The Governance Structures of Chinese Firms: China's Innovation System and Chinese Model

Series Preface
Preface
Acknowledgments
Introduction
	Part I
	Part II
		Author´s Notes: Contribution to the Comparative Studies Approach
Contents
About the Author
Chapter 1: Different Economic Models and Their Corresponding Innovation Systems: To Build the Way to Find China
	1.1 The Business Model and Innovation System of Market-Based Firm´s Governance Structure and Coordinated Firm´s Governance Str...
		1.1.1 Liberal Market Economies and Coordinated Market Economies
		1.1.2 Firm´s Governance Structure Defined by Five Dimensions
		1.1.3 The Business Model and Innovation System of Market-Based Firm´s Governance Structure Versus that of Coordinated Firm´s G...
			1.1.3.1 Ownership Coordination
			1.1.3.2 Interfirm Coordination
			1.1.3.3 Employer-Employee Relations and Patterns of Work Organization and Control
			1.1.3.4 The Financing Patterns and Performance Criteria of Firms
			1.1.3.5 Innovation System and Competitive Capacity
	1.2 Case Analyses on Two Basic Models/Innovation Systems
		1.2.1 The ``German and Japanese Model´´ for the Coordinated Firm´s Governance Structure
			1.2.1.1 The Coordinated Firm´s Governance Structure in the German Model
				1.2.1.1.1 Ownership and Control of German Firms
				1.2.1.1.2 Interfirm Coordination
				1.2.1.1.3 Employer-Employee Relations and Patterns of Work Organization and Control
				1.2.1.1.4 The Financing Pattern and Performance Criteria of Firms
				1.2.1.1.5 Innovation System and Competitive Capacity
			1.2.1.2 The Coordinated Firm´s Governance Structure in the Japanese Model
			1.2.1.3 Comparison of ``Coordination´´ Between German and Japanese Firms´ Coordinated Governance Structures
		1.2.2 The ``American and British Models´´ for the Market-Based Firm´s Governance Structure
			1.2.2.1 The ``American Model´´ as a Model Case for the Market-Based Firm´s Governance Structure with Arm´s Length Portfolio Co...
				1.2.2.1.1 Ownership and Control of American Firms
				1.2.2.1.2 Employer-Employee Relations and Patterns of Work Organization and Control
				1.2.2.1.3 Interfirm Relations
				1.2.2.1.4 The Financing Pattern and Performance Criteria of Firms
				1.2.2.1.5 Innovation System and Competitive Capacity
			1.2.2.2 The ``British Model´´ as a Model Case for the Market-Based Firm´s Governance Structure with Direct Owner Control
	1.3 Business Model / Innovation System and the Basic Concepts of Institutional Complementarities, Continuity, and Divergence: ...
		1.3.1 Institutional Complementarities and the Differences Between Business Models (and Between Innovation Systems)
			1.3.1.1 Institutional Complementarities Reinforce the Difference Between Firms´ Governance Structures (and Between Innovation ...
			1.3.1.2 Institutional Complementarities Generate Disincentives to Radical Change
			1.3.1.3 Each Type of Firm´s Governance Structure/Innovation System Conditions its Specialization in the Production Regime
		1.3.2 An Exceptional Case of Chinese Economy: A Dual-Structured Business Model/Innovation System with a Clear Coordination Bou...
		1.3.3 Institutional Continuity and Divergence Restrain the Convergence Between Different Business Models (Between Different In...
			1.3.3.1 The Assumption of the Economic Convergence Across Different Economies
			1.3.3.2 Institutional Continuity and Divergence Restrain the Convergence Effect Between Different Business Models (and Between...
		1.3.4 The Exceptional Case of China: The Concept Supports the Dual Convergence of Dual-Structured Chinese Economy Toward Both ...
	References
Chapter 2: The Economic Model and Innovation System of Chinese State Sector
	2.1 SOE Reorganization: Keeping the Large and Letting Go of the Small (zhuada fangxiao)
		2.1.1 ``Letting Go of the Small´´ in the Competitive Industries
		2.1.2 ``Keeping the Large´´ in the Strategic Industries
			2.1.2.1 Corporatization
			2.1.2.2 Ownership Diversification
	2.2 The Formation of State-Controlled Shareholding Coordinated Governance Structure of State-Controlled Enterprises​ and State...
		2.2.1 The Corporatization of SOEs Results in High Levels of Surplus
			2.2.1.1 The Corporatization of SOEs
			2.2.1.2 A Key Priority of the SOE Reforms: The Corporate Governance Reform
			2.2.1.3 Separating the State Shareholder Function from the Regulatory Function
			2.2.1.4 Introducing Corporate Governance Mechanisms
				Shareholders´ General Meeting
				Board of Directors
				Supervisory Board
				Compensation System
				External Control
			2.2.1.5 The General Process of Corporatization in China
			2.2.1.6 Classifying Shares of Listed Companies: State Shares Cannot Be Freely Traded
			2.2.1.7 Effective Corporate Governance Generates More Surpluses to Be Invested in Building up the State Innovation System and ...
