The Needham Puzzle Reconsidered: Organizations, Organizing, and Innovation in China

Mie Augier, Jerry Guo  and Harry Rowen

Abstract: This paper discusses some aspects of innovation in China. As China seeks to transition to a knowledge-based economy, it may become more important for China to develop innovative technologies to sustain economic growth. How do China’s history, culture, institutions, and organizations aid or hinder innovation? How does China’s national innovation system compare to the innovation culture in the US, as well as other developed and emerging economies? What are the prospects for the future of the Chinese national innovation system?

Our starting point is the Needham Puzzle – the paradox that while China was once a world leader in technological development, it fell behind; the Industrial Revolution happened in Europe rather than in China. Potential explanations for the Needham Puzzle may shed light on the challenges facing innovation in modern China. We identify three factors that might help explain the Needham Puzzle; assess how the Needham Puzzle and Chinese culture and history have affected the modern innovation system; discuss comparative aspects of innovation ecosystems in the United States and elsewhere; and suggest that Chinese innovation emphasizes exploitation and refinement of existing knowledge to the exploration and development of new knowledge. We also discuss implications for the future of innovation in China.

Empirical Research on Corporate Governance in China: A Review and New Directions for the Future   

Wei Shen, Qiong Zhou, Chung-Ming Lauo

Abstract: The ownership structure of Chinese firms has experienced significant changes over the last three decades, including the development of a fast growing stock market through which a large number of domestic firms have become publicly traded corporations. These changes have drawn increasing attention from researchers of corporate governance. In this article, we review the empirical research on corporate governance in China, with a focus on the internal and external governance mechanisms that have been investigated and the findings about the effectiveness of these mechanisms. On the basis of our review of 132 studies, we summarize the major findings and discuss the limitation of agency theory in understanding the governance issue in Chinese firms. We offer several ideas (e.g., the importance of the social context, new conceptualization of governance, different outcomes of governance, and data/method issues) for a new agenda to guide future research in the corporate governance of firms operating in the Chinese and other emerging economy contexts.

Political Strategy and Market Capabilities: Evidence from the Chinese Private Sector

Nan Jia

Abstract: In this article, I argue that in emerging markets firms’ market capabilities are positively related to the political strategies that they employ to reduce the risks of expropriation by public and private entities. I focus specifically on the moderating conditions, including institutional environments that have direct constraint on governmental power, supportive policies that promote private sector growth, and developed legal systems. My empirical analysis utilizes data on privately owned Chinese enterprises. The results show that firms’ market capabilities – as indicated by their asset turnover ratios and R&D intensity – are positively related to their likelihood of participating in key policy-making political organizations but this relationship is weaker in provinces that have more effective constraints on governmental power, more supportive policies for private sector growth, and more developed legal systems.

Political Connections, Home Formal Institutions, and Internationalization: Evidence from China 

Xingqiang Du, Jin-hui Luo

Abstract: This study draws on the resource dependence theory and institution-based view to examine political connections in the home market and home formal institutions for their impact on the internationalization of emerging market firms in the context of China. The results suggest that political connections at home may prevent emerging market firms from implementing internationalization strategies by reducing the dependence constraints imposed by local governments and foreign firms, whereas home formal institutional development may promote the strategy transition of emerging market firms from building political connections to international expansion and also reduce the negative impact of political connections. Overall, our findings indicate that political connections and formal institutions at home play an important role in shaping emerging market firms’ strategies of outward internationalization.

The Spatial and Career Mobility of China’s Urban and Rural Labor Force 

Lingxin Hao, Yucheng Liang

Abstract: In this article, we provide a comprehensive examination of the spatial and career mobility of China’s labor population. We integrate theories on stratification and social change and exploit the innovative design and measurement of the China Labor-force Dynamics Survey to minimize the undercoverage problem of the rural-urban migratory experience. Our analysis provides several fresh findings: (1) at-birth rural household registration (hukou) status leads to a greater probability of spatial mobility and career advancement than at-birth urban hukou status does; (2) education and gender differentiates rural-origin people, increasing the heterogeneity of urban labor and decreasing the heterogeneity of rural labor; (3) hukou policy relaxation favors later cohorts over earlier cohorts; and (4) among demographically comparable people, having experienced spatial mobility is correlated with having career advancement experience. Work organizations are found to be the arena where the two dimensions of mobility can happen jointly. Our findings provide a rich context for understanding the management and organization of Chinese labor.

Labor Unrest and Incipient Collective Bargaining in China

Sarosh Kuruvilla, Hao Zhang

Abstract: In this paper, we argue that both labor unrest and collective bargaining are increasing in China. Using McAdam’s political process theory, we argue that Chinese workers are striking more and offensively in support of their economic demands. We identify the state’s interests in promoting collective bargaining, and through an analysis of union and employers’ organizations, attempt to predict the future trajectory of collective bargaining in China. Using new data about strikes, we confirm our argument that strikes in China are increasing. Based on very limited past and current research, we create a taxonomy of baseline collective bargaining in China against which future developments can be compared.

The Nordic Corporate Governance Model

Steen Thomsen

Abstract: The Nordic countries – Denmark, Norway, Sweden, and Finland—have attracted attention in recent years. Some elements of the Nordic model—particularly the welfare state—are well understood, but its governance characteristics remain elusive to the international audience. This article reviews Nordic governance and discusses its relevance as a development paradigm. The article quantitatively documents the existence of a Nordic governance model using data from the World Bank, Transparency International and other sources. Secondly, it is shown how Nordic corporate governance – Nordic civil law, concentrated ownership, semi two-tier board structures, employee representation and low-powered managerial incentives – has been shaped by the welfare state in ways consistent with systemic corporate governance theories. The article concludes with a skeptical discussion of the Nordic model as a development paradigm.