China's Transition Economy David Knoke and Xinxiang Chen Department of Sociology University of Minnesota ABSTRACT This research project will investigate two related social processes: the impact of state intervention on interfirm governance relations, and the effect of those governance relations on firm performance in Chinese business groups in China's transition economy. It will test a set of propositions and hypotheses that Chinese business groups with greater state intervention experience a relatively higher degree of vertical integration, and thereby a relatively lower level of firm performance. Data will be collected mainly in Beijing, Zhengzhou, and Shenzhen, using interviews with insiders from approximately 120 firms belonging to 30 business groups, as well as qualitative and quantitative data gathered from secondary sources. Data analyses will focus on the effects of the capital and membership structures of Chinese business groups on their interfirm vertical integration, which is a primary governance form of business enterprises with Chinese characteristics in the current transition economy, in contrast to the relatively mature Western market economies. In addition, the research specifically analyzes the effect of the vertical integration of Chinese business groups on firm performance under the context of Chinese state intervention. The project investigators will advance the understanding of complex relationships between state intervention and economic development, especially firm performance, as they are mediated by the governance structures of business enterprises, specifically Chinese business groups. Research on Chinese business groups has also important implications for the debate about the substitution of state intervention for entrepreneurial social capital. The project will contribute to state role theory about improving economic development in different situations. The research is relevant to questions about how best to further the reform of Chinese business groups. Therefore, its results have potential public policy implications for developing countries lacking well-functioning markets or experiencing transitional economies, which have important consequences for their people's welfare. Project results will be disseminated to a wide variety of academic and policy audiences to advance organization theory research; to promote awareness of alternative forms of governance for business groups; and to inform the public and policymakers about the implications of these results for policy-making on state intervention in developing countries.