Unleashing corporate entrepreneurship in privatization

Li Sun, Livia Markoczy, Weiwen Li and Weilei Stone Shi

Chapter 22 in Research Handbook on Corporate Governance in China, 2025, pp 438-469 from Edward Elgar Publishing

Abstract: In the past four decades, privatization has profoundly changed the political and economic landscapes worldwide. However, little is known about how privatization affects corporate entrepreneurial activities and then impacts performance. Drawing from agency theory, organizational learning theory, and institution-based view, we examine the relationships between privatized ownership, incentive structures, and corporate entrepreneurial activities, as well as the impacts of these activities on firm performance and risk. Based on a sample of 437 Chinese privatized state-owned enterprises in five industries between 2001 and 2012, we find that the proportion of privatized ownership and two market-based incentives – the equity value of the top management team (TMT) and the compensation of the TMT – significantly increase corporate entrepreneurial activities. These activities subsequently increase accounting-based long-term firm performance and decrease accounting-based long-term firm risk.

Keywords: Privatization; Institution-based view; Organizational learning; SOEs; Corporate entrepreneurship (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035312603
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