Hostname: page-component-669899f699-7tmb6 Total loading time: 0 Render date: 2025-05-04T09:27:07.571Z Has data issue: false hasContentIssue false
  • English
  • Français

Industrial Specialization in China: Effects of Central Tools Governing Subnational Agency

Published online by Cambridge University Press:  11 November 2024

Dan Prud'homme  and
Wenlong He
Dan Prud'homme
Affiliation:
Florida International University, USA
Wenlong He*
Affiliation:
Renmin University of China, China
*
Corresponding author: Wenlong He ([email protected])
Get access Rights & Permissions [Opens in a new window]

Abstract

We examine how the central government's management of subnational governments' agency influences the smartness of the latter's industrial specialization choices. Based on smart industrial specialization theory and agency theory, we hypothesize how two central government tools governing subnational governments' agency – facilitating their organizational efficacy and promoting their officials to higher ranks – explain recent industrial specialization choices by China's 31 provincial governments. We find that provincial governments with greater organizational efficacy, measured by access to better-resourced local state-owned enterprises in focal industries, make smarter specialization policies. In addition, we show that provincial governments with greater numbers of officials previously promoted to the central government make, contrary to conventional wisdom, potentially less smart specialization policies. Our research extends smart specialization theory by explaining that central government tools governing subnational agency problems can have knock-on effects making subnational governments' industrial specialization choices smart or unsmart.

摘要

摘要

本文研究了中央对地方政府代理权的管理如何影响后者产业专业化的选择。基于产业专业化理论和代理理论，本文讨论了中央管理地方政府的两种工具，即促进地方政府的组织效能和地方官员升迁，如何影响省级政府产业专业化的选择。本文发现，组织效能较高的省级政府会制定更明智的专业化政策。此外，本文还发现，与传统观点相反，有更多官员得到提拔的省级政府，其制定的专业化政策可能存在偏差。本研究通过解释中央对地方政府代理权的管理工具会产生连锁效应，并影响地方政府产业专业化的选择，从而拓展了产业专业化理论。

Keywords

agency theoryjob promotionsorganizational efficacyquasi-decentralized politiessmart industrial specialization产业专业化委托代理理论组织效能职位晋升中央-地方分权体制
Type
Article
Information
Management and Organization Review , Volume 20 , Issue 4 , August 2024 , pp. 671 - 694
Copyright
Copyright © The Author(s), 2024. Published by Cambridge University Press on behalf of International Association for Chinese Management Research

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.)

