Political embeddedness, market-oriented autonomy, and failure of business groups during China's state-led institutional transition Online publication date: Sun, 05-Apr-2015
by Qiang Zhang; Yan Wang
International Journal of Economics and Business Research (IJEBR), Vol. 9, No. 3, 2015
Abstract: In this study, we focus on important organisational features and institutional conditions underlying the prosperity of business groups, and propose a new approach to analysing the distinctive roles of business groups during market-oriented institutional transitions. We examine the likelihood of failure of business groups initiated with varying degrees of political embeddedness and market-oriented autonomy, and the institutional contingency of interactive organisational mechanisms in the context of China. Specifically, we conduct empirical tests using data from Chinese textile business groups. The results of our Cox regression analyses show the complexity of the proposed organisational and institutional mechanisms. It is possible for market-oriented autonomy to dominate political embeddedness in determining the overall prosperity of business groups. However, the effect of organisational mechanisms is highly contingent on the specific institutional conditions that confront a business group.
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