Change your identity and fit in: an empirical examination of ownership structure change, firm performance and local knowledge spillovers in China

ABSTRACT

This paper evaluates the effectiveness of China’s reform of state-owned enterprises (SOEs) by exploring if reformed SOEs have genuinely changed their identity and fitted in. Using a firm-level data set, we show that reformed SOEs have learned more from non-SOEs about how to promote economic performance. Empirical results also confirm that the effectiveness of the SOE reform is contingent on regional institutional contexts. Finally, this research contributes to the existing literature by bringing firm’s financial performance to the forefront, and pointing out that knowledge spillovers derived from non-SOEs have impacts on the financial performance of reformed SOEs.

KEYWORDS:

• knowledge spillovers
• relatedness
• regional institutions
• reform of state-owned enterprises
• firm performance

JEL:

• C12
• O11
• O53
• R11

DISCLOSURE STATEMENT

No potential conflict of interest was reported by the authors.

Notes

1 The Pearson’s correlation coefficient between relatedness indicators between all four-digit industries is calculated using the proximity product index, and that calculated based on the SIC is around 0.4.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [grant numbers 41731278, 41701115 and 41425001].