Ownership, Affiliation, and Organizational Performance: Evidence from China’s Results-Oriented Energy Policy

ABSTRACT:

Notwithstanding voluminous studies probing the relationship between publicness and performance, few of them examine the extent to which key organizational and managerial variables moderate publicness effects. This study conceptualizes the role of organizations’ administrative affiliation with different levels of government, which are sources of multiple, conflicting political controls, in moderating the effect of ownership on organizational performance. We examine how ownership and affiliation jointly influence regulated entities’ achievement of energy conservation targets assigned by China’s central government. The analysis of a combined dataset on quasi-public and private organizations shows that centrally affiliated organizations, which are more likely to receive unified policy demands, outperform local entities that are influenced by fragmented institutional controls. The performance of state-owned enterprises (SOEs) is contingent on their administrative affiliation. Specifically, central-SOE subsidiaries and central SOEs are leaders of policy goal accomplishment. Organizations with more rigorous targets achieve a higher level of policy goal.

ACKNOWLEDGEMENTS

The two authors contribute equally to this study and they are listed alphabetically. Liang Ma is the correspondence author. Earlier versions of this paper were presented at workshops held in Beijing, Taipei, and Singapore, and the authors are grateful to the participants for helpful comments. They thank Huihua Nie for sharing the firm-level data used in this study. They thank the Editor Steve Kelman and two anonymous reviewers for helpful comments.

FUNDING

The authors would like to thank the National Natural Science Foundation of China (NSFC) (No.: 71774164; 1633004) and the Key Project of Ministry of Education (18JZD048) for financial support.

Notes

1 Koppell (2003) suggested that “organizations that generate revenue that effectively covers most of their operating expenses” should be considered privately funded (11). However, for China’s SOEs, government is the owner and/or majority shareholder. As such, we describe China’s SOEs as mixed-funded entities.

2 Tibet is excluded from the analysis, as targets were not assigned for this jurisdiction.

3 These firms have annual sales of at least 20 million RMB (prior to 2011, five million RMB).

4 Due to the use of cross-sectional analysis, we cannot include the fixed effect for each firm.

5 To a varying degree, the reduced sample does, however, overrepresent central SOEs and local non-SOE firms, and underrepresent central non-SOE firms and local SOEs. Of 1,008 target firms, 793 firms have valid information matched with the ACIED. Central SOEs, central non-SOE firms, local SOEs, and local non-SOE firms account for approximately 7.692%, 11.475%, 21.564%, and 59.269%, respectively. In terms of the full sample in 2010, reduced samples in 2008, 2009, and 2010, central SOEs compose 8.894%, 8.738%, 10.032%, and 10.032%, respectively; central non-SOE firms compose 12.26%, 11.327%, 9.709%, and 10.032% respectively; local SOEs compose 18.269%, 14.563%, 17.152%, and 16.181%, respectively; and local non-SOE firms compose 60.577%, 65.372%, 63.107%, and 63.754%, respectively.

6 The estimates of the models with robust standard errors clustered at the industry level are largely consistent with the baseline models (detailed results are not reported).

7 The NDRC did not publish the quantity of saved energy in 2007. Instead, the NDRC rated each firm using the categories of “failure,” “basic achievement,” “achievement,” and “excessive achievement.” As such, for the reduced sample, we perform evaluations for 2008, 2009, and 2010. For these three years, we conduct cross-sectional analyses rather than a panel analysis, because there was no temporal variation in the focal explanatory variables (e.g., ownership, affiliation, capacity, industrial sector) during our research time frame.

Additional information

ABOUT THE AUTHORS

Jiaqi Liang ([email protected]) is an Assistant Professor in the Department of Public Administration, College of Urban Planning and Public Affairs at the University of Illinois at Chicago. Her research interests encompass public management, bureaucratic politics, public policy process, social equity, environmental and energy policy, and comparative public administration and policy.

Liang Ma ([email protected]) is an Associate Professor at the School of Public Administration and Policy and a Research Fellow at the National Academy of Development and Strategy, Renmin University of China, China. His research interests include performance management and organizational innovation in the public sector.