Article purchase

Temporarily unavailable

References

Ahmad, E., & Tanzi, E. 2002. Managing fiscal decentralization. London: Routledge.CrossRefGoogle Scholar
Bai, C. E., Du, Y. J., Tao, Z. G., & Tong, S. 2004. Local protectionism and regional specialization: Evidence from China's industries. Journal of International Economics, 63(2): 397–417.CrossRefGoogle Scholar
Bakker, A. 2015. A job demands-resources approach to public service motivation. Public Administration Review, 75(5): 723–732.CrossRefGoogle Scholar
Batisse, C., & Poncet, S. 2004. Protectionism and industry location in Chinese provinces. Journal of Chinese Economic and Business Studies, 2(2): 133–154.CrossRefGoogle Scholar
Binderkrantz, A., Holm, M., & Korsager, K. 2012. Performance contracts and goal attainment in government agencies. International Public Management Journal, 14(4): 445–463.CrossRefGoogle Scholar
Bo, Z. 1996. Economic performance and political mobility: Chinese provincial leaders. Journal of Contemporary China, 5(12): 135–154.CrossRefGoogle Scholar
Bo, Z. 2002. Chinese provincial leaders: Economic performance and political mobility since 1949. New York: M.E. Sharpe.Google Scholar
Boardman, C., & Sundquist, E. 2009. Toward understanding work motivation: Worker attitudes and the perception of effective public service. American Review of Public Administration, 39(5): 519–535.CrossRefGoogle Scholar
Bohn, J. 2002. The relationship of perceived leadership behaviors to organizational efficacy. Journal of Leadership and Organization Studies, 9(2): 65–79.CrossRefGoogle Scholar
Boivie, S., Lange, D., McDonald, M. L., & Westphal, J. D. 2011. Me or we: The effects of CEO organizational identification on agency costs. Academy of Management Journal, 54(3): 551–576.CrossRefGoogle Scholar
Brambor, T., Clark, W. R., & Golder, M. 2006. Understanding interaction models: Improving empirical analyses. Political Analysis, 14(1): 63–82.CrossRefGoogle Scholar
Busenbark, J. R., Yoon, H., Gamache, D. L., & Withers, M. C. 2022. Omitted variable bias: Examining management research with the impact threshold of a confounding variable (ITCV). Journal of Management, 48(1): 17–48.CrossRefGoogle Scholar
Capello, R., & Kroll, H. 2016. From theory to practice in smart specialization strategy: Emerging limits and possible future trajectories. European Planning Studies, 24(8): 1393–1406.CrossRefGoogle Scholar
Chen, T. J., & Ku, Y. H. 2014. Indigenous innovation vs. teng-long huan-niao: policy conflicts in the development of China's flat panel industry. Industrial and Corporate Change, 23(6): 1445–1467.CrossRefGoogle Scholar
Christensen, T., Laegreid, P., Roness, P., & Rovik, K. 2007. Organization theory and the public sector. New York: Routledge.CrossRefGoogle Scholar
Deng, S. L., Peng, J., & Wang, C. 2013. Fiscal transparency at the Chinese provincial level. Public Administration, 91(4): 947–963.CrossRefGoogle Scholar
Eisenhardt, K. 1985. Control: Organizational and economic approaches. Management Science, 31(2): 134–149.CrossRefGoogle Scholar
Eisenhardt, K. 1989. Agency theory: An assessment and review. Academy of Management Review, 14(1): 57–74.CrossRefGoogle Scholar
Fama, E., & Jensen, M. 1983. Agency problems and residual claims. Journal of Law and Economics, 26(2): 327–349.CrossRefGoogle Scholar
Filatotchev, I., & Boyd, B. 2009. Taking stock of corporate governance research while looking to the future. Corporate Governance: An International Review, 17(3): 257–265.CrossRefGoogle Scholar
Foray, D. 2014. Smart specialisation: Opportunities and challenges for regional innovation policy. Routledge.CrossRefGoogle Scholar
Frank, K. 2000. Impact of a confounding variable on a regression coefficient. Sociological Methods & Research, 29(2): 147–194.CrossRefGoogle Scholar
Fuller, D. 2019. Paper tigers, hidden dragons: Firms and the political economy of China's technological development. Oxford, UK: Oxford University Press.Google Scholar
