Entry modes and performance of foreign direct investment in China

How does a firm choose a proper model of foreign direct investment (FDI) for entering a foreign market? Which mode of entry performs better? What are the performance implications of joint venture (JV) ownership structure? These important questions face a multinational enterprise (MNE) that decides to enter a foreign market. However, few studies have been conducted on such issues, and no consistent or conclusive findings are generated, especially with respect to China. It’s composed of five chapters, providing corresponding answers to the questions given above. Specifically, Chapter One is an overall introductory chapter. Chapter Two is about the choice of entry mode of FDI in China. Chapter Three examines the relationship between four main entry modes and performance. Chapter Four explores the performance implications of JV ownership structure. Chapter Five is an overall concluding chapter. These empirical studies are based on the most recent and richest data that has never been explored in previous studies. It contains information on 11,765 foreign-invested enterprises in China in seven manufacturing industries in 2000, 10,757 in 1999, and 10,666 in 1998. The four FDI entry modes examined include wholly-owned enterprises (WOEs), equity joint ventures (EJVs), contractual joint ventures (CJVs), and joint stock companies (JSCs). In Chapter Two, a multinominal logit model is established, and techniques of multiple linear regression analysis are employed in Chapter Three and Four. It was found that MNEs, under the conditions of a good investment environment, large capital commitment and small cultural distance, prefer the WOE strategy. If these conditions are not met, the EJV mode would be of greater use. The relative propensity to pursue the CJV mode increases with a good investment environment, small capital commitment, and small cultural distance. JSCs are not favoured by MNEs when the investment environment improves and when affiliates are located in the coastal areas. MNEs have been found to have a greater preference for an EJV as a mode of entry into the Chinese market in all industries. It is also found that in terms of return on assets (ROA) and asset turnover, WOEs perform the best, followed by EJVs, CJVs, and JSCs. Finally, minority-owned EJVs or JSCs are found to outperform their majority-owned counterparts in terms of ROA and asset turnover.

The contract management responsibility system in China : an institutional interpretation

Thesis is about the enterprise reform in China in general, and the Contract Management Responsibility System (the CMRS) in particular. The latter is a new institutional arrangement to deal with the relation between the government and the state-owned enterprise which has always been at the centre of the enterprise reform. The focus of the research is on the process of institutionalization in order to study the problems of the emergence of a free enterprise system in China. The research is conducted by four in-depth case studies to reveal how the CMRS is running and what interaction is taking place between the government and the state-owned enterprise under the system. Drawing on the empirical work, the thesis analyzes the features of the CMRS and the characteristics of its implementation process with respect to the structural-institutional paradigm, and the property rights approach. The research shows that to establish a market-type relation between the government and the enterprise is a complicated and dynamic process. It involves the understanding of the two different economic mechanisms, market and planning, and the interations taken by two parties. It concludes that the CMRS is an unstable system, either going back to the previous system or moving towards a market system, because its dynamic and control dimension are dysfunctional.

Safety culture during major organisational change

This research examines the effect of major changes, in the external context, on the safety culture of a UK generating company. It was focused on an organisation which was originally part of the state owned Central Electricity Generating Board and which, by the end of the research period, was a self-contained generating company, operating in a competitive market and a wholly owned subsidiary of a US utility. The research represents an attempt to identify the nature and culture of the original organisation and to identify, analyse and explain the effects of the forces of change in moulding the final organisation. The research framework employed a qualitative methodology to investigate the effects of change, supported by a safety culture questionnaire, based on factors identified in the third report of the ACSNI Human Factors Study Group; Organising for Safety, as being indicators of safety culture. An additional research objective was to assess the usefulness of the ACSNI factors as indicators of safety culture. Findings were that the original organisation was an engineering dominated technocracy with a technocentric safety culture. Values and beliefs were very strongly held and resistant to change and much of the original safety culture survived unchanged into the new organisation. The effects of very long periods of uncertainty about the future were damaging to management/worker relationships but several factors were identified which effectively insulated the organisation from any of the effects of change. The forces of change had introduced a beneficial appreciation of the crucial relationship between safety risk assessment and commercial risk assessment.Although the technical strength of the original safety culture survived, so did the essential weakness of a low level of appreciation of the human behavioural aspects of safety. This led to a limited, functionalist world view of safety culture, which assumed that cultural change was simpler to achieve than was the case and an inability to make progress in certain areas which were essentially behavioural problems.The factors identified by ACSNI provided a useful basis for the site research methodology and for identifying areas of relative strength and weakness in the site safety arrangements.

