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Control Modes and Outcomes of Transformed State-Owned Enterprises in China: An Empirical Test

Published online by Cambridge University Press:  02 February 2015

Shaomin Li ,
Jun Xia ,
Cheryl Xiaoning Long  and
Justin Tan
Shaomin Li
Affiliation:
Old Dominion University, USA
Jun Xia
Affiliation:
West Virginia University, USA
Cheryl Xiaoning Long
Affiliation:
Colgate University, USA University of Electronic Science and Technology of China (UESTC), China
Justin Tan
Affiliation:
York University, Canada
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Abstract

The transformation of state-owned enterprises (SOEs) into efficient entities has been an important approach in transition economies. However, the transition literature reveals little about how control structure affects firm performance of transformed SOEs. Drawing on agency theory, we distinguish three modes of control in transformed SOEs: state-controlled, dispersedly controlled, and privately controlled modes and argue that actual control after transformation plays a critical role in determining performance. Examining the impact of different control modes in China, we find that the key is who controls the transformed firm. Non-state-controlled (dispersedly controlled and privately controlled) firms are more likely to have enhanced post-transformation performance and reduced agency costs than state-controlled firms.

Keywords

control modeorganizational transformationperformancestate-owned enterprise控制模式组织转型业绩国有企业
Type
Articles
Information
Management and Organization Review , Volume 8 , Issue 2 , July 2012 , pp. 283 - 309
Copyright
Copyright © International Association for Chinese Management Research 2012

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