Dongling Cai, Leonard Fengsheng Wang and Xiaokai Wu
The purpose of this study is to investigate the interplay between economic governance and privatization, and how these two instruments affect the entry mode choice of the foreign…
Abstract
Purpose
The purpose of this study is to investigate the interplay between economic governance and privatization, and how these two instruments affect the entry mode choice of the foreign firm and the social welfare of the host country.
Design/methodology/approach
This study constructs a mixed duopoly model wherein one domestic public firm competes with a foreign firm and investigates the influence of economic governance investment on the domestic government’s optimal degree of privatization choice and the foreign firm’s entry mode choice.
Findings
This study shows that (1) better economic governance enhances the effect of privatization on output, thus resulting in a lower degree of privatization; (2) the optimal privatization policy of the domestic government is partial privatization irrespective of the foreign firm’s entry mode choice; (3) with optimal investment by the domestic government on economic governance, the optimal degree of privatization is higher under FDI than export, and the host-country welfare is also higher under FDI. In particular, this study demonstrates that better economic governance decreases the threshold of the degree of privatization when the foreign firm switches from export to FDI, implying that better economic governance stimulates the foreign firm to undertake FDI in the host country.
Practical implications
The findings shed some light on both the mixed ownership reform of the SOEs in China and attracting foreign capital inflow to improve the host country’s social welfare.
Originality/value
To the best of the authors’ knowledge, this study constitutes the first attempt to build a theoretical framework to explore how the interactions between economic governance and privatization influence the entry mode choice of the foreign firm.
Details
Keywords
Yilin Zhang, Dongling Cai, Fansheng Jia and Guangzhong Li
This paper aims to mainly investigate the role of trust, which is an important informal system, in executive compensation incentives.
Abstract
Purpose
This paper aims to mainly investigate the role of trust, which is an important informal system, in executive compensation incentives.
Design/methodology/approach
Using the data of Chinese A-share private enterprises from 2003 to 2014, the paper estimates the effect that trust has on executive compensation incentives.
Findings
Results indicate that trust can significantly enhance the effectiveness of executive compensation incentives. Furthermore, the better the regional trust environment in which companies are located, the more pronounced the effect is. In particular, the effect of trust on executive compensation incentives is only significant when the formal legal system is immature. As companies continue to grow and develop and the formal system becomes perfect, the role of trust weakens. The formal system, including the corporate governance mechanism and perfect legislation, then becomes the key to promoting executive compensation incentives.
Practical implications
This paper provides evidence of the significance of both informal and formal systems. It not only emphasises the important role that the informal system has played in “the mystery of China’s economic growth” but also supports the “ruling the country by law” strategy for the sustainable development of China’s economy.
Originality/value
This paper reveals the relationship between the formal and informal systems, which provides a new perspective on and empirical evidence for the determinants of executive compensation incentives, and it also finds an explanation for the rapid growth of China’s economic development.
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Keywords
Lianhua Liu, Aili Xie and Shiqi Lyu
This paper aims to clarify the spatial connection characteristics and organization mode of logistics economy of 21 cities in Guangdong Province under the background of the…
Abstract
Purpose
This paper aims to clarify the spatial connection characteristics and organization mode of logistics economy of 21 cities in Guangdong Province under the background of the integrated development of Guangdong, Hong Kong and Macao Bay area, and explore the spatial development characteristics and influencing factors of logistics economy in Guangdong Province.
Design/methodology/approach
This paper constructs the development level model of urban logistics economy in Guangdong Province from three aspects: demand level, supply level and support level, and uses the entropy weight method to measure the development level index of urban logistics economy in Guangdong Province. Then, the traffic accessibility index model is used to measure the traffic accessibility index between cities in Guangdong Province. Finally, using the social network analysis method, combined with the development level index of urban logistics economy in Guangdong Province and the urban traffic access index in Guangdong Province, this paper analyzes the spatial connection characteristics and influencing factors of logistics economy network in Guangdong Province.
Findings
There are regional differences in the development level of logistics economy in Guangdong Province; The overall network density of its logistics economic connection is large, but there is an imbalance in the network structure, and the core edge phenomenon is obvious; Logistics economic space presents the characteristics of double core development.
Research limitations/implications
Because the research object is the spatial connection characteristics of logistics economy in Guangdong Province, the research results may lack universality. Therefore, researchers are encouraged to put forward further tests.
Practical implications
By studying the spatial connection mode of logistics economy in 21 cities in Guangdong Province, China, this paper promotes the original methods and empirical contributions, and constructs the research framework of spatial relationship of logistics economy. This research framework is universal to a certain extent.
Social implications
This paper is conducive to promoting the integrated development of logistics economy in Guangdong Province and improving the balance of regional development of logistics economy.
Originality/value
Firstly, this study provides a new perspective to understand the spatial relationship and spatial spillover of logistics economy from relational data rather than attribute data. Secondly, This study enriched and broadened the research topic of spatial correlation of logistics economy. Thirdly, this research aims to promote the original methods and empirical contributions. Specifically, this study establishes a comprehensive research framework on the spatial network structure of logistics economy.