Market liberalization and firm performance during China's economic transition

Seung Ho Park, Shaomin Li and David K Tse
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Shaomin Li: Department of Business Administration, Old Dominion University, Norfolk, Virginia, USA
David K Tse: School of Business, University of Hong Kong, Hong Kong

Journal of International Business Studies, 2006, vol. 37, issue 1, 127-147

Abstract: This paper examines the impact of market liberalization on firm performance through institutional changes during the economic reform in China. The conceptualization focuses on the decentralization of control, ownership restructuring, and industrial policy as the primary institutional changes to implement market liberalization in China. These institutional changes affect firm performance by shaping managerial incentives, affecting transaction and agency costs, and making selective resource allocations across and within industries. Using a large-scale data set including 23,577 firms between 1992 and 1996, the study examines how market liberalization affects the profitability and productivity of Chinese firms and the relationship between ownership change and the performance of state-owned enterprises. Journal of International Business Studies (2006) 37, 127–147. doi:10.1057/palgrave.jibs.8400178

Date: 2006
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