Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/49391
Authors: 
Bickenbach, Frank
Liu, Wan-Hsin
Year of Publication: 
2011
Series/Report no.: 
Kiel Working Paper 1728
Abstract: 
This paper describes the Chinese economic and institutional reform process as a gradual transition of an informal, relation-based governance system into a more formal and rule-based governance system. The consequences of macro-level institutional reforms on the importance of personal relationships for the firm-level governance of business operations are discussed. Theoretical considerations based on the New Institutional Economics suggest that, in a transition economy such as China, companies' incentives to reduce the reliance on personal relationships should depend on firm characteristics such as the age, size and the internationalization of the firm. We confront these suppositions with empirical data obtained from a company survey performed among 222 (electronics industry) companies operating in the PRD, China. From this we obtain some, though often weak, evidence in favor of the suppositions.
Subjects: 
Formal and informal institutions
relation-based governance
firm characteristics
China
company survey
JEL: 
L20
L63
P0
Document Type: 
Working Paper

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