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State governance and technological innovation in emerging economies: State-owned enterprise restructuration and institutional logic dissonance in China’s high-speed train sector

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Abstract

Can state governance spur firm innovation in an emerging economy and transform state-owned enterprises (SOEs) from “dying dinosaurs” to “dynamic dynamos”? We seek an answer to this question by investigating the innovative performance of restructured SOEs in China’s high-speed train sector. We expect that SOE restructuration will improve firm innovation, but that the degree of improvement will depend on how the state conducts firm governance. Building on institutional theory, we distinguish state governance via equity ownership and administrative affiliation in an emerging economy with market-hierarchy institutional conflicts. Under such conflicts, restructured SOEs experience institutional logic dissonance, which hinders organizational change for technological innovation. We hypothesize that state ownership exacerbates institutional logic dissonance at a restructured SOE, thus limiting innovation improvement from restructuration; in contrast, state affiliation mitigates firm dissonance and hence augments such improvement. We find empirical evidence for these hypotheses in a comprehensive panel of high-speed train manufacturers in China between 1989 and 2015. This study contributes to the institution-based theory of technological innovation in emerging economies. On the practical front, our findings suggest that emerging states may adopt arms-length governance to spur SOE innovation and unleash these dynamic dynamos to fuel sustainable economic growth.

Résumé

La gouvernance de l’État peut-elle stimuler l’innovation dans une économie émergente et transformer les entreprises publiques (EP) de « dinosaures mourants » en « dynamos dynamiques » ? Nous cherchons une réponse à cette question en étudiant les performances innovantes des EP restructurées dans le secteur des trains à grande vitesse en Chine. Nous prévoyons que la restructuration des EP améliorera l’innovation des entreprises, mais que le degré d’amélioration dépendra de la manière dont l’État conduit la gouvernance des entreprises. Sur la base de la théorie institutionnelle, nous distinguons la gouvernance de l’État via la propriété des actions et l’affiliation administrative dans une économie émergente avec des conflits institutionnels de type hiérarchie-marché. Dans de tels conflits, les EP restructurées connaissent une dissonance logique institutionnelle, ce qui entrave le changement organisationnel pour l’innovation technologique. Nous faisons l’hypothèse que la propriété de l’État exacerbe la dissonance de la logique institutionnelle dans une EP restructurée, limitant ainsi l’amélioration de l’innovation par la restructuration; en revanche, l’affiliation à l’État atténue la dissonance de la firme et augmente donc cette amélioration. Nous validons ces hypothèses par des preuves empiriques fondées sur un panel complet de fabricants de trains à grande vitesse en Chine entre 1989 et 2015. Cette étude contribue à la théorie institutionnelle de l’innovation technologique dans les économies émergentes. Sur le plan pratique, nos résultats suggèrent que les États émergents pourraient adopter une gouvernance indépendante pour stimuler l’innovation des EP et déclencher ces dynamos dynamiques pour alimenter une croissance économique durable.

Resumen

¿Puede la gobernanza estatal estimular la innovación de las empresas en una economía emergente y transformar las empresas de propiedad estatal de “dinosaurios agonizantes a “dínamos dinámicos”? Buscamos una respuesta a esta pregunta investigando los resultados innovadores de las empresas estatales en el sector de los trenes de alta velocidad de China. Esperamos que la restructuración de las empresas de propiedad estatal mejore la innovación de las empresas, pero que el grado de mejora dependerá de cómo el Estado lleve a cabo la gobernanza de la empresa. Basándose en la teoría institucional, distinguimos la gobernanza estatal a través de la propiedad de capital y la afiliación administrativa en una economía emergente con conflictos institucionales de jerarquía de mercado. Bajo esos conflictos, las empresas de empresas de empresas de servicios personales reestructuradas experimentan disonancia lógica institucional, lo que dificulta el cambio organizativo para la innovación tecnológica. Lanzamos las hipótesis que la propiedad estatal exacerba la disonancia de la lógica institucional en una empresa de propiedad estatal reestructurada, limitando así la mejora de la innovación de la reestructuración; en cambio, la afiliación estatal mitiga la disonancia de la empresa y, por lo tanto, aumenta dicha mejora. Encontramos evidencia empírica de estas hipótesis en un amplio panel de fabricantes de trenes de alta velocidad en China entre 1989 y 2015. Este estudio contribuye a la teoría de la innovación tecnológica basada en instituciones en las economías emergentes. En el frente práctico, nuestros hallazgos sugieren que los Estados emergentes pueden adoptar una gobernanza en condición de igualdad para estimular la innovación de las empresas de propiedad estatal y dar rienda suelta a estos dinamos dinámicos para impulsar el crecimiento económico sostenible.

