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Multi-Level State Capitalism: Chinese State-Owned Buisness Groups

Published online by Cambridge University Press:  22 November 2018

Jakob Arnoldi ,
Anders Ryom Villadsen ,
Xin Chen  and
Chaohong Na
Jakob Arnoldi*
Affiliation:
Aarhus University, Denmark
Anders Ryom Villadsen
Affiliation:
Aarhus University, Denmark
Xin Chen
Affiliation:
Shanghai Jiao Tong University, China
Chaohong Na
Affiliation:
Yunnan University of Finance and Economics, China
*
Corresponding author: Jakob Arnoldi ([email protected])
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Abstract

We argue that vertical interlocks in Chinese state-owned business groups are important mechanisms for coordination and information exchange between the apex firm and affiliated firms, and that they are also mechanisms for government owners of the business groups to exercise control. By combining resource dependence theory with elements from transaction cost economics and agency theory, we propose that the need for interlocks increases the higher the level of government ownership. The central government is therefore more likely to use vertical interlocks than the provincial governments, which again are more likely to use vertical interlocks than the municipal governments. We develop three hypotheses based on these arguments. A regression analysis of a hand-collected data set finds strong support for our hypotheses. Our results shed light on coordination and governance issues within the state-owned sector in China and on an important means for mitigating these issues used by the government owners and firms affiliated with state-owned groups.

Keywords

business groupsChinagovernmentinterlocks
Type
Article
Information
Management and Organization Review , Volume 15 , Issue 1 , March 2019 , pp. 55 - 79
Copyright
Copyright © The International Association for Chinese Management Research 2018 

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Footnotes

This title has been revised since its original publication. A corrigendum detailing this change has also been published: doi 10.1017/mor.2019.1.

Accepted by: Senior Editor Lin Cui

References

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