		2.2.2 The State as the Controlling Shareholder of State-Controlled Enterprises Has Extraordinary Power to Deploy Investable Fu...
			2.2.2.1 The State Shareholder as the Controlling Shareholder in Shareholding Companies in China
			2.2.2.2 State Shareholders in Control of Corporate Governance in China and the ``Backbone´´ of the State Strategic Innovation ...
		2.2.3 Worker Participation in Corporate Governance
		2.2.4 The State-Controlled Shareholding Coordination-Based SOE Groups
			2.2.4.1 The State´s Active Role in the Formation of SOE Groups
			2.2.4.2 The Ownership, Control, and Organizational Structure of Chinese SOE Groups
			2.2.4.3 Key Players in Chinese SOE Groups
				The Core Firm
				The Finance Company
				The Administrative Company
				The Research and Development Company: The Access to Advanced Innovations
			2.2.4.4 Interfirm Relations in Chinese SOE Groups
				Cross-Shareholding
				Interlocking Directorates
				Financing Relations
				Production and Management Relations
		2.2.5 The Financing Pattern of State-Controlled Enterprises Independent of Short-Term Profitability
			2.2.5.1 The Insider and Bank-Based Financial System in the Chinese State Sector
			2.2.5.2 China´s Banking System Reform
			2.2.5.3 China´s Statist Banking System Concentrates Financing on State Enterprises
			2.2.5.4 State Commercial Banks Pursue Developmental Objectives by Lending Predominantly to the State Sector
			2.2.5.5 The Main Banks in China Participate in the Corporate Governance of State Enterprises
			2.2.5.6 Access of State Enterprises to Stock Market Financing: Majority State-Owned Shares Are Not Allowed to Be Freely Traded
		2.2.6 Good Performance and Successful Long-Term Innovation Strategies of State-Controlled Enterprises
			2.2.6.1 The Performance of State-Controlled Enterprises Has Been Significantly Improved by the Reforms
			2.2.6.2 The Relatively High Portion of State Ownership Has a Positive and Significant Impact on Firm Performance
			2.2.6.3 The Objectives of State-Controlled Enterprises: Long-Term Profitability and Long-Term Strategies for Economic Developm...
			2.2.6.4 The State-Controlled Shareholding-Coordinated Firms´ Governance Structure of State-Controlled Enterprises Pursues Long...
			2.2.6.5 The Governance Structure of the Reformed SOEs Is Stakeholder Oriented: Focusing on Productive Efficiency and Increment...
		2.2.7 The Corporate Governance and Innovation System of State-Controlled Enterprises Resemble the German-Japanese ``Insider´´ ...
			2.2.7.1 ``Insider´´ Corporate Governance (German-Japanese Model) and ``Outsider´´ Corporate Governance (American Model)
				The German Model
				The Japanese Model
			2.2.7.2 The Modern Corporate Governance and Innovation System of State-Controlled Enterprises in China Resemble the ``Insider´...
		2.2.8 The Different Types of Coordination Between Chinese State-Controlled Enterprises and the Firms in Coordinated Market Eco...
	2.3 Innovation Highlight and Chapter Conclusion
	References
Chapter 3: The Economic Model and Innovation System of Chinese Private Sector
	3.1 The Development and the Sectoral Distribution of the Private Sector during the Period from the mid-1990s to the middle of ...
		3.1.1 Development of the Private Sector
		3.1.2 The Sectoral Distribution of Private Sector and State Sector
	3.2 The Formation of Governance Structure and Innovation System of Chinese Private Firms during the Period from the mid-1990s ...
		3.2.1 Ownership and Control of Chinese Private Firms
			3.2.1.1 Chinese Private Firms Are Generally Firms Under the Owner´s Direct Control, the Majority of Which Are Family-Managed B...
			3.2.1.2 Ownership and Control of Chinese Private Firms Are Highly Concentrated and Centralized in the Hands of the Owner-Manag...
			3.2.1.3 The Chinese Private Business Management Model Significantly Differs from the State Enterprise Management Model
		3.2.2 Employer-Employee Relations
			3.2.2.1 Proprietorial Prerogative and Market-Oriented Employment Relations in Chinese Private Firms
			3.2.2.2 Employment Relations in Chinese Private Firms Are Different from Those in Chinese State Enterprises, but Are Similar t...
