The Transformation of Collectively Owned Enterprises and its Outcomes in China, 2001-2005

Posted: 11 Sep 2009 Last revised: 6 Jul 2014

See all articles by Xia Jun

Xia Jun

affiliation not provided to SSRN

Shaomin Li

Old Dominion University

Cheryl Long

Colgate University - Economics Department

Date Written: September 9, 2009

Abstract

Previous studies have primarily focused on the relative success of collectively owned enterprises (COEs) in China during the early years of reform, but they have ignored the agency problems inherent in this type of organizational form that may be an obstacle to further improving performance in a changing environment. Drawing on agency theory and the privatization literature, we argue that the transformed COEs in the ongoing organizational transformation process may achieve better performance by reducing agency costs. We examine a sample of COEs in Chinese manufacturing industries and track their ownership statuses from 2000 to 2005. Our findings reveal that the transformed firms achieved better performance than the traditional, untransformed COEs by mitigating agency problems.

Keywords: ownership transformation, agency problems, performance, collectively owned enterprises

JEL Classification: G34, L33, P21, P31, P32, P41

Suggested Citation

jun, xia and Li, Shaomin and Long, Cheryl Xiaoning, The Transformation of Collectively Owned Enterprises and its Outcomes in China, 2001-2005 (September 9, 2009). World Development, Vol. 37, No. 10, 2009, Available at SSRN: https://ssrn.com/abstract=1470622

Xia Jun

affiliation not provided to SSRN ( email )

Shaomin Li

Old Dominion University ( email )

Norfolk, VA 23529-0222
United States

Cheryl Xiaoning Long (Contact Author)

Colgate University - Economics Department ( email )

13 Oak Drive
Hamilton, NY 13346
United States

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