Hostname: page-component-586b7cd67f-tf8b9 Total loading time: 0 Render date: 2024-11-23T17:50:18.406Z Has data issue: false hasContentIssue false
  • English
  • Français

Personnel Power: Governing State-Owned Enterprises

Published online by Cambridge University Press:  07 June 2021

Wendy Leutert Open the ORCID record for Wendy Leutert [Opens in a new window]  and
Samantha A. Vortherms Open the ORCID record for Samantha A. Vortherms [Opens in a new window]
Wendy Leutert
Affiliation:
Indiana University
Samantha A. Vortherms*
Affiliation:
Department of Political Science, 5229 Social Science Plaza B, University of California-Irvine, Irvine, CA92697-5100
*
*Corresponding author: Samantha A. Vortherms, email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

State-owned enterprises (SOEs) retain a strong presence in many economies around the world. How do governments manage these firms given their dual economic and political nature? Many states use authority over executive appointments as a key means of governing SOEs. We analyze the nature of this “personnel power” by assessing patterns in SOE leaders’ political mobility in China, the country with the largest state-owned sector. Using logit and multinomial models on an original dataset of central SOE leaders’ attributes and company information from 2003 to 2017, we measure the effects of economic performance and political connectedness on leaders’ likelihood of staying in power. We find that leaders of well-performing firms and those with patronage ties to elites in charge of their evaluation are more likely to stay in office. These findings suggest that states can leverage personnel power in pursuit of economic and political stability when SOE management is highly politically integrated.

Keywords

state-owned enterprisesstate-business relationsChinapolitical mobility
Type
Research Article
Information
Business and Politics , Volume 23 , Issue 3 , September 2021 , pp. 419 - 437
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press on behalf of V.K. Aggarwal.

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Aharoni, Yair. 1986. The Evolution and Management of State Owned Enterprises. Melrose, MA: Ballinger Publishing Company.Google Scholar
Bo, Zhiyue. 2013. “Paths to the Top Leadership in China: The Case of Provincial Leaders.” In Choosing China's Leaders, edited by Kou, Chien-wen and Zang, Xiaowei, 65–96. London: Routledge.Google Scholar
Brødsgaard, Kjeld Erik. 2012. “Politics and Business Group Formation in China: The Party in Control?” The China Quarterly 211: 624–48.CrossRefGoogle Scholar
Brødsgaard, Kjeld Erik, Hubbard, Paul, Cai, Guilong, and Zhang, Linlin. 2017. “China's SOE Executives: Drivers of or Obstacles to Reform?” Copenhagen Journal of Asian Studies 35 (1): 52–75.10.22439/cjas.v35i1.5399CrossRefGoogle Scholar
Central Organization Department, Party-Building Research Institute. 1993. Dangjian yanjiu zongheng tan [Party-Building Research Discussion]. Beijing: Dangjian duwu chubanshe.Google Scholar
Chang, Eric C., and Wong, Sonia M. L.. 2004. “Political Control and Performance in China's Listed Firms.” Journal of Comparative Economics 32 (4): 617–36.10.1016/j.jce.2004.08.001CrossRefGoogle Scholar
Chen, Jay Chih-Jou. 2006. “Elite Mobility in Post-Reform Rural China.” Issues and Studies 42 (2): 53–83.Google Scholar
Choi, Eun Kyong. 2012. “Patronage and Performance: Factors in the Political Mobility of Provincial Leaders in Post-Deng China.” The China Quarterly 212: 965–81.10.1017/S030574101200118XCrossRefGoogle Scholar
Clayton, Matthew C., Hartzell, Jay C., and Rosenberg, Joshua. 2005. “The Impact of CEO Turnover on Equity Volatility.” The Journal of Business 78 (5): 1779–1808.CrossRefGoogle Scholar
Cuervo-Cazurra, Alvaro, Inkpen, Andrew, Musacchio, Aldo, and Ramaswamy, Kannan. 2014. “Governments as Owners: State-Owned Multinational Companies.” Journal of International Business Studies 45 (8): 919–42.10.1057/jibs.2014.43CrossRefGoogle Scholar
Dewenter, Kathryn L., and Malatesta, Paul H.. 2001. “State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity.” American Economic Review 91 (1): 320–34.10.1257/aer.91.1.320CrossRefGoogle Scholar
Ehrlich, Isaac, Gallais-Hamonno, Georges, Liu, Zhiqiang, and Lutter, Randall. 1994. “Productivity Growth and Firm Ownership: An Analytical and Empirical Investigation.” Journal of Political Economy 102 (5): 1006–38.10.1086/261962CrossRefGoogle Scholar
Ennser-Jedenastik, Laurenz. 2014. “The Politics of Patronage and Coalition: How Parties Allocate Managerial Positions in State-Owned Enterprises.” Political Studies 62 (2): 398–417.10.1111/1467-9248.12031CrossRefGoogle Scholar
Filatov, Alexander, Tutkevich, Vladimir, and Cherkaev, Dmitry. 2005. “Board of Directors at State-Owned Enterprises (SOE) in Russia.” OECD Russian Corporate Governance Roundtable.Google Scholar
Frydman, Roman, Gray, Cheryl, Hessel, Marek, and Rapaczynski, Andrzej. 1999. “When Does Privatization Work? The Impact of Private Ownership on Corporate Performance in the Transition Economies.” The Quarterly Journal of Economics 114 (4): 1153–91.10.1162/003355399556241CrossRefGoogle Scholar
Hertog, Steffen. 2010. “Defying the Resource Curse: Explaining Successful State-Owned Enterprises in Rentier States.” World Politics 62 (2): 261–301.CrossRefGoogle Scholar
Hsueh, Roselyn. 2011. China's Regulatory State: A New Strategy for Globalization. Ithaca, NY: Cornell University Press.10.7591/cornell/9780801449956.001.0001CrossRefGoogle Scholar
Jiang, Junyan. 2018. “Making Bureaucracy Work: Patronage Networks, Performance Incentives, and Economic Development in China.” American Journal of Political Science 62 (4): 982–99.CrossRefGoogle Scholar
Keller, Franziska Barbara. 2016. “Moving beyond Factions: Using Social Network Analysis to Uncover Patronage Networks among Chinese Elites.” Journal of East Asian Studies 16 (1): 17–41.10.1017/jea.2015.3CrossRefGoogle Scholar
Kowalski, Przemyslaw, Büge, Max, Sztajerowska, Monika and Egeland, Matias. 2013. “State-Owned Enterprises: Trade Effects and Policy Implications.” OECD Trade Policy Papers, no. 147.Google Scholar
Landry, Pierre F. 2003. “The Political Management of Mayors in Post-Deng China.” Copenhagen Journal of Asian Studies 17: 31–58.10.22439/cjas.v17i0.12CrossRefGoogle Scholar
Landry, Pierre F. 2008. Decentralized Authoritarianism in China: The Communist Party's Control of Local Elites in the Post-Mao Era. New York: Cambridge University Press.10.1017/CBO9780511510243CrossRefGoogle Scholar
Landry, Pierre F., Lü, Xiaobo, and Duan, Haiyan. 2018. “Does Performance Matter? Evaluating Political Selection along the Chinese Administrative Ladder.” Comparative Political Studies 51 (8): 1074–1105.CrossRefGoogle Scholar
Lee, Ching Kwan. 2017. The Specter of Global China: Politics, Labor, and Foreign Investment in Africa. Chicago: University of Chicago Press.10.7208/chicago/9780226340975.001.0001CrossRefGoogle Scholar
Leutert, Wendy. 2018. “The Political Mobility of China's Central State-Owned Enterprise Leaders.” The China Quarterly 233: 1–21.10.1017/S0305741017001412CrossRefGoogle Scholar
Leutert, Wendy. 2020. “State-Owned Enterprises in Contemporary China.” In Bernier, Luc, Florio, Massimo, and Bance, Philippe. Routledge Handbook of State-Owned Enterprises. New York: Routledge.Google Scholar
Li, Chen. 2016. “Holding ‘China Inc.’ Together: The CCP and the Rise of China's Yangqi.” The China Quarterly 288: 927–49.10.1017/S0305741016001466CrossRefGoogle Scholar
Li, Lianjiang. 2019. “The Cadre Resignation Tide in the Wake of the 18th Party Congress.” China: An International Journal 17 (3): 188–99.Google Scholar
Li, Hongbin, and Zhou, Li-An. 2005. “Political Turnover and Economic Performance: The Incentive Role of Personnel Control in China.” Journal of Public Economics 89: 1743–62.10.1016/j.jpubeco.2004.06.009CrossRefGoogle Scholar
Lin, Li-Wen. 2017. “Reforming China's State-Owned Enterprises: From Structure to People.” The China Quarterly 229: 107–29.CrossRefGoogle Scholar
Lin, Li-Wen, and Milhaupt, Curtis J.. 2013. “We Are the (National) Champions: Understanding the Mechanisms of State Capitalism in China.” Stanford Law Review 65: 697–759.Google Scholar
Liou, Chih-shian, and Tsai, Chung-min. 2017. “The Dual Role of Cadres and Entrepreneurs in China: The Evolution of Managerial Leadership in State-Monopolized Industries.” Asian Survey 57 (6): 1058–85.10.1525/as.2017.57.6.1058CrossRefGoogle Scholar
Maskin, Eric, Qian, Yingyi, and Xu, Chenggang. 2000. “Incentives, Information, and Organizational Form.” The Review of Economic Studies 67 (2): 359–78.10.1111/1467-937X.00135CrossRefGoogle Scholar
Meyer, David, Shih, Victor C., and Lee, Jonghyuk. 2016. “Factions of Different Stripes: Gauging the Recruitment Logics of Factions in the Reform Period.” Journal of East Asian Studies 16 (1): 43–60.10.1017/jea.2015.5CrossRefGoogle Scholar
Meyer, Klaus E., Ding, Yuan, Li, Jing, and Zhang, Hua. 2018. “Overcoming Distrust: How State-Owned Enterprises Adapt Their Foreign Entries to Institutional Pressures Abroad.” In State-Owned Multinationals: Governments in Global Business, edited by Cuervo-Cazurra, Alvaro, 211–51. Cham, Switzerland: Palgrave Macmillan.10.1007/978-3-319-51715-5_9CrossRefGoogle Scholar
Ministry of Finance. 2017. Zhongguo caizheng nianjian [China Financial Yearbook].Google Scholar
OECD. 2013. “Boards of Directors of State-Owned Enterprises: An Overview of National Practices.” Paris: OECD.Google Scholar
OECD. 2017. “The Size and Sectoral Distribution of State-Owned Enterprises.” Paris: OECD.Google Scholar
Rhodium Group. 2018. The China Dashboard, https://aspi.gistapp.com/china-dashboard/.Google Scholar
Rosen, Daniel H., Leutert, Wendy, and Guo, Shan. 2018. Missing Link: Corporate Governance in China's State Sector. San Francisco: Asia Society.Google Scholar
Schoenherr, David. 2019. “Political Connections and Allocative Distortions.” Journal of Finance 74 (2): 543–86.10.1111/jofi.12751CrossRefGoogle Scholar
Scissors, Derek. 2017. “Chinese Investment: Revenge of the State.” Washington, DC: American Enterprise Institute.Google Scholar
Shih, Victor C., Adolph, Christopher, and Liu, Mingxing. 2012. “Getting Ahead in the Communist Party: Explaining the Advancement of Central Committee Members in China.” American Political Science Review 106 (1): 166–87.CrossRefGoogle Scholar
State-Owned Assets Supervision and Administration Commission. 2003. Zhongyang qiye jingying yeji kaohe zanxing banfa fudao jiangzuo [Guiding Lectures on Temporary Measures for Performance Evaluation of Central Enterprises]. Beijing: Jingji kexue chubanshe.Google Scholar
State-Owned Assets Supervision and Administration Commission. 2018. Guoqi gaige licheng, 1978–2018 [The Course of Chinese State-Owned Enterprise Reform, 1978–2018], vol. 2. Beijing: Zhongguo jingji chubanshe.Google Scholar
Tian, Lihui, and Estrin, Saul. 2008. “Retained State Shareholding in Chinese PLCs: Does Government Ownership Always Reduce Corporate Value?” Journal of Comparative Economics 36 (1): 74–89.10.1016/j.jce.2007.10.003CrossRefGoogle Scholar
Vortherms, Samantha A. 2019. “Disaggregating China's Local Political Budget Cycles: ‘Righting’ the U.” World Development 114: 95–109.10.1016/j.worlddev.2018.09.025CrossRefGoogle Scholar
Wang, Changyun. 2005. “Ownership and Operating Performance of Chinese IPOs.” Journal of Banking and Finance 29 (7): 1835–56.CrossRefGoogle Scholar
World Bank. 2014. “Corporate Governance of State-Owned Enterprises: A Toolkit.” Washington, DC: World Bank.Google Scholar
Wu, Mark. 2016. “The ‘China, Inc.’ Challenge to Global Trade Governance.” Harvard International Law Journal 57 (2): 261–324.Google Scholar
Yang, Ruilong, Wang, Yuan, and Nie, Huihua. 2013. “‘Zhun guanyuan’ de pusheng jizhi: laizi zhongguo yangqi de zhengju” [The Political Promotion for Quasi-Government Officers: Evidence from Central State-owned Enterprises in China].” Guanli shijie [Management World] 3: 223–233.Google Scholar
Zhang, Chunlin. 2019. “How Much Do State-Owned Enterprises Contribute to China's GDP and Employment?” Washington, DC: World Bank.10.1596/32306CrossRefGoogle Scholar
Zhang, Jun, Zhang, Qi, and Liu, Zhikuo. 2017. “The Political Logic of Partial Reform of China's State-Owned Enterprises.” Asian Survey 57 (3): 395–415.10.1525/as.2017.57.3.395CrossRefGoogle Scholar
Zhou, Li-an. 2018. “‘Guanchang + shichang’ yu zhongguo zengzhang gushi” [‘Bureaucratic + Economic Markets’ and China's Growth Story). Shehui [Chinese Journal of Sociology] 38 (2): 1–45.Google Scholar
Supplementary material: File

Leutert and Vortherms supplementary material

Leutert and Vortherms supplementary material

Download Leutert and Vortherms supplementary material(File)
File 221.3 KB