		3.2.3 Financing Pattern and Innovation System
			3.2.3.1 The Financing of Chinese Private Firms Depends on Internal Sources and Informal Channels
			3.2.3.2 Private Firms Receive Limited Bank Loans Conditioned on Hard Budget Constraints
			3.2.3.3 The Chinese Stock Markets Play a Very Limited Role in the Private Firms´ Financing Patterns
			3.2.3.4 Performance Criteria of Chinese Private Firms
			3.2.3.5 Price Competitiveness Is the Competitive Advantage of Chinese Private Firms
			3.2.3.6 Innovation and New Technology Development in the Nonstate Sector
			3.2.3.7 Creating ``China´s Silicon Valley´´: The Beijing Model of High Technology Development in the Private Sector
		3.2.4 Personal Networks Different from the Institutionalized Coordination in Coordinated Market Economies
			3.2.4.1 Different from the Nonmarket Coordination in Coordinated Market Economies, Personal Networks in China´s Private Sector...
				3.2.4.1.1 Instrumental Ties Model: Profit-Oriented Personal Networking
				3.2.4.1.2 Personal Networking for the Pursuit of Market Interest in the Institutional Environment Dominated by Interpersonal T...
				3.2.4.1.3 Market-Functional Personal Networking
			3.2.4.2 The Personal Network in the Chinese Private Sector Is Different from the Institutionalized Coordination in Coordinated...
			3.2.4.3 The Personal Network Acts as an Informal Market-Supporting Institution
			3.2.4.4 The Business Associations in the Chinese Private Sector Act as Market-Supporting Institutions
			3.2.4.5 Business Groups in the Chinese Private Sector: No Coordination Links All Member Firms Together
			3.2.4.6 Summarizing the Nature of Networking in the Chinese Private Sector
		3.2.5 The Chinese Private Sector Is Not Supportive for Coordinated Industrial Districts
			3.2.5.1 Market Competition Dominates the Chinese Private Sector
			3.2.5.2 The Business Environment of the Chinese Private Sector Suits a Fragmented Business System Rather than a Coordinated In...
			3.2.5.3 The Wenzhou Case: The Chinese Private Sector Cannot Support the Forms of Coordination Typical for Industrial Districts
				3.2.5.3.1 The First Stage: Scattered Household Businesses
				3.2.5.3.2 The Second Stage: Privately Owned Businesses + Specific Markets
				3.2.5.3.3 The Third Stage: Positive Replacement of Specific Markets by Vertically Integrated Enterprises
				3.2.5.3.4 An Empirical Proof of the Replacement of Specific Markets by Enterprises: The Failure of the Development of Liushi E...
	3.3 Privatized SOEs, Collectives, and TVEs Converge to Direct Owner-Controlled Firms
		3.3.1 Privatized SOEs Converge to Direct Owner-Controlled Firms
			3.3.1.1 The Privatization of Small and Medium-Sized SOEs
			3.3.1.2 Two Waves of Privatization: From Employee Ownership to Management Buyout
				3.3.1.2.1 The First Wave
				3.3.1.2.2 The Second Wave
				3.3.1.2.3 The Case of Shunde´s Two Waves of Privatization
		3.3.2 Privatized Collectives Converge to Direct Owner-Controlled Firms
			3.3.2.1 About Collectives
				3.3.2.1.1 Rented Collectives
				3.3.2.1.2 ``Red Hat´´ Collectives
				3.3.2.1.3 Township and Village Enterprises
			3.3.2.2 The Incentives and Reasons for Local Governments to Privatize Collectives and TVEs
				3.3.2.2.1 The Reasons for Privatizing TVEs
				3.3.2.2.2 The Reasons to Privatize ``Red Hat´´ and Rented Collectives
			3.3.2.3 Privatizing Rented Collectives and ``Red Hat´´ Collectives
			3.3.2.4 Privatizing TVEs
				3.3.2.4.1 The Gradual Process of Ownership Transformation of the TVE Sector
				3.3.2.4.2 The Evolution of Joint-Stock Cooperatives
	3.4 Innovation Highlight and Chapter Conclusion
	References
Chapter 4: Dual Structure and Dual Convergence Drove Chinese Economic Catching-Ups and Innovation Engine Is Sparked
	4.1 FDI and Technology Transfer Drive the Convergence Between the Economies with Similar Business Models / Innovation Systems
	4.2 The Dual-Structured Chinese Business Models / Innovation System Support China´s Dual Convergence Toward and Catching-Up wi...
		4.2.1 Massive Waves of FDI Flow to China in Those Catching-Up Years
			4.2.1.1 An Overview of Foreign Direct Investment in China in Those Years
			4.2.1.2 US Direct Investment in China
			4.2.1.3 German Direct Investment in China
		4.2.2 The Remarkable Achievement of China´s Catching-Up
	4.3 After the Dual-Structured Business Models / Innovation System Being Built Up and Chinese Economy Catching-Up, Chinese Econ...
		4.3.1 China Furthers Its Long-Term Economic Development
		4.3.2 The Innovation Explosion Effect Follows Up: A Remarkable Success of China´s Innovation
	References
Conclusion
	References
Index