Factors which affect the dynamics of privately-owned Chinese firms: an interdisciplinary empirical evaluation

The thesis focuses on those factors which affect firm growth in the setting of the Chinese transition economy, such as size, age, entrepreneurship, resources, and environment. As regards the complexity of the business expansion mechanism, an interdisciplinary approach combining the fields of economics and management is adopted. Using fieldwork methods, new data were gathered in face-to-face interviews with 83 owner-managers of the Chinese privately owned firms in P. R. China in 2004, as well as in follow-up telephone interviews in 2006. The unique body of qualitative and quantitative data in terms of firm operation, human resources management, finance, technology and innovation, enterprise culture and competitive environment, were collected by a specially designed survey instrument, and enabled a number of new hypotheses to be tested in both economic and managerial aspects. With respect to the modern developments of Gibrat’s Law (1931) and Jovanovic’s Learning Theory (1982) in economics, the effects of two “stylized factors”, namely size and age, along with a vector of firm-specific, environmental and selection bias variables, on firm growth, were examined in Heckman’s (1979) two-step selection model with the correction for sample selection bias and heteroscedasticity. The results indicated that the “stylized facts” that smaller and younger firms grew faster were also valid in the setting of China. This thesis also explored managerial factors contributing to firm growth – viz. entrepreneurship theory, resource-based view in strategic management, and contingency theory in organizational behaviour. A variety of statistical methods were utilized to operationalize entrepreneurial orientation (EO), intangible assets (IA), and contingency factors (e.g. structure, environment, strategy, etc), and econometric models were estimated to examine their relationship with firm dynamics. The evidence suggested that IA might be more capable of facilitating firm growth than EO. However, when both were disaggregated into a lower ...