Gao, X. D. 2017. Approaching the technological innovation frontier: Evidence from Chinese SOEs. Industry and Innovation, 26(1): 100–120.CrossRefGoogle Scholar
Genin, A. L., Tan, J., & Song, J. 2021. State governance and technological innovation in emerging economies. State-owned enterprise restructuration and institutional logic dissonance in China's high-speed train sector. Journal of International Business Studies, 52: 621–645.CrossRefGoogle Scholar
Greenwald, B., & Stiglitz, J. 2013. Industrial policy, creation of a learning society and economic development. In Stiglitz, J. & Lin, J. Y. (Eds.), The industrial policy revolution I: The role of government beyond ideology: 43–71. New York: Palgrave Macmillan.CrossRefGoogle Scholar
He, C., Wei, Y. D., & Xie, X. 2008. Globalization, institutional change, and industrial location: Economic transition and industrial concentration in China. Journal of Regional Studies, 42(7): 923–945.CrossRefGoogle Scholar
He, Z. L., Tong, T. W., Zhang, Y., & He, W. 2018. A database linking Chinese patents to China's census firms. Scientific Data, 5(1): 1–16.CrossRefGoogle ScholarPubMed
Helveston, J., Wang, Y., Karplus, V., & Fuchs, E. 2019. Institutional complementarities: The origins of experimentation in China's plug-in electric vehicle industry. Research Policy, 48(1): 206–222.CrossRefGoogle Scholar
Hirschman, A. 1958. The strategy of economic development. Yale University Press.Google Scholar
Howell, A. 2018. Agglomeration, absorptive capacity and knowledge governance: implications for public-private firm innovation in China. Regional Studies, 54: 1069–1083.CrossRefGoogle Scholar
Howell, A. 2019. Industry relatedness, FDI liberalization and the indigenous innovation process in China. Regional Studies, 54(2): 229–243.CrossRefGoogle Scholar
Huang, C. 2021. Measuring China's innovation capacity: An important unmeasurable factor and a new contextual factor. Management and Organization Review, 17(4): 873–879.CrossRefGoogle Scholar
Huang, J. 2013. Foreign trade, interregional trade, and regional specialization. In Lu, M., Chen, Z., Zhu, X., & Xu, X. (Eds.), China's regional development: Review and prospect: 169–212. New York: Routledge.Google Scholar
Hubbard, T. D., Christensen, D. M., & Graffin, S. D. 2017. Higher highs and lower lows: The role of corporate social responsibility in CEO dismissal. Strategic Management Journal, 38(11): 2255–2265.CrossRefGoogle Scholar
Iossa, E., & Martimort, D. 2015. The simple microeconomics of public-private partnerships. Journal of Public Economy Theory, 17(1): 4–48.CrossRefGoogle Scholar
Jaros, K., & Tan, Y. 2020. Provincial power in a centralizing China: The politics of domestic and international ‘development space’. The China Journal, 83: 79–104.CrossRefGoogle Scholar
Jia, N., Huang, K. G., & Zhang, C. 2019. Public governance, corporate governance, and firm innovation: An examination of state-owned enterprises. Academy of Management Journal, 62(1): 220–247.CrossRefGoogle Scholar
Jia, R., Kudamatsu, M., & Seim, D. 2015. Political selection in China: Complementary roles of connections and performance. Journal of the European Economic Association, 13(4): 631–668.CrossRefGoogle Scholar
Keller, F. 2016. Moving beyond factions: Using social network analysis to uncover patronage networks among Chinese elite. Journal of East Asian Studies, 16(1): 17–41.CrossRefGoogle Scholar
Kerr, S. 1975. On the folly of rewarding A, while hoping for B. Academy of Management Journal, 18: 769–783.CrossRefGoogle ScholarPubMed
Knight, J. 2014. China as a developmental state. The World Economy, 37(10): 1335–1347.CrossRefGoogle Scholar
Knight, J. 2016. The societal cost of China's rapid economic growth. Asian Economic Papers, 15(2): 138–159.CrossRefGoogle Scholar
Krammer, S. 2017. Science, technology, and innovation for economic competitiveness: The role of smart specialization in less-developed countries. Technological Forecasting and Social Change, 123: 95–107.CrossRefGoogle Scholar
