Sponsor(s): Industrial economy research institute
12 issues per year
Current Issue: Issue 01, 2015
Journal official website:http://www.jjgl.cass.cn/CommonBlock/GetSiteDescribeDetail/1242?channelID=1242
Economic Management Journal is supervised by Chinese Academy of Social Sciences, and sponsored by Institute of Industrial Economics, Chinese Academy of Social Sciences. It aims to report the economics-based management research, which is an indispensable reference for the management of scientific research. Its scope covers macro-economic management, industrial and regional economic management, business management, management science and engineering, public administration and management reviews. The Journal is included in CSSCI.
Associate Editors in Chief
Rent-seeking, fiscal subsidies and corporate growth: evidence from Chinese listed firms with the concept of new energy
Business Management Journal,2015,Vol 37,No. 01
Fiscal subsidy is an important part of government expenditure. In many countries especially in countries of economic transition, fiscal subsidy is one of important policy tools for maintaining economic stability, optimizing the allocation of resources and implementing industrial policy. In recent years, Chinese listed firms have received increasing fiscal subsidies. According to statistics, in 2013, nearly 95% of Chinese listed firms (more than 2,000 firms) have received fiscal subsidies, which are amounted to more than CNY 100 billion. On the other hand, there are many irregularities in fiscal subsidies, many of which are related to the problem of corruption. In fact, fiscal subsidies have become an important topic worthy of further exploration. Using a sample of 117 Chinese A-share listed firms with the concept of new energy for the period 2010–2012, this paper empirically tests the impact factors and economic consequences of fiscal subsidies based on the perspective of rent-seeking and firm growth. We find that rent-seeking behaviors help listed firms especially private firms get more fiscal subsidies, while which cannot play an active role in improving the growth of private listed firms and state-owned ones. Moreover, the higher fiscal subsidies are associated with the higher research and development (R&D) investment of listed firms, especially private firms. However, fiscal subsidies do not push private listed firms or state-owned ones to increase their capital expenditure. Our results indicate that rent-seeking and inefficiency of using fiscal subsidies are two main reasons that explain why fiscal subsidies have no positive impacts on corporate growth in China. According to the findings of this study, we propose the following suggestions. Firstly, fiscal subsidies should be reasonable and moderate. At present, many scholars have questioned the excessive government subsidies to listed firms. The main reasons are as follows. On one hand, excessive government subsidies not only make the local finance more difficult, but also lead to failures of subsidies management. On the other hand, government subsidies to listed firms especially the loss ones destroy the market environment of fair competition. In view of this, the government should make cautious and moderate policy of fiscal subsidies, which will not only help reduce the burden of local finance, but also be beneficial to increase the fairness of the market competition. Secondly, government should further improve the laws and regulations of fiscal subsidies policy. For a long time, the laws and regulations of government subsidies to firms are not clearly and perfect, which creates opportunities for government officials setting up a “rent” and rent-seeking of firms. Therefore, government needs to improve corresponding laws and regulations, detail application eligibility of fiscal subsidies, the amount of subsidies, application process and the use of subsidies funds, etc. At the same time, we should strengthen the supervision of fiscal subsidies system, to ensure that all aspects of fiscal subsidies operation more transparent. Thirdly, firms should use the government fiscal subsidies more properly to promote their development. First of all, firms need to learn fiscal subsidies policy and reasonably obtain fiscal subsidies so as to energize the development of firms. Moreover, firms should focus on business development, rather than trying to do things by irregular ways even by rent-seeking to get access to fiscal subsidies. After all, the rent-seeking is neither legal nor a long-term solution. Finally, the use of fiscal subsidies should be in accordance with the relevant provisions, such as for R&D investment or capital expenditure purposes, so as to enhance the use efficiency of funds.
International monetary system and manufacturing technology innovation: case studies and their implications for China
Business Management Journal,2015,Vol 37,No. 01
The international monetary system is mainly a series of principles and rules on the international currency categories and scopes and the currency exchange ratios among nations in the international trade. Currently, the US sovereign currency acts as the main international trade settlement currency, which has significantly benefited the technological innovations for the US enterprises. However, in varying degrees, this has disparaged the enterprise technological innovations of the countries trading with the US. Using the case studies of the exchange rate fluctuations between the US and Japan, the manufacturing power shifting from the UK to the US, as well as the Sino-US trade interdependence, this paper does a detailed study of the different phenomena of the industrial technological innovation of the international monetary system to the US and its close trading countries. On this basis, this paper proposes specific measures to enhance technological innovation capabilities of China’s manufacturing enterprises under the existing international monetary system, including reconstruction the mechanism for the application of foreign exchange, building the mechanism for differential demand, and promoting changes in the exchange rate mechanism.
Production networks, new spatial forms and rising of global cities: comparison and inspiration from Asia Pacific's pathway
Business Management Journal,2015,Vol 37,No. 01
As a main organizational pattern of international division in globalization era, production networks have also exerted deep influences on the rising of global cities, from which some common characteristics deserve to be paid more attention and studied deeply. The article considered that it was a main reason making the global cities in the Asia-Pacific region to reveal widely different development path from those world/global cities under traditional trade pattern. It is the rising of global cities in the Asia-Pacific region that makes “enterprise centered” production networks to extend in the different social and political environment compatibly. With the interactive relationship between global cities and production networks, traditional “nation centered” governance structure has been changed, which means that as gradually open level of service sectors and the degree of globalization in international metropolis all increase, the rising global city will get quite a number of rights previously held by national governance system and become the main interface of world economic competition and cooperation. Based on analysis among Tokyo, Singapore and Hong Kong, the article has drawn two important conclusions. First, regional industrial agglomeration and division of labor created spatial platform conditions for the rising of global cities in Asia-Pacific region. Different types of spatial form exerted different influences on development paths towards global cities. It means that current global cities should not and also are impossible to follow unique growth pattern given by the previous ones. Second, as organizational conditions, production networks have become the common bases for global cities in Asia-Pacific region especially, which at the same time asked for structural transformation of city functions basing on range extension of regional division of labor along with geographical entrenchment of intra-industry division of labor. More analysis for typical examples in the Asia-Pacific region shows that port cities grew up to be one of new generation of global cities relying on urban transformation through developing professional services in order to satisfy ever-increasing needs of intermediate products trade coming from geographical extension of production network. Inspiration from similarities of depending on production networks development among Tokyo, Singapore and Hong Kong is that new spatial forms constantly springing up to contain production networks have significantly imposed impact on the rising of global cities as an outcome of geographical reorganization arising from production networks development. Two extraordinary spatial forms are respectively “growth triangle” in Singapore and Hong Kong, and “mega-region” in Tokyo, which have different theoretical meanings according to some famous scholars. Based on the core role of China in East Asian production networks and emerging mega-region in the Yangtze River Delta，there are scare opportunities for Shanghai to become the next global city in future. As a coastal megacity, Shanghai should seize the opportunity coming from the establishment of pilot free trade zone and rely on promotion new spatial forms to meet the demands of production network so as to improve service chains and functional networks paralleling to regional production process and rise to be a global cities gradually. For Shanghai pilot free trade zone, it should target towards free port to start new turn of institutional innovation which especially promotes internationalization of financial system in order to open wider to the outside world. At the same time, it also needs to guide Yangtze River Delta into new integration stage of which core contents are collective urban transformation among those node cities and system optimization of regional governance. Also as an incubation platform for Shanghai becoming a global city, it should promote the development of service economy in node cities in the Yangtze River Delta accompanied by the needs for shaping, deriving, extending and upgrading of “value sectