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Business Group Performance in China: Ownership and Temporal Considerations

Published online by Cambridge University Press:  02 February 2015

Michael Carney ,
Daniel Shapiro  and
Yao Tang
Translated by
唐遥
Michael Carney
Affiliation:
Concordia University, Canada
Daniel Shapiro
Affiliation:
Simon Fraser University, Canada
Yao Tang
Affiliation:
University of British Columbia, Canada
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Abstract

We address the institutional voids hypothesis, which suggests affiliation with a business group will improve a firm's performance in circumstances of poor-quality institutions and extensive market failures. We hypothesize that initial positive effects of group affiliation should decline as the quality of market institutions improves. Further, we hypothesize that differences in state and private ownership will influence the value and persistence of firm affiliation. Using data on 476 publicly listed firms in 1999 and 467 matched firms in 2004, we find support for a temporal hypothesis that affiliation with a business group improves performance, but the value of group affiliation declines over time. We also find support for a state ‘helping hand’ hypothesis that suggests firms with high levels of state ownership initially experienced an amplified value effect from their group affiliation, which disappeared by 2004. The results suggest that China's policy makers are beginning to establish an institutional and market infrastructure that is conducive to entry by unaffiliated, freestanding firms.

Keywords

business groupsChinainstitutional voidsownershipperformance企业集团中国制度空隙所有权绩效
Type
Articles
Information
Management and Organization Review , Volume 5 , Issue 2 , July 2009 , pp. 167 - 193
Copyright
Copyright © International Association for Chinese Management Research 2009

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