Kroll, H., & Kou, K. 2018. Innovation output and state ownership: Empirical evidence from China's listed firms. Industry and Innovation, 26(2): 176–198.CrossRefGoogle Scholar
Lan, G. G. Y., & Galaskiewicz, J. 2015. Innovations in public and non-profit sector organizations in China. Management and Organization Review, 8(3): 491–506.CrossRefGoogle Scholar
Landry, P., Lu, X., & Duan, H. 2017. Does performance matter? Evaluating political selection among the Chinese administrative ladder. Comparative Political Studies, 51(8): 1074–1105.CrossRefGoogle Scholar
Lazzarini, S. 2013. Strategizing by the government: Can industrial policy create firm-level competitive advantage? Strategic Management Journal, 36(1): 97–112.CrossRefGoogle Scholar
Lazzarini, S., Mesquita, L., Monterio, F., & Musacchio, A. 2021. Leviathan as an inventor: An extended agency model of state-owned versus private firm invention in emerging and developed economies. Journal of International Business Studies, 52: 560–594.CrossRefGoogle Scholar
Lee, K. 2013. Capability failure and industrial policy to move beyond the middle-income trap: From trade-based to technology-based specialization. In Stiglitz, J. & Lin, J. Y. (Eds.), The industrial policy revolution: The role of government beyond ideology: 244–272. New York: Palgrave Macmillan.CrossRefGoogle Scholar
Lee, K. 2016. Innovation and technological specialization of the Chinese industry. In Lewin, A., Kenney, M., & Murmann, P. (Eds.), China's innovation challenge: Overcoming the middle-income trap: 108–120. Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Lee, K. 2017. Smart specialization with short-cycle technologies and implementation strategies to avoid target and design failures. In Radosevic, S., Curaj, A., Gheorghiu, R., Andreescu, L., & Wade, I. (Eds.), Advances in the theory and practice of smart specialization: 201–224. London: Academic Press.CrossRefGoogle Scholar
Lewin, A., Kenney, M., & Murmann, J. P. 2016. China's innovation challenge: An introduction. China's innovation challenge: Overcoming the middle-income trap: 1–31. Cambridge, UK: Cambridge University Press.Google Scholar
Li, H., & Zhou, L. A. 2005. Political turnover and economic performance: the incentive role of personnel control in China. Journal of Public Economics, 89(9-10): 1743–1762.CrossRefGoogle Scholar
Li, S., Yao, X., Sue-Chan, C., & Xi, Y. 2015. Where do social ties come from: Institutional framework and governmental tie distribution among Chinese managers. Management and Organization Review, 7(1): 97–124.CrossRefGoogle Scholar
Lin, J. Y. 2012. New structural economics: A framework for rethinking development and policy. Washington, DC: World Bank.CrossRefGoogle Scholar
Lin, J. Y. 2017. New structural economics and industrial policies for catching-up economies. In Radosevic, S., Curaj, A., Gheorghiu, R., Andreescu, L., & Wade, I. (Eds.), Advances in the theory and practice of smart specialization: 183–199. London: Academic Press.CrossRefGoogle Scholar
Lin, L., Tian, H., & Lv, Y. 2018. China's rule of law index 2017. Washington, DC: Springer.Google Scholar
Ling, C., & Naughton, B. 2016. An institutionalized policy-making mechanism: China's return to techno-industrial policy. Research Policy, 45(10): 2138–2152.Google Scholar
Liu, X., Wang, X., & Hu, Y. 2021. Catch-up and radical innovation in Chinese state-owned enterprises. Cheltenham, UK: Edward Elgar Publishing.CrossRefGoogle Scholar
Marquis, C., & Qiao, K. 2022. Mao and markets: The communist roots of Chinese enterprise. New York: Yale University Press.Google Scholar
Mathews, J. A. 2002. Competitive advantages of the latecomer firm. Asia Pacific Journal of Management, 19(4): 467–488.CrossRefGoogle Scholar
Mathews, J. A. 2005. The intellectual roots of latecomer industrial development. International Journal of Technology and Globalisation, 14(1): 433–450.CrossRefGoogle Scholar
