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Government-business alliances in state capitalist economies: evidence from low-income markets in China

Published online by Cambridge University Press:  20 January 2017

Genia Kostka  and
Jianghua Zhou
Jianghua Zhou
Affiliation:
Chinese Academy of Social Sciences, Beijing Normal University, Beijing, China
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Abstract

Based on three in-depth case studies, the study analyzes how and why Chinese enterprises partner with governments in cooperative ventures which aim to simultaneously achieve poverty alleviation objectives and establish profitable business ventures in rural areas. The analysis draws out specific characteristics of three government-business partnerships in China, which vary in terms of governance structure, resource complementarity and incentives. The findings show that in this state capitalist system, outcomes of government-business partnerships depend on firms having unique resources and capabilities that serve particular policy objectives of the government. By the same token, in order to make partnerships attractive to firms, national and local governments must hold the keys to unique resources needed by enterprises looking to do business in low-income markets. The cases further illustrate that, in order to build and maintain successful government-business partnerships over time, the alignment of incentives plays an important role. In sum, complementary resources and well-aligned interests between firms and governments help to explain why some government-enterprise partnerships are more successful than others.

Type
Research Article
Information
Business and Politics , Volume 15 , Issue 2 , August 2013 , pp. 245 - 274
Copyright
Copyright © V.K. Aggarwal 2013 and published under exclusive license to Cambridge University Press 

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