Resumo

Pode a governança estatal estimular inovação de empresas em uma economia emergente e transformar empresas estatais (SOEs) de “dinossauros moribundos” em “dínamos dinâmicos”? Buscamos uma resposta para essa pergunta investigando o desempenho inovador de empresas estatais reestruturadas no setor de trens de alta velocidade da China. Esperamos que a reestruturação de SOE melhore a inovação da empresa, mas que o grau de melhoria dependa de como o estado conduz a governança da empresa. Com base na teoria institucional, distinguimos governança estatal por meio de propriedade acionária e afiliação administrativa em uma economia emergente com conflitos institucionais em hierarquia de mercado. Sob tais conflitos, SOEs reestruturadas são acometidas de dissonância na lógica institucional, o que dificulta mudança organizacional visando inovação tecnológica. Hipotetizamos que a propriedade estatal aumente a dissonância na lógica institucional em uma SOE reestruturada, limitando assim a melhoria na inovação advinda da reestruturação; por outro lado, afiliação estatal atenua a dissonância da empresa e, portanto, amplia essa melhoria. Encontramos evidências empíricas para essas hipóteses em um painel abrangente de fabricantes de trens de alta velocidade na China entre 1989 e 2015. Este estudo contribui para a teoria baseada em instituições da inovação tecnológica em economias emergentes. Em termos práticos, nossas descobertas sugerem que países emergentes podem adotar uma governança independente para estimular inovação de SOE e desencadear esses dínamos dinâmicos para fomentar crescimento econômico sustentável.

抽象

新兴经济体中, 国家治理能激发企业创新, 并将国有企业从 “垂死挣扎的恐龙” 转变为 “充满动能的发电机”吗 ? 我们通过研究中国高速列车行业国企改制后的创新绩效, 来寻求这—问题的答案. 我们认为, 国企改制将促进企业创新, 但创新改进的程度取决于国家的公司治理水平. 在制度理论基础上, 我们将新兴经济体 (存在市场等级制度冲突) 的国家治理分成: 所有制和行政隶属两个不同维度. 在市场等级制度冲突下, 改制后的国企会面临制度逻辑不协调, 这将阻碍技术创新所需的组织变革进程. 我们假设, 国家所有制将加剧改制国企的制度逻辑不协调, 从而降低改制对创新的促进作用; 与之相反, 国家隶属却能缓解这种不协调, 进而提高改制对企业创新的促进作用. 通过对中国高速列车制造行业 1989–2015 年的面板数据分析, 以上假设得到证实. 这项研究为基于制度理论的新兴经济体技术创新理论做出了贡献. 在实践方面, 我们的研究表明, 新兴国家可以采取适当的 “长臂” 治理, 以更好激发国企创新, 进而释放国企动能以推动经济可持续增长.

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ACKNOWLEDGEMENTS

This research is in part supported by Grants from Social Science and Humanities Research Council of Canada and National Natural Science Foundation of China (71472131, 71732005, and 71401183).

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Authors and Affiliations

  1. Isenberg School of Management, University of Massachusetts Amherst, 121 President’s Drive, Amherst, MA, 01002, USA

    Aurora Liu Genin

  2. Schulich School of Business, York University, 4700 Keele Street, Toronto, ON, M3J 1P3, Canada

    Justin Tan

  3. School of Business, Central South University, Changsha, Hunan, China

    Juan Song

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  1. Aurora Liu Genin
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Accepted by Jaideep Anand, Guest Editor, 5 May 2020. This article has been with the authors for four revisions.

Appendices

Appendix 1: Conceptual Supplement

See Table 5.

Table 5 Disentangling state ownership and affiliation: dissonance-based mechanisms
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Appendix 2: Additional Analysis

See Tables 6, 7 and 8.

Table 6 Random-effect OLS panel regression results on firm-year invention patent publication
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Table 7 Random-effect OLS panel regression results on firm-year invention patent conversion ratio
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Table 8 Random-effect OLS panel regression results on firm-year R&D employee productivity
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Genin, A.L., Tan, J. & Song, J. State governance and technological innovation in emerging economies: State-owned enterprise restructuration and institutional logic dissonance in China’s high-speed train sector. J Int Bus Stud 52, 621–645 (2021). https://doi.org/10.1057/s41267-020-00342-w

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