Article,
Interfirm Relations in China Group Structure and Firm Performance in Business Groups
American Behavioral Scientist, 52 (12): 1709-1730 (2009)Keister, Lisa A..
Abstract
The networks of interfirm relations that developed in business groups
during China's economic transition have been an important part of
the country's economic transition. This article examines the process
by which interfirm lending and trade ties emerged and evolved in
the business groups in the early stages of reform. It studies the
effect of business group structure on firm financial performance
in the early stages of reform (1988-1990) and later in development
(1994-1999). Initially, firms resorted to external resources (e.g.,
prior connections) to develop alliances. With time, they began to
draw on internal resources (e.g., experience) to identify partners.
Some business group structures improve member firm performance early
in reform, but group membership reduces performance as markets stabilize.
The findings underscore the changing significance of interfirm alliances
at various stages of economic development. The findings are relevant
for both developing countries and countries that developed in previous
eras.
