Liao The Governance Structures of Chinese Firms

Innovation, Competitiveness, and Growth in a Dual Economy
1. Auflage 2009
ISBN: 978-1-4419-0036-4
Verlag: Springer
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 206 Seiten

Reihe: Innovation, Technology, and Knowledge Management

China's extraordinary economic growth is inspiring research from a wide spectrum of fields to explain the phenomenon: What are the primary drivers of China's economic growth? Can it be sustained? Can the Chinese business model be emulated by other countries? What long-term effects will China's economic growth have on the global economy? In this volume, Chun Liao explores these issues in the context of firms' governance structures, arguing that China's dual business system of state-owned enterprises and private enterprises is uniquely suited to the challenges of economic development in the twenty-first century. On the one hand, China's state-owned enterprises are characterized by state coordination, bank financing, insulation from the stock market fluctuations, and incremental productivity-enhancing innovations, which are similar to the firms in the business systems of coordinated market economies (like Germany and Japan). On the other hand, China's private enterprises are characterized by private (often family) ownership, hard budget constraints, profit maximization, and more risky radical innovation, which are similar to the firms in the business systems of liberal market economies (like the US and the UK). Based on the state controlling shareholding in the state sector, the boundary between the state sector business system and private sector business system is clear. This dual type system is contrasted with those in liberal market economies and those in coordinated market economies, where only one type system dominates. Drawing from empirical data and industry analysis over the past 15 years, Liao provides unparalleled access to the dynamics of the Chinese economy, including ownership structure, management design, labor-management relations, business infrastructure, capitalization (including role of banks and financial institutions, private investment, and FDI) in both the public and private sectors. In the process, she analyzes both opportunities and challenges that result from China's dual business system, particularly in regard to innovation, core competitiveness, and sustainable growth in both state strategic technology-based industries and private high technology industries . The result is an approach that sheds new light on China's economic performance and its rise as a player on the international stage.

Liao, Chun is a professor of economics at Shanghai Lixin University of Commerce in Shanghai, China. She holds a PhD in Economic Sociology (the research field of firms' governance structures, business systems and innovation systems) from Free University, Berlin. She has published more than 40 articles on Chinese business, economics, and policy, in such journals as Finance and Trade Economy and China Economists, and is coauthor of Knowledge-Based Economy and Economic Globalization (Guangdong Tourism Press, 1999).

Autoren/Hrsg.