Cost economies, efficiency and productivity growth in the Chinese banking industry:evidence from a quarterly panel dataset

This article examines cost economies, productivity growth and cost efficiency of the Chinese banks using a unique panel dataset that identifies banks' four outputs and four input prices over the period of 1995-2001. By assessing the appropriateness of model specification, and making use of alternative methodologies in evaluating the performance of banks, we find that the joint-stock commercial banks outperform state-owned commercial banks in productivity growth and cost efficiency. Under the variable cost assumption, Chinese banks display economies of scale, with state-owned commercial banks enjoying cost advantages over the joint-stock commercial banks. Consequently, our results highlight the ownership advantage of these two types of banks and generally support the ongoing banking reform and transformation that is currently taking place in China.

Institutional reforms, productivity and profitability:from rents to competition?

This paper explores the divergent effects of institutional reforms on firm's productivity and profits. To assess this empirically, we investigate the impact of various components of economic liberalisation on the performance of firms from Central and Eastern European countries from 1998 to 2006. The impact of reforms on profitability vis-à-vis productivity differs, which we interpret as an indication that profitability is an ambiguous measure of performance: one needs to distinguish between unproductive rents and productivity-based quasi-rents. We find that competition-enhancing liberalisation measures have more impact on state owned firms as compared with domestic and foreign owned firms. © 2012 Association for Comparative Economic Studies.

How important is ownership in a market with a level playing field? The Indian banking sector revisited

Private ownership of firms is often argued to lead to better firm performance than public ownership. However, the theoretical literature and the empirical evidence indicate that agency problems may affect the performance of privately owned firms. At the same time, competition and hard budget constraints can induce state-owned firms to operate efficiently. In India, banking sector reforms and deregulation were initiated in 1992, encouraging entry and establishing a level playing field for all banks. Data for the financial years 1995–1996 through 2000–2001 suggest that, by 1999–2000, ownership was no longer a significant determinant of performance. Rather, competition induced public-sector banks to eliminate the performance gap that existed between them and both domestic and foreign private-sector banks.

Innovation, ownership and profitability

This paper considers the relationship between innovation, ownership and profitability for a panel of manufacturing plants in Ireland and Northern Ireland. Previous literature suggests that innovators are persistently more profitable than non-innovators, but little is known about how this link is moderated by external versus domestic ownership. We consider the link between innovation and profits separately for innovators and non-innovators, and for indigenous innovators and non-innovators and externally-owned plants. We also consider the determinants of innovation over the distribution of plant-level profitability, and find that the determinants of profitability – including innovation and external ownership – vary over the distribution from low to high profitability plants. We find support for the view that innovators and non-innovators have different profitability determinants, and that the profitability of externally-owned plants depends on very different factors to that of indigenously-owned enterprises.

Winners and Losers in the Liberalized Energy Retail Sector in Hungary:A Co-evolutionary Approach

This paper examines the recent history of the Hungarian energy trading market in a co-evolutionary framework. Hungary is characterized by a mixed ownership structure with mainly multinational incumbents in energy retail and distribution, while the wholesale is dominantly owned by state-owned companies. The legal framework also has dual characteristics, with free-market regulation for industrial consumers and a regulated price regime for households. Our research method follows a longitudinal approach from the period of market liberalization in 2008 until 2013. We identified strong relationship between the individual and sector performance of the trading companies and the current political ideology and institutional regime.

Technological capability development in China's energy service company industry

Technological capability (TC) plays a strategic role in the competitive advantage of not only individual corporate entities but also entire industries. This paper investigates the crucial factors that affect technological capability development by Energy Service Companies (ESCOs) in China. It identifies how differently sized ESCOs make progress in developing TCs. Through looking at the successes achieved by developed countries in the field of energy conservation, ESCOs are able to improve energy efficiency and reduce emissions and are deemed to provide an effective means of conserving energy in China. Existing literature indicates that limited TC levels of are one of the crucial barriers facing Chinese ESCOs. Through investigating three different sizes of Chinese ESCO - small, medium-sized and large - this paper provides a framework to present the idea that Chinese ESCOs' TC development is affected by four key internal and external capabilities: management capability, investment capability, innovation capability and linkage capability. Through comparative analysis, the paper establishes that small and medium-sized private ESCOs are mainly affected by investment and linkage capabilities. Large state-owned ESCOs are mainly affected by innovation and management capability. In addition, all three types of ESCO exhibit a strong desire to develop their technological capability, but small and medium-sized ESCOs exhibit a stronger desire to conduct research and development (R&D) than large ESCOs, whilst large ESCOs prefer to increase their technical reserves through acquisition. This paper identifies factors that affect Chinese ESCOs' TC, but it does intend to address the problem of how to reduce the negative effects of limited TC or the question of how to improve the TC development of Chinese ESCOs effectively. This paper contributes to the field of TC development in the ESCO industry.

