scholarly journals How much state ownership do hybrid firms need for better performance?

2021 ◽  
Author(s):  
Bach Nguyen ◽  
Hoa Do ◽  
Chau Le
Keyword(s):  
Firm Performance ◽  
Small Businesses ◽  
Emerging Market ◽  
Resource Dependence Theory ◽  
State Ownership ◽  
The State ◽  
Strategic Decision ◽  
Political Connections ◽  
Business Ownership ◽  
Adequate Level

Abstract Hybrid ownership—sharing partial business ownership with the state—is a new form of political connections that entrepreneurs in developing countries may employ to improve their access to key resources. This study investigates hybrid ownership as a strategic decision of entrepreneurs running small businesses in Vietnam—a transition economy. Utilising the resource dependence theory and legitimacy viewpoint, we propose and evidently show that increased state ownership in hybrid firms leads to improved performance. However, increasing state ownership beyond a minority share threshold harms firm performance due to the presence of agency costs. Also, the involvement of the state in firm governance reduces the benefits gained from having state ownership. Plain English Summary Is the more the better? How much state ownership really matters for hybrid firms to enhance their performance? More state ownership means more access to resources and privileges; but too much state ownership may reduce firm efficiency due to its poor governance. Analysing more than one million observations of small businesses in Vietnam, this study offers three insightful implications. First, for academics, institutional conditions should be considered when investigating political connections, especially in an emerging market context. Second, for practitioners, political connections in the form of hybrid ownership when being held at an adequate level can boost firm performance. However, an exceeding level of state ownership in hybrid firms may become harmful. Third, for policymakers, we suggest that forming hybrid business ownership with the private sector helps firms make use of state-owned resources. This collaboration is a win-win solution as long as the state ownership remains at an adequate level.

State Ownership and Political Connections

2019 ◽  
Vol 45 (6) ◽  
pp. 2293-2321 ◽  
Author(s):  
Laszlo Tihanyi ◽  
Ruth V. Aguilera ◽  
Pursey Heugens ◽  
Marc van Essen ◽  
Steve Sauerwald ◽  
...  
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Global Economy ◽  
State Ownership ◽  
The State ◽  
Strategic Decision ◽  
Political Connections ◽  
Future Research ◽  
Firm Level ◽  
Firm Financial Performance

The influence of the state on firms in the global economy is alive and well. States have become dominant owners of companies in many countries around the world. Firms have also increasingly established political connections to access resources and improve their competitive positions. Nonetheless, our understanding of how state ownership and political connections affect firm performance remains limited and marked by conflicting findings. Using meta-analytical techniques on a sample of 210 studies spanning 139 countries, we examine two key research questions: (a) How do state ownership and political connections affect firm strategies and financial performance? and (b) How does firm-level strategic decision making mediate the relationships between state ownership, political connections, and firm financial performance? Our findings show that state ownership has a small negative effect on firm financial performance and that political connections have no direct consequences for performance. However, we find evidence that both state ownership and political connections have a profound effect on the strategies firms pursue, such as financial leverage, R&D intensity, and internationalization, and that these strategies play a mediating role in the state ownership–firm performance relationship. We conclude with some suggestions for fruitful future research in further connecting these two important and timely research fields.

REVENUE DIVERSIFICATION AND BANKING RISK: DOES THE STATE OWNERSHIP MATTER? EVIDENCE FROM AN EMERGING MARKET

2020 ◽  
Vol 15 (04) ◽  
pp. 2050019
Author(s):  
GIANG THI HUONG VUONG ◽  
MANH HUU NGUYEN
Keyword(s):  
Commercial Banks ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
State Ownership ◽  
The State ◽  
Least Square ◽  
Revenue Diversification ◽  
Income Diversification ◽  
Empirical Results ◽  
Banking Risk

Our paper investigates the influence of state ownership on the linkage between revenue diversification and risk of Vietnam domestic commercial banks in the period 2009–2018. By using the Generalized Method of Moments (GMM) estimation for a dynamic panel model, the empirical results indicate that Vietnamese domestic commercial banks with higher state equity are promoted to take more risks in the revenue diversification process. Our findings are robustly checked by a variety of measures of banking risk, income diversification, and state equity. Empirical results from our dynamic model are not only accordant with the previous findings of Batten and Vo [(2016). Bank risk shifting and diversification in an emerging market. Risk Management, 18(4), 217–235] estimated by Ordinary Least Square (OLS) regression on the positive relationship between banking risk and income diversification in Vietnamese domestic commercial banks but also provide new evidence on the tradeoff relationship between risk-return in the operating strategy of Vietnamese state-owned banks in the post-financial crisis. This paper proposes a framework for evaluating the nexus between revenue diversification and risk from the state ownership aspect in other frontier markets.

scholarly journals Internal social capital and international firm performance in emerging market family firms: The mediating role of participative governance

2018 ◽  
Vol 36 (8) ◽  
pp. 887-910 ◽  
Author(s):  
Misagh Tasavori ◽  
Reza Zaefarian ◽  
Teck-Yong Eng
Keyword(s):  
Social Capital ◽  
Firm Performance ◽  
Family Relationships ◽  
Family Firms ◽  
Emerging Market ◽  
Strategic Decision ◽  
Mediating Role ◽  
International Firm ◽  
The Relationship

Family firms benefit from internal social capital, which refers to resources related to structural, relational and cognitive aspects of family relationships. However, it is not clear if and how possession of internal social capital can enhance the international performance of emerging economy family firms. Based on the data collected from 192 small- and medium-sized family firms from Turkey, we show that family firms can improve their international firm performance by utilising the internal social capital of family relationships. Our findings also demonstrate that the relationship between internal social capital and international firm performance is mediated by participative governance capability. In participative governance, family members as well as board members have the capability to contribute to strategic decision-making and implementation. We also show that all structural, relational and cognitive aspects of internal social capital should be developed in order to improve international firm performance.

scholarly journals Resignation of officials as independent directors and firm performance

2020 ◽  
Vol 14 (1) ◽  
Author(s):  
Ting Ren ◽  
Youzhi Xiao ◽  
Xinguo Yu ◽  
Hongyan Yang ◽  
Jianmei Ge
Keyword(s):  
Firm Performance ◽  
Resource Dependence ◽  
Resource Dependence Theory ◽  
Social Capital Theory ◽  
Political Connections ◽  
Independent Directors ◽  
Chinese Government ◽  
Political Connection ◽  
Capital Theory ◽  
Negative Effect

Abstract In 2013, the Chinese government implemented Rule No. 18, which suspended the directorships of incumbent government officials and precluded those who retired within the past three years from serving as independent directors for listed firms. The surprise implementation of Rule No. 18 triggered a wave of resignations among official independent directors (OIDs). The event provided a unique opportunity to examine the impacts of the political connections of board members on firm performance. We applied a difference-in-difference technique to empirically investigate the effect of OID resignations on firm performance from the perspectives of resource dependence theory and social capital theory. The results indicate that the resignation of OIDs had a significantly negative effect on firm performance, as measured by Tobin’s Q and firm leverage. This also confirmed the importance of independent directors’ political connection on firm performance, as discovered in prior research. However, this influence varied across OIDs’ heterogeneity, external environment and firm ownership. The results indicate that political connections may not be necessary channels for firms to achieve success.

Political connections and firm performance in an emerging market context: the mediating effect of sustainability disclosure

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Faisal Faisal ◽  
Rizki Ridhasyah ◽  
Haryanto Haryanto
Keyword(s):  
Firm Performance ◽  
Stock Exchange ◽  
Emerging Market ◽  
Economic Benefits ◽  
Mediating Effect ◽  
Political Connections ◽  
Public Companies ◽  
Content Type ◽  
Sustainability Disclosure ◽  
The Relationship

PurposeThis study examines the mediating effect of sustainability disclosure on the relationship between political connections and firm performance from the resource-based view.Design/methodology/approachThe sample of this study was sourced from 888 public companies listed on the Indonesia Stock Exchange (IDX) from 2016 to 2017. Path analysis and Sobel tests were used to determine the mediating effect of sustainability disclosure.FindingsThe results show that political connections have a positive and significant influence on firm performance. Furthermore, sustainability disclosures mediate the relationship between political connections and firm performance.Research limitations/implicationsIn the context of developing countries such as Indonesia, managers can make the existence of parties in politically connected companies as a medium to demonstrate their adherence to external stakeholders through the disclosure of sustainability information.Originality/valueThis study is the first to investigate the mediating effect of sustainability disclosure on the relationship between political connections and firm performance, especially in emerging markets. The parties of the politically connected companies use a social responsibility mechanism as a medium that can sustain their operational sustainability whilst gaining long-term economic benefits.

scholarly journals Political Connections, Home Formal Institutions, and Internationalization: Evidence from China

2016 ◽  
Vol 12 (01) ◽  
pp. 103-133 ◽  
Author(s):  
Xingqiang Du ◽  
Jin-hui Luo
Keyword(s):  
Local Governments ◽  
Resource Dependence ◽  
Emerging Market ◽  
Institutional Development ◽  
Resource Dependence Theory ◽  
Foreign Firms ◽  
Political Connections ◽  
Formal Institutions ◽  
Emerging Market Firms ◽  
At Home

ABSTRACTThis study draws on the resource dependence theory and institution-based view to examine political connections in the home market and home formal institutions for their impact on the internationalization of emerging market firms in the context of China. The results suggest that political connections at home may prevent emerging market firms from implementing internationalization strategies by reducing the dependence constraints imposed by local governments and foreign firms, whereas home formal institutional development may promote the strategy transition of emerging market firms from building political connections to international expansion and also reduce the negative impact of political connections. Overall, our findings indicate that political connections and formal institutions at home play an important role in shaping emerging market firms’ strategies of outward internationalization.

scholarly journals The moderating role of director’s financial expertise in political connections and corporate financial performance in Pakistan

