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Organizational Learning and Productivity: State Structure and Foreign Investment in the Rise of the Chinese Corporation

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  • Doug Guthrie

    (New York University)

Abstract

Over the two and a half decades of economic reform in China, two types of Chinese firms have consistently outperformed their peers. In the 1980s, it was the firms at the lower levels of the industrial hierarchy, the township and village enterprises that were closely monitored by local governments. In the 1990s and beyond, the top performers have been those Chinese firms that have formal relationships with foreign investors. While many studies on the economic reforms in China have focused on the hardening of budget constraints and the transfer of technology from foreign to Chinese firms, I focus here on the stability created by relationships with local government offices and with powerful foreign investors. Where advocates of shock therapy have argued that a rapid transition to market institutions was the best path to building a market economy, I argue that the successful practices of the market are learned gradually over time, and the Chinese firms that are stabilized by attention from local government offices and relationships with foreign investors are well-positioned to successfully navigate China's emerging markets. A quantitative analysis of 81 firms in industrial Shanghai and three case studies help illuminate the mechanisms behind these relationships.

Suggested Citation

  • Doug Guthrie, 2005. "Organizational Learning and Productivity: State Structure and Foreign Investment in the Rise of the Chinese Corporation," Management and Organization Review, International Association of Chinese Management Research, vol. 1(2), pages 165-195, July.
  • Handle: RePEc:cmr:mor101:v:1:y:2005:i:2:p:165-195
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    Cited by:

    1. Liang Chen & Yi Li & Di Fan, 2021. "Who are the most inclined to learn? Evidence from Chinese multinationals’ internationalization in the European Union," Asia Pacific Journal of Management, Springer, vol. 38(1), pages 231-257, March.
    2. Kang, Yuanfei & Scott-Kennel, Joanna & Battisti, Martina & Deakins, David, 2021. "Linking inward/outward FDI and exploitation/exploration strategies: Development of a framework for SMEs," International Business Review, Elsevier, vol. 30(3).
    3. Sun, Jinyun & Maksimov, Vladislav & Wang, Stephanie Lu & Luo, Yadong, 2021. "Developing compositional capability in emerging-market SMEs," Journal of World Business, Elsevier, vol. 56(3).
    4. Gordon Redding & Michael Witt, 2009. "China’s business system and its future trajectory," Asia Pacific Journal of Management, Springer, vol. 26(3), pages 381-399, September.
    5. Jing Yang & Frank Tipton & Jiatao Li, 2011. "A review of foreign business management in China," Asia Pacific Journal of Management, Springer, vol. 28(3), pages 627-659, September.
    6. Haiyang Li & Xiwei Yi & Geng Cui, 2017. "Emerging Market Firms' Internationalization: How Do Firms' Inward Activities Affect Their Outward Activities?," Strategic Management Journal, Wiley Blackwell, vol. 38(13), pages 2704-2725, December.
    7. Zhu, JianJun (John) & Tse, Caleb H. & Li, Xu, 2019. "Unfolding China’s state-owned corporate empires and mitigating agency hazards: Effects of foreign investments and innovativeness," Journal of World Business, Elsevier, vol. 54(3), pages 191-212.
    8. Buckley, Peter J. & Wang, Chengqi & Clegg, Jeremy, 2007. "The impact of foreign ownership, local ownership and industry characteristics on spillover benefits from foreign direct investment in China," International Business Review, Elsevier, vol. 16(2), pages 142-158, April.
    9. Liudmila Tkachenko, 2020. "Public Finance Management: Challenges and Opportunities," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 6(1), pages 73-98, January.
    10. Krug, B. & Hendrischke, H., 2006. "Framing China: Transformation and Institutional Change," ERIM Report Series Research in Management ERS-2006-025-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    11. Ruta Kazlauskaite & Erkko Autio & Modestas Gelbuda & Tadas Šarapovas, 2015. "The Resource-based View and SME Internationalisation: An Emerging Economy Perspective," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 3(2), pages 53-64.
    12. Gedajlovic, Eric & Cao, Qing & Zhang, Hongping, 2012. "Corporate shareholdings and organizational ambidexterity in high-tech SMEs: Evidence from a transitional economy," Journal of Business Venturing, Elsevier, vol. 27(6), pages 652-665.
    13. Luo, Yadong, 2009. "From gain-sharing to gain-generation: The quest for distributive justice in international joint ventures," Journal of International Management, Elsevier, vol. 15(4), pages 343-356, December.
    14. Zhu, Qinghua & Sarkis, Joseph & Lai, Kee-hung, 2011. "An institutional theoretic investigation on the links between internationalization of Chinese manufacturers and their environmental supply chain management," Resources, Conservation & Recycling, Elsevier, vol. 55(6), pages 623-630.
    15. Krug, B. & Hendrischke, H., 2006. "Institution Building and Change in China," ERIM Report Series Research in Management ERS-2006-008-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    16. Dirk Holtbrügge & Sue Claire Berning, 2018. "Market Entry Strategies and Performance of Chinese Firms in Germany: The Moderating Effect of Home Government Support," Management International Review, Springer, vol. 58(1), pages 147-170, February.
    17. Satta, Giovanni & Parola, Francesco & Persico, Luca, 2014. "Temporal and Spatial Constructs in Service Firms' Internationalization Patterns: The Determinants of the Accelerated Growth of Emerging MNEs," Journal of International Management, Elsevier, vol. 20(4), pages 421-435.

    More about this item

    Keywords

    China; Emerging Markets; Foreign Investment; Industrial Hierarchy; Local Government; Organizational Learning; Productivity; State Structure;
    All these keywords.

    JEL classification:

    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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