Mathews, J. A. 2007. Catch-up strategies and the latecomer effect in industrial development. New Political Economy, 11(3): 313–335.CrossRefGoogle Scholar
Mathews, J. A. 2017. Global green shift: When CERES meets Gaia. New York: Anthem Press.CrossRefGoogle Scholar
Miao, C., Fang, D., Sun, L., Luo, Q., & Yu, Q. 2018. Driving effect of technology innovation on energy utilization efficiency in strategic emerging industries. Journal of Cleaner Production, 170: 1177–1184.CrossRefGoogle Scholar
Miller, G. 2005. The political evolution of principal-agent models. Annual Review of Political Science, 8: 203–225.CrossRefGoogle Scholar
Monge, P., Rothman, L., Eisenberg, E., Miller, K., & Kirste, K. 1985. The dynamics of organizational proximity. Management Science, 31(9): 1129–1141.CrossRefGoogle Scholar
Musacchio, A., Lazzarini, S., & Aguilera, R. 2015. New varieties of state capitalism: Strategic and governance implications. Academy of Management Perspectives, 29(1): 115–131.CrossRefGoogle Scholar
Naughton, B., & Tsai, K. 2015. Introduction: State capitalism and the Chinese economic miracle. In Naughton, B. & Tsai, K. (Eds.), State capitalism, institutional adaptation, and the Chinese miracle: 1–26. New York: Cambridge University Press.CrossRefGoogle Scholar
Nicholson-Crotty, S., Nicholson-Crotty, J., & Fernandez, S. 2016. Performance and management in the public sector: Testing a model of relative risk aversion. Public Administration Review, 77(4): 603–614.CrossRefGoogle Scholar
Obloj, T., & Zenger, T. 2017. Organization design, proximity, and productivity responses to upward social comparison. Organization Science, 28(1): 1–18.CrossRefGoogle Scholar
OECD, . 2008. Handbook on constructing composite indicators: Methodology and user guide. Paris, France: OECD and European Commission JRC.CrossRefGoogle Scholar
Pearce, J., Dibble, R., & Klein, K. 2009. The effects of governments on management and organization. Academy of Management Annals, 3(1): 503–541.CrossRefGoogle Scholar
Pearson, M. 2015. State-owned business and party-state regulation in China's modern political economy. In Naughton, B. & Tsai, K. (Eds.), State capitalism, institutional adaptation, and the Chinese miracle: 27–45. New York: Cambridge University Press.CrossRefGoogle Scholar
Porter, M. 1990. The competitive advantage of nations. New York: Free Press.CrossRefGoogle Scholar
Prud'homme, D. 2016a. Forecasting threats and opportunities for foreign innovators in China's strategic emerging industries: A policy-based analysis. Thunderbird International Business Review, 58(2): 103–115.CrossRefGoogle Scholar
Prud'homme, D. 2016b. Dynamics of China's provincial-level specialization in strategic emerging industries. Research Policy, 45(8): 1586–1603.CrossRefGoogle Scholar
Prud'homme, D., & von Zedtwitz, M. 2018. The changing face of innovation in China. MIT Sloan Management Review, 59: 24–32.Google Scholar
Prud'homme, D., Tong, T. W., & Han, N. 2021. A stakeholder-based view of the evolution of intellectual property institutions. Journal of International Business Studies, 52: 773–802.CrossRefGoogle Scholar
Qu, T., Qu, T., & Wu, Y. 2017. The role of regional formal institutions and foreign direct investment in innovation in China. Asia Pacific Business Review, 23(1): 27–43.CrossRefGoogle Scholar
Radosevic, S. 2017. Advancing theory and practice of smart specialization: Key messages, in: New structural economics and industrial policies for catching-up economies. In: Radosevic, S., Curaj, A., Gheorghiu, R., Andreescu, L., & Wade, I. (Eds.), Advances in the theory and practice of smart specialization: 345–355. New York: Academic Press.CrossRefGoogle Scholar
Ricardo, D. 1821. Principles of political economic and taxation (3rd ed.). John Murray Publishers.Google Scholar
Rodrik, D. 2008. Normalizing industrial policy. Washington, DC: World Bank.Google Scholar
Romer, P. 1987. Growth based on increasing returns due to specialization. American Economic Review, 77(2): 56–62.Google Scholar
