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Employment and Market Innovation in Chinese Business Group Affiliated Firms: The Role of Group Control Systems

Published online by Cambridge University Press:  02 February 2015

Robert E. White ,
Robert E. Hoskisson ,
Daphne W. Yiu  and
Garry D. Bruton
Translated by
姚詠儀
Robert E. White
Affiliation:
Arizona State University, USA
Robert E. Hoskisson
Affiliation:
Arizona State University, USA
Daphne W. Yiu
Affiliation:
Chinese University of Hong Kong, China
Garry D. Bruton
Affiliation:
Texas Christian University, USA
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Abstract

Prior research has suggested a number of potential benefits to firm membership in business groups. These benefits include availability of capital and other resources not readily accessible in an open market, the facilitation of entrepreneurship, plus information and risk sharing advantages. We suggest that another important benefit is the assistance of group control systems in helping the firm to manage conflicting pressures in the institutional environment and facilitate coevolution of these conflicting pressures. To empirically demonstrate the relevance of this viewpoint, we examine the case of China where business groups facilitate institutional transition, actively balancing market pressures to increase levels of innovativeness in firms with institutional pressures emanating from the government to maintain high employment levels. Using data from a broad sample of more than 1,000 Chinese affiliate firms in more than 200 business groups, we find that government policy, ownership and managerial mindset influence the political goal of maintaining high employment levels, while interdependence among group affiliate firms is related to lower employment levels. However, while government ownership and the government managerial mindset were negatively related to market innovation activities, group financial and cultural control systems positively affected the tendency of affiliate firms to focus on market innovation.

Keywords

business groupsChinacontrol systemsinnovationinstitutional theory创新企业集团制度理论中国控制系统

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Type
Articles
Information
Management and Organization Review , Volume 4 , Issue 2 , July 2008 , pp. 225 - 256
Copyright
Copyright © International Association for Chinese Management Research 2008

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