Liao, Chun

Inhaltsverzeichnis

1;Series Foreword;6
2;Preface;10
3;Acknowledgments;12
4;Contents;13
5;Introduction;16
5.1;Authors Notes;18
5.1.1;Contribution to the Comparative Studies Approach;18
5.1.2;Comments on the Book The Future of Chinese Capitalism ;21
6;1 General Theory;23
6.1;1.1 Liberal Market Economies and Coordinated Market Economies;23
6.2;1.2 Market-Based Firms Governance Structure and Coordinated Firms Governance Structure;23
6.2.1;1.2.1 Firms' Governance Structures Defined by Five Dimensions;24
6.2.2;1.2.2 The Market-Based Governance Structure Versus the Coordinated Governance Structure;25
6.2.2.1;1.2.2.1 Ownership Coordination;26
6.2.2.2;1.2.2.2 Interfirm Coordination;26
6.2.2.3;1.2.2.3 Employer--Employee Relations and Patterns of Work Organization and Control;27
6.2.2.4;1.2.2.4 The Financing Patterns and Performance Criteria of Firms;29
6.2.2.5;1.2.2.5 Competitive Capacity;30
6.3;1.3 Case Studies on Two Basic Types of Firms Governance Structures;32
6.3.1;1.3.1 The 'German and Japanese Model' for the Coordinated Firms' Governance Structure;32
6.3.1.1;1.3.1.1 The Coordinated Firms' Governance Structure in the German Model;32
6.3.1.2;1.3.1.2 The Coordinated Firms' Governance Structure in the Japanese Model;35
6.3.1.3;1.3.1.3 Comparison of 'Coordination' Between German and Japanese Firms' Coordinated Governance Structures;37
6.3.2;1.3.2 The 'American and British Models' for the Market-Based Firms' Governance Structure;38
6.3.2.1;1.3.2.1 The 'American Model' as a Model Case for the Market-Based Firms' Governance Structure with Arm's Length Portfolio Control;38
6.3.2.2;1.3.2.2 The 'British Model' as a Model Case for the Market-Based Firms' Governance Structure with Direct Owner Control;42
6.3.3;1.3.3 The 'Taiwanese Model' for the Market-Based Firms' Governance Structure;45
6.3.3.1;1.3.3.1 Ownership Relations;45
6.3.3.2;1.3.3.2 Interfirm Coordination;45
6.3.3.3;1.3.3.3 Employer--Employee Relations and Labor Management;46
6.3.3.4;1.3.3.4 The Financing Patterns and Performance Criteria of Taiwanese Private Firms;47
6.4;1.4 Institutional Complementarities, Continuity, and Divergence;47
6.4.1;1.4.1 Institutional Complementarities;47
6.4.1.1;1.4.1.1 Institutional Complementarities Reinforce the Difference Between Firms' Governance Structures;47
6.4.1.2;1.4.1.2 Institutional Complementarities Generate Disincentives to Radical Change;48
6.4.1.3;1.4.1.3 Each Type of Firms' Governance Structure Conditions its Specialization in the Production Regime and Innovation System;49
6.4.2;1.4.2 Institutional Continuity and Divergence;50
6.4.2.1;1.4.2.1 The Assumption of the Economic Convergence Across Different Economies;50
6.4.2.2;1.4.2.2 Institutional Continuity and Divergence Versus Convergence of Different Economic Models;50
7;2 Firms Governance Structure in the Chinese State Sector;54
7.1;2.1 SOE Reorganization: Keeping the Large and Letting Go of the Small ( zhuada fangxiao );54
7.1.1;2.1.1 ''Letting Go of the Small'' in the Competitive Industries;56
7.1.2;2.1.2 ''Keeping the Large'' in the Strategic Industries;57
7.1.2.1;2.1.2.1 Corporatization;57
7.1.2.2;2.1.2.2 Ownership Diversification;58
7.2;2.2 The Formation of the State Ownership Coordinated Modern Governance Structure of SOEs;60
7.2.1;2.2.1 The Corporatization of SOEs Results in High Levelsof Surplus;60
7.2.1.1;2.2.1.1 The Corporatization of SOEs;60
7.2.1.2;2.2.1.2 A Key Priority of the SOE Reforms: The CorporateGovernance Reform;61
7.2.1.3;2.2.1.3 Separating the State Shareholder Function from the Regulatory Function;62
7.2.1.4;2.2.1.4 Introducing Corporate Governance Mechanisms;65
7.2.1.5;2.2.1.5 The General Process of Corporatization in China;68