Accounting ◽  
2021 ◽  
pp. 865-874
Author(s):  
Murtaza Masud Niazi ◽  
Zaleha Othman ◽  
Sitraselvi Chandren
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Emerging Market ◽  
Political Influence ◽  
Political Connections ◽  
Political Connection ◽  
Firm Financial Performance ◽  
Financial Expertise ◽  
The Impact ◽  
The Relationship

Prior theoretical and empirical studies have suggested that political influence affects the application of corporate governance and firm performance enormously. However, several fundamental questions remain to be answered. To fill this knowledge gap,the study's main objectives are examining the direct impact of political connection on firm financial performance in Pakistani non-financial listed companies and the moderating effect of director's financial expertise on political connections and firm financial performance. The study utilised panel data of 220 firms from 2008 to 2017 and used panel corrected standard error regression analysis. The results show that political connection negatively impacted firm financial performance, and director financial expertise as a moderator strengthened the relationship between political connections and firm financial performance. This study's results supported political economy theory in that weak judicial systems and unstable political systems have immense effects on investor’s rights. The study contributes to extending the existing literature on political connection by providing evidence of the impact of politically connected firms on firm performance in an emerging market. The study also deliberates on how the director’s financial expertise contributes towards the relationship. The findings could be generalised to other countries with similar degrees of development and culture.

The Rise of SASAC: Asset Management, Ownership Concentration, and Firm Performance in China's Capital Markets

2012 ◽  
Vol 8 (2) ◽  
pp. 253-281 ◽  
Author(s):  
Junmin Wang ◽  
Doug Guthrie ◽  
Zhixing Xiao
Keyword(s):  
Firm Performance ◽  
Capital Markets ◽  
Asset Management ◽  
State Ownership ◽  
The State ◽  
Ownership Concentration ◽  
Listed Firms ◽  
Positive Effects ◽  
Free Rider Problem ◽  
Domestic Capital

Since the mid 1990s the State-Owned Assets Supervision and Administration Commission (SASAC) has emerged as a key institution governing firm ownership in China, but its impact on firm performance is understudied. Through an analysis of Chinese firms listed on the Shanghai and Shenzhen stock exchanges from 1994-2003, we examine how the changing ownership patterns following the rise of SASAC influenced firm performance. We have three findings. First, contrary to the popular view that state ownership in China's listed firms has declined, we find that the state shares have been moved from the original state offices to the SASAC in the format of ‘state institutional shares’. Second, compared with the old state shares, the SASAC institutions affect firm performance more positively. Third, after controlling for state and SASAC ownership, ownership concentration is a strong positive factor in firm performance. Our findings fit squarely within a long tradition of agency theorists who argue that ownership concentration helps solve the free-rider problem and thus has positive effects on firm performance. However, we focus on the ways in which ownership concentration allows firm owners to monitor and stabilize firm behaviour, which has more important implications for emerging economies such as China's domestic capital markets.

OWNERSHIP IN THE REPUBLIC OF MACEDONIA AND THE STATE AS THE HOLDER OF THE PROPERTY RIGHT UNDER THE CONSTITUTION IN 1991

2018 ◽  
Vol 28 (6) ◽  
pp. 1993-2005
Author(s):  
Shemsije Demiri ◽  
Rudina Kaja
Keyword(s):  
Legal Aspect ◽  
State Ownership ◽  
The State ◽  
Point Of View ◽  
State Function ◽  
Dominant Form ◽  
Republic Of Macedonia ◽  
General Terms ◽  
Starting Point ◽  
The Republic

This paper deals with the right to property in general terms from its source in Roman law, which is the starting point for all subsequent legal systems. As a result of this, the acquisition of property rights is handled from the historical point of view, with the inclusion of various local and international literature and studies, as well as the legal aspect devoted to the respective civil codes of the states cited in the paper.Due to such socio-economic developments, state ownership and its ownership function have changed. The state function as owner of property also changed in Macedonia's property law.The new constitutional sequence of the Republic of Macedonia since 1991 became privately owned as a dominant form of ownership, however, state ownership also exists.This process of transforming social property into state or private (dissolves), in Macedonia starts from Yugoslavia through privatization, return and denationalization measures, on which basis laws on privatization have been adopted. Because of this, there will be particularly intensive negotiations regaring the remaining state assets.

The State of Asian American Businesses

2011 ◽  
Vol 9 (1-2) ◽  
pp. 70-77
Author(s):  
Diem Tran ◽  
OiYan Poon
Keyword(s):  
Ethnic Minorities ◽  
Asian American ◽  
The State ◽  
Business Success ◽  
American Business ◽  
Policy Recommendations ◽  
Business Ownership ◽  
Careful Scrutiny ◽  
Potential Factors ◽  
Racial Ethnic

Business success is a dominant theme in the Asian American narrative. However, Asian American entrepreneurship is more complex and multilayered than commonly believed and requires careful scrutiny. This brief examines the state of Asian American business ownership between 2005 and 2007. Findings suggest that although Asian Americans form businesses at higher rates than other racial/ethnic minorities, Asian American business ownership and outcomes continue to trail those of non-Hispanic whites. Potential factors contributing to racial/ethnic gaps and policy recommendations are discussed.

Sign in / Sign up

Export Citation Format

Share Document