nep-cna New Economics Papers
on China
Issue of 2006‒09‒11
four papers chosen by
Zheng Fang
Fudan University

  1. Framing China: Transformation and Institutional Change By Krug, B.; Hendrischke, H.
  2. Enterprise Ground Zero in China By Krug, B.
  3. THE ROLE OF SMALL FIRMS IN CHINA’S TECHNOLOGY DEVELOPMENT By Lundin, Nannan; Sjöholm, Fredrik; Qian , Jinchang
  4. Rational Entrepreneurship in Local China: Exit Plus Voice for Preferential Tax Treatments By Zhu, Z.; Hendrikse, G.W.J.; Krug, B.

  1. By: Krug, B.; Hendrischke, H. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The paper offers a frame for investigating the extent to which decentralisation, and subsequent locally chosen institutions shape private organisational and institutional innovation. To include the numerous locally based “economic regimes†matters as the resulting business system reflects political institution setting and private organisational innovation. Such a frame is a necessary first step for empirical studies attempting to explain the heterogeneity of China’s business systems, the emergence of hybrid organisations, and last but none the least, the different growth rates that can be observed across China.
    Keywords: Transition Economy;Institutional Change in China;Private Business Sector;
    Date: 2006–06–30
  2. By: Krug, B. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The paper claims that the analysis of the private business sector needs to concentrate on entrepreneurship. Based on fieldwork the paper proceeds by describing how Chinese entrepreneurs perceive the (economic) problems whose solutions pre-determine the economic performance of new firms. Entrepreneurship takes the form of institution building by which the high transaction costs can be mitigated and the value of assets and contracts be protected. The empirical research identified corporate governance, incentive contracts, local autonomy and networking as the crucial “hybrids†for mobilising investment and limiting moral hazard.
    Keywords: Entrepreneurship;Chinese Business Sector;Local Autonomy;Networking;
    Date: 2006–06–30
  3. By: Lundin, Nannan (European Institute of Japanese Studies); Sjöholm, Fredrik (European Institute of Japanese Studies); Qian , Jinchang (National Bureau of Statistics of China)
    Abstract: Science & Technology (S&T) is high on the Chinese policy agenda but there are large uncertainties on the actual S&T development. For instance, previous studies tend to focus only on large and medium-sized enterprises (LMEs). The situation in Chinese small firms is far less explored. This paper aims to examine the role of S&T-based small firms. More precisely, we examine how much S&T that has been accounted for by small firms and how their S&T intensity differs across industries and ownership groups. We also analyze how various firm characteristics differ over size categories and S&T status. This study is based on newly processed micro level data provided by the National Bureau of Statistics with information on a large number of S&T indicators for small-, medium-, and large-sized manufacturing firms in China in 2000 and 2004. Our results suggest that small firms in Chinese S&T resemble their role in many other countries. They account for a comparably small share of total S&T and most small firms are not engaged in any S&T. However, those small firms that do engage in S&T tend to be more S&T intensive and have a higher output in terms of patents than larger Chinese S&T firms.
    Keywords: Technology; SMEs; China; S&T; R&D
    JEL: O30 O31 O53
    Date: 2006–08–15
  4. By: Zhu, Z.; Hendrikse, G.W.J.; Krug, B. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: Bearing the legacy from central-planned system, the tax system in local China still lacks transparency and, in many cases, the liabilities of firms, especially those with extensive influences, are subject to negotiation despite the new tax-reform 1994. Applying Hirschman’s Exit-Voice theory, we construct a game model of interplay between firm and local government, in terms of exit and voice for preferential tax treatments, thereby revealing dynamics of these two options under rational entrepreneurship of economizing transaction cost. Suggested by the model, exit not only induces firm to opt for voice, it also underpins firm’s voice that forces local government to compromise. Particularly, when holding private information of exit cost, firm is able to mimic behaviors of those with high mobility so as to boost the effectiveness of voice. The empirical cases fully illustrate such rational entrepreneurship of exit plus voice to profit from local preferential policy.
    Keywords: Exit;Voice;Preferential Tax Treatments;Tax Competition;China;
    Date: 2006–03–10

This nep-cna issue is ©2006 by Zheng Fang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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