Local government revenue from oil and gas production

Oil and gas production generates substantial revenue for state and local governments. This report examines revenue from oil and gas production flowing to local governments through four mechanisms: (i) state taxes or fees on oil and gas production; (ii) local property taxes on oil and gas property; (iii) leasing of state-owned land; and (iv) leasing of federally owned land. We examine every major oil- and gas-producing state and find that the share of oil and gas production value allocated to and collected by local governments ranges widely, from 0.5 percent to more than 9 percent due to numerous policy differences among states. School districts and trust funds endowing future school operations tend to see the highest share of revenue, followed by counties. Municipalities and other local governments with more limited geographic boundaries tend to receive smaller shares of oil and gas driven revenue. Some states utilize grant programs to allocate revenue to where impacts from the industry are greatest. Others send most revenue to state operating or trust funds, with little revenue earmarked specifically for local governments.

La privatización de la identidad petrolera : De la ilusión la desarraigo

En el presente trabajo estudiamos el proceso de conformación y fragmentación identitaria de los ex trabajadores de una de las empresas petroleras estatales de América Latina más ;importante que fue privatizada en los años 90, la compañía Yacimientos Petrolíferos Fiscales (YPF) de la República Argentina. La identidad laboral de los ex trabajadores petroleros será aprehendida a partir de la reconstrucción de las trayectorias laborales de veinte ex obreros de la Refinería ubicada en la ciudad de Ensenada, Provincia de Buenos Aires. Así entonces en primer lugar presentamos las relaciones existentes entre el mundo del trabajo (la fábrica) y la comunidad de Ensenada en sentido amplio durante los años de auge de la producción petrolera estatal para mostrar la importancia que esta relación tuvo en las identidades de los trabajadores petroleros. En segundo lugar desarrollamos un apartado teórico en el que especificamos el concepto de identidad laboral que utilizamos. En tercer lugar realizamos la reconstrucción y análisis de las trayectorias laborales de los ex obreros petroleros entrevistados aprehendiendo a través de ellas la particular configuración identitaria del trabajador "ypefeano". Finalmente analizamos cómo, con la privatización de la empresa petrolera estatal, la identidad laboral de quienes eran sus trabajadores entró en crisis dando lugar a la construcción de nuevas identidades laborales

La privatización de la identidad petrolera : De la ilusión la desarraigo

En el presente trabajo estudiamos el proceso de conformación y fragmentación identitaria de los ex trabajadores de una de las empresas petroleras estatales de América Latina más ;importante que fue privatizada en los años 90, la compañía Yacimientos Petrolíferos Fiscales (YPF) de la República Argentina. La identidad laboral de los ex trabajadores petroleros será aprehendida a partir de la reconstrucción de las trayectorias laborales de veinte ex obreros de la Refinería ubicada en la ciudad de Ensenada, Provincia de Buenos Aires. Así entonces en primer lugar presentamos las relaciones existentes entre el mundo del trabajo (la fábrica) y la comunidad de Ensenada en sentido amplio durante los años de auge de la producción petrolera estatal para mostrar la importancia que esta relación tuvo en las identidades de los trabajadores petroleros. En segundo lugar desarrollamos un apartado teórico en el que especificamos el concepto de identidad laboral que utilizamos. En tercer lugar realizamos la reconstrucción y análisis de las trayectorias laborales de los ex obreros petroleros entrevistados aprehendiendo a través de ellas la particular configuración identitaria del trabajador "ypefeano". Finalmente analizamos cómo, con la privatización de la empresa petrolera estatal, la identidad laboral de quienes eran sus trabajadores entró en crisis dando lugar a la construcción de nuevas identidades laborales

