Does Ethnicity Pay

52 Pages Posted: 24 Aug 2010 Last revised: 29 Oct 2014

See all articles by Yasheng Huang

Yasheng Huang

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Li Jin

Harvard Business School - Finance Unit

Yi Qian

Northwestern University - Kellogg School of Management

Date Written: August 2010

Abstract

Most of the economic analyses of the overseas-Chinese network focus on trade and investment flows at the country level. In this paper, we analyze the effects of the ethnic Chinese network at the firm level. Contrary to the conventional wisdom, we find that ethnic-Chinese FDI firms in China in fact underperform non-ethnic-Chinese FDI firms. We also find that the performance of ethnic-Chinese firms deteriorates over time. We present evidence consistent with the hypothesis that ethnic-Chinese firms under-invest in those firm attributes that may enhance long-term performance, such as human capital and technology. Our findings raise both empirical and normative implications of ethnic ties.

Suggested Citation

Huang, Yasheng and Jin, Li and Qian, Yi, Does Ethnicity Pay (August 2010). NBER Working Paper No. w16294. Available at SSRN: https://ssrn.com/abstract=1662288

Yasheng Huang (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Li Jin

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-5590 (Phone)
617-496-5271 (Fax)

Yi Qian

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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