7.2.1.6;2.2.1.6 Classifying Shares of Listed Companies: State Shares Cannot Be Freely Traded;69
7.2.1.7;2.2.1.7 Effective Corporate Governance Generates More Surpluses To Be Invested in Rapid Technological Modernization;70
7.2.2;2.2.2 The State as the Majority Owner of SOEs Has Extraordinary Power To Deploy Investable Funds for Technological Modernization;71
7.2.2.1;2.2.2.1 The State Shareholder as the Controlling Shareholder in Shareholding Companies in China;72
7.2.2.2;2.2.2.2 State Shareholders in Control of Corporate Governance in China;73
7.2.3;2.2.3 Worker Participation in Corporate Governance;75
7.2.4;2.2.4 The State Ownership Coordination Based SOE Groups;77
7.2.4.1;2.2.4.1 The State's Active Role in the Formation of SOE Groups;77
7.2.4.2;2.2.4.2 The Ownership, Control, and Organizational Structure of Chinese SOE Groups;78
7.2.4.3;2.2.4.3 Key Players in Chinese Enterprise Groups;81
7.2.4.4;2.2.4.4 Interfirm Relations in Chinese SOE Groups;83
7.2.5;2.2.5 The Financing Pattern of SOEs Independent of Short-Term Profitability;84
7.2.5.1;2.2.5.1 The Insider and Bank-Based Financial System in the Chinese State Sector;85
7.2.5.2;2.2.5.2 China's Banking System Reform;86
7.2.5.3;2.2.5.3 China's Statist Banking System Concentrates Financing on State Enterprises;89
7.2.5.4;2.2.5.4 State Commercial Banks Pursue Developmental Objectives by Lending Predominantly to the State Sector;91
7.2.5.5;2.2.5.5 The Main Banks in China Participate in the Corporate Governance of State Enterprises;95
7.2.5.6;2.2.5.6 Access of State Enterprises to Stock Market Financing: Majority-State-Owned Shares Are Not Allowed To Be Freely Traded;96
7.2.6;2.2.6 Good Performance and Long-Term Innovation Strategies of SOEs;98
7.2.6.1;2.2.6.1 The Performance of SOEs Has Been Significantly Improved by the Reforms;98
7.2.6.2;2.2.6.2 The Relatively High Portion of State Ownership Has a Positive and Significant Impact on Firm Performance;100
7.2.6.3;2.2.6.3 The Objectives of SOEs: Long-Term Profitability and Long-Term Strategies for Economic Development and Innovative Enhancement;102
7.2.6.4;2.2.6.4 The State Ownership Coordinated Firms' Governance Structure of SOEs Pursues Long-Term Strategies;103
7.2.6.5;2.2.6.5 The Governance Structure of the Reformed SOEs Is Stakeholder-Oriented: Focusing on Productive Efficiency Rather Than on Allocative Efficiency;103
7.2.7;2.2.7 The Corporate Governance of SOEs Resembles the German''Japanese ''Insider'' Model;105
7.2.7.1;2.2.7.1 Insider'' Corporate Governance (German''Japanese Model) and ''Outsider'' Corporate Governance (Anglo-Saxon Model);105
7.2.7.2;2.2.7.2 The Modern Corporate Governance of SOEs in China Resembles the --Insider-- Corporate Governance (German--Japanese Model);107
7.2.8;2.2.8 The Different Types of Coordination Between SOEs and the Firms in Coordinated Market Economies;109
8;3 Firms Governance Structure in the Chinese Private Sector;111
8.1;3.1 The Development and the Sectoral Distribution of the Private Sector;111
8.1.1;3.1.1 Development of the Private Sector;111
8.1.2;3.1.2 The Sectoral Distribution of Private Sector and State Sector;113
8.2;3.2 The Governance Structure of Chinese Private Firms;116
8.2.1;3.2.1 Ownership and Control of Chinese Private Firms;116
8.2.1.1;3.2.1.1 Chinese Private Firms Are Generally Firms Under the Owner's Direct Control, the Majority of Which Are Family-Managed Businesses;116
8.2.1.2;3.2.1.2 Ownership and Control of Chinese Private Firms Are Highly Concentrated and Centralized in the Hands of the Owner-Managers;117
8.2.1.3;3.2.1.3 The Chinese Private Business Management Model Significantly Differs from the State Enterprise Management Model;122