La privatización de la identidad petrolera : De la ilusión la desarraigo

En el presente trabajo estudiamos el proceso de conformación y fragmentación identitaria de los ex trabajadores de una de las empresas petroleras estatales de América Latina más ;importante que fue privatizada en los años 90, la compañía Yacimientos Petrolíferos Fiscales (YPF) de la República Argentina. La identidad laboral de los ex trabajadores petroleros será aprehendida a partir de la reconstrucción de las trayectorias laborales de veinte ex obreros de la Refinería ubicada en la ciudad de Ensenada, Provincia de Buenos Aires. Así entonces en primer lugar presentamos las relaciones existentes entre el mundo del trabajo (la fábrica) y la comunidad de Ensenada en sentido amplio durante los años de auge de la producción petrolera estatal para mostrar la importancia que esta relación tuvo en las identidades de los trabajadores petroleros. En segundo lugar desarrollamos un apartado teórico en el que especificamos el concepto de identidad laboral que utilizamos. En tercer lugar realizamos la reconstrucción y análisis de las trayectorias laborales de los ex obreros petroleros entrevistados aprehendiendo a través de ellas la particular configuración identitaria del trabajador "ypefeano". Finalmente analizamos cómo, con la privatización de la empresa petrolera estatal, la identidad laboral de quienes eran sus trabajadores entró en crisis dando lugar a la construcción de nuevas identidades laborales

Team characteristics beneficial for Open Innovation projects

This study discusses the importance of creating Open Innovation (OI) teams for optimizing costs of Research and Development (R&D), dividing risks and maximizing profits. The purpose of this study is to determine team characteristics beneficial for successful OI project, with the emphasis on the fact that such teams are formed of professionals belonging to different organizations, both private and state-owned, with different educational and professional backgrounds and personal qualities. This purpose is supported by three sub-objectives: to observe the phenomenon of OI and its implementation in emerging economies, particularly in Russia; to specify professional and personal competencies of OI team members essential for the successful collaboration; and to identify the role of the leader in OI teams. The theoretical part of this study consists of knowledge from academic literature related to OI, cross-functional and innovation teams and leadership in innovation. The practical part of the study is presented in the form of multiple case study, and the empirical research is based on six semistructured interviews collected in October 2014 from the CEOs, Innovation Managers and Technical Directors of innovation companies participating actively in OI projects. The findings of the study demonstrate that many of the necessary competencies are equal for innovation or cross-functional teams and OI teams, such as professionalism and communication skills. However, due to the specific nature of OI, additional personal characteristics were recognized as beneficial for OI teams, such as flexibility, empathy and success-orientation. The role of the leader is also considered as a critical success factor for OI teams, with the emphasis on flexibility and autonomy. The findings of the study contribute to understanding the connection between notions of team member, team climate and team leader, and its influence on OI project success. Thus, the main purpose of the study is providing support for existing knowledge on OI teams and developing new insights into this newly emerged topic.

Essays in corporate finance

China has been growing rapidly over the last decades. The private sector is the driving force of this growth. This thesis focuses on firm-level investment and cash holdings in China, and the chapters are structured around the following issues. 1. Why do private firms grow so fast when they are more financially constrained? In Chapter 3, we use a panel of over 600,000 firms of different ownership types from 1998 to 2007 to find the link between investment opportunities and financial constraints. The main finding indicates that private firms, which are more likely to be financially constrained, have high investment-investment opportunity sensitivity. Furthermore, this sensitivity is relatively lower for state-owned firms in China. This shows that constrained firms value investment opportunities more than unconstrained firms. To better measure investment opportunities, we attempt to improve the Q model by considering supply and demand sides simultaneously. When we capture q from the supply side and the demand side, we find that various types of firms respond differently towards different opportunity shocks. 2. In China, there are many firms whose cash flow is far greater than their fixed capital investment. Why is their investment still sensitive to cash flow? To explain this, in Chapter 4, we attempt to introduce a new channel to find how cash flow affects firm-level investment. We use a dynamic structural model and take uncertainty and ambiguity aversion into consideration. We find that uncertainty and ambiguity aversion will make investment less sensitive to investment opportunities. However, investment-cash flow sensitivity will increase when uncertainty is high. This suggests that investment cash flow sensitivities could still be high even when the firms are not financially constrained. 3. Why do firms in China hold so much cash? How can managers’ confidence affect corporate cash holdings? In Chapter 5, we analyse corporate cash holdings in China. Firms hold cash for precautionary reasons, to hedge frictions such as financing constraints and uncertainty. In addition, firms may act differently if they are confident or not. In order to determine how confidence shocks affect precautionary savings, we develop a dynamic model taking financing constraints, uncertainty, adjustment costs and confidence shocks into consideration. We find that without confidence shocks, firms will save money in bad times and invest in good times to maximise their value. However, if managers lose their confidence, they tend to save money in good times to use in bad times, to hedge risks and financing constraint problems. This can help explain why people find different results on the cash flow sensitivity of cash. Empirically, we use a panel of Chinese listed firms. The results show that firms in China save more money in good times, and the confidence shock channel can significantly affect firms’ cash holdings policy.