Ross, S. 1973. The economic theory of agency: The principal's problem. American Economic Review, 63(2): 134–39.Google Scholar
Shapiro, S. 2005. Agency theory. Annual Review of Sociology, 31: 263–284.CrossRefGoogle Scholar
Simon, H. 1991. Organizational learning: Papers in honor of (and by) James G. March. Organization Science, 2(1): 125–134.CrossRefGoogle Scholar
Soete, L. 1987. The impact of technological innovation on International trade patterns; the evidence reconsidered. Research Policy, 16(2-4): 101–130.CrossRefGoogle Scholar
Soete, L. 1988. Technical change and international implications for small countries. In Freeman, C. & Lundvall, B. (Eds.), Small countries facing the technological revolution: 99–110. London: Pinter Publishers.Google Scholar
Soete, L., & Wyatt, S. 1983. The use of foreign patenting as an internationally comparable science and technology output indicator. Scientometrics, 5: 31–54.CrossRefGoogle Scholar
Song, H., Wan, J., & Reng, Z. 2010. Characteristics of China's strategic emerging industries, industry selection, and development policy research (in Chinese). Science & Technology for Development, 5: 1–14.Google Scholar
Stock, J., & Staiger, D. 1997. Instrumental variables regression with weak instruments. Econometrica, 65(3): 557–586.Google Scholar
Strong, W., & George, G. 1997. On the folly of reward A, while hoping for B. Public Productivity & Management Review, 20: 308–322.Google Scholar
Su, Y. S., Gelman, A., Hill, J., & Yajima, M. 2011. Multiple imputation with diagnostics (mi) in R: Opening windows into the black box. Journal of Statistical Software, 45(2): 1–31.CrossRefGoogle Scholar
Teece, D. 2019. China and the reshaping of the auto industry: A dynamic capabilities perspective. Management and Organization Review, 15(1): 177–199.CrossRefGoogle Scholar
The Economist. 2012. Special report: State capitalism (January 21): 1–18.Google Scholar
Thun, E. 2006. Changing lanes in China: Foreign direct investment, local governments, and auto sector development. New York: Cambridge University Press.CrossRefGoogle Scholar
Tommasi, M., & Iinschelbaum, F. 2007. Centralization vs. decentralization: A principal-agent analysis. Journal of Public Economic Theory, 9(2): 369–389.CrossRefGoogle Scholar
Walder, A. 2010. From control to ownership: China's managerial revolution. Management and Organization Review, 7(1): 19–38.CrossRefGoogle Scholar
Wang, X., Li, B., & Shi, Y. 2020. The convergence management of strategic emerging industries: Sustainable design analysis for facilitating the improvement of innovation networks. Sustainability, 12(3): 1–21.Google Scholar
Wen, J. 2009. Speech of Prime Minister Wen Jiabao to CPC Central Committee Political Bureau Standing Committee on 3 November 2009 at the 60th anniversary of Chinese Academy of Sciences (in Chinese).Google Scholar
Weng, C. F., Li, X. Y., Yang, H. Y., & Ren, T. 2021. Formal and information institutions: The independent and joint impacts on firm innovation. Management and Organization Review, 17(5): 918–967.CrossRefGoogle Scholar
Williams, E. 1979. Reasoning with statistics (2nd ed.). Rinehart & Winston.Google Scholar
Williamson, O. 1998. Transaction cost economics: How it works; where it is headed. De Economist, 146: 23–58.CrossRefGoogle Scholar
Young, A. 2000. The razor's edge: Distortions and incremental reform in the People's Republic of China. The Quarterly Journal of Economics, 115(4): 1091–1135.CrossRefGoogle Scholar
Zhao, D. 2009. The mandate of heaven and performance legitimation in historical and contemporary China. American Behavioral Scientist, 53(3): 416–433.CrossRefGoogle Scholar
Zhou, K. Z., Gao, G. Y., & Zhao, H. X. 2016. State ownership and firm innovation in China: An integrated view of institutional and efficiency logics. Administrative Science Quarterly, 62(2): 375–404.CrossRefGoogle Scholar
Zhu, Y. 2011. “Performance legitimacy” and China's political adaptation strategy. Journal of Chinese Political Science, 16: 123–140.CrossRefGoogle Scholar