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Modes of state intervention and business group performance in China's transitional economy

Authors
Journal
The Journal of Socio-Economics
1053-5357
Publisher
Elsevier
Publication Date
Volume
39
Issue
6
Identifiers
DOI: 10.1016/j.socec.2010.06.006
Keywords
  • State Intervention
  • Business Group Performance
  • Transitional Economy
Disciplines
  • Economics

Abstract

Abstract This paper examines the contingent nature of state intervention affecting business group performance in the context of a transition economy by identifying different modes of state intervention in China's transitional economy. Using data on China's 76 business groups collected in 2006, I find that, at the group level, modes of state intervention have different economic effects on business group performance, depending on the specific modes of intervention and the context of the institutional environment in China's transitional economy. Through direct intervention – such as ownership, officials, and Chinese Communist Party members at the group level – the Chinese state failed to provide positive economic effects. However, the result demonstrates the state's ability to provide positive economic effects by matching the functional demands of the emerging market, such as loans from state-controlled banks as financial support.

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