8.2.2;3.2.2 Employer--Employee Relations;124
8.2.2.1;3.2.2.1 Proprietorial Prerogative and Market-Oriented Employment Relations in Chinese Private Firms;124
8.2.2.2;3.2.2.2 Employment Relations in Chinese Private Firms Are Different from Those in Chinese State Enterprises, but Are Similar to Those in Small British Firms;126
8.2.3;3.2.3 Financing Pattern, Performance Criteria, and Competitive Capability;127
8.2.3.1;3.2.3.1 The Financing of Chinese Private Firms Depends on Internal Sources and Informal Channels;127
8.2.3.2;3.2.3.2 Private Firms Receive Limited Bank Loans Conditioned on Hard Budget Constraints;128
8.2.3.3;3.2.3.3 The Chinese Stock Markets Play a Very Limited Role in the Private Firms' Financing Patterns;131
8.2.3.4;3.2.3.4 Performance Criteria of Chinese Private Firms;131
8.2.3.5;3.2.3.5 Price Competitiveness Is the Competitive Advantage of Chinese Private Firms;132
8.2.3.6;3.2.3.6 New Technology Development in the Nonstate Sector;134
8.2.4;3.2.4 Personal Networks Different from the Institutionalized Coordination in Coordinated Market Economiess;136
8.2.4.1;3.2.4.1 Different from the Nonmarket Coordination in Coordinated Market Economies, Personal Networks in China's Private SectorAre Profit-Oriented and Market-Functioned;136
8.2.4.2;3.2.4.2 The Personal Network in the Chinese Private Sector Is Different from the Institutionalized Coordination in Coordinated Market Economies;139
8.2.4.3;3.2.4.3 The Personal Network Acts as an Informal Market-Supporting Institution;140
8.2.4.4;3.2.4.4 The Business Associations in the Chinese Private Sector Act as Market-Supporting Institutions;141
8.2.4.5;3.2.4.5 Business Groups in the Chinese Private Sector: No Coordination Links All Member Firms Together;143
8.2.4.6;3.2.4.6 Summarizing the Nature of Networking in the Chinese Private Sector;144
8.2.5;3.2.5 The Chinese Private Sector Is Not Supportive for Coordinated Industrial Districts;144
8.2.5.1;3.2.5.1 Market Competition Dominates the Chinese Private Sector;144
8.2.5.2;3.2.5.2 The Business Environment of the Chinese Private Sector Suits a Fragmented Business System Rather than a Coordinated Industrial District;145
8.2.5.3;3.2.5.3 The Wenzhou Case: The Chinese Private Sector Cannot Support the Forms of Coordination Typical for Industrial Districts;147
8.3;3.3 Privatized SOEs, Collectives, and TVEs Converge to Direct Owner-Controlled Firms;152
8.3.1;3.3.1 Privatized SOEs Converge to Direct Owner-Controlled Firms;152
8.3.1.1;3.3.1.1 The Privatization of Small and Medium-Sized SOEs;152
8.3.1.2;3.3.1.2 Two Waves of Privatization: From Employee Ownership to Management Buyout;153
8.3.2;3.3.2 Privatized Collectives Converge to Direct Owner-Controlled Firms;156
8.3.2.1;3.3.2.1 About Collectives;156
8.3.2.2;3.3.2.2 The Incentives and Reasons for Local Governments to Privatize Collectives and TVEs;158
8.3.2.3;3.3.2.3 Privatizing Rented Collectives and ''Red Hat'' Collectives;160
8.3.2.4;3.3.2.4 Privatizing TVEs;160
9;4 Foreign Direct Investment, Technology Transfer, and Dual Convergence in the Dual-Structured Chinese Market Economy;164
9.1;4.1 FDI and Technology Transfer Drive the Convergence Between Economies with Similar Models;164
9.2;4.2 The Dual-Structured Chinese Market Economy Supports Its Dual Convergence Toward Both Coordinated Market Economies and Liberal Market Economies;165
9.2.1;4.2.1 Massive Waves of FDI Flow to China;165
9.2.1.1;4.2.1.1 An Overview of Foreign Direct Investment in China;165
9.2.1.2;4.2.1.2 US Direct Investment in China;168
9.2.1.3;4.2.1.3 German Direct Investment in China;171
9.2.2;4.2.2 The Remarkable Long-Term Economic Growth of China;176
10;Conclusion;178
11;References;194
12;About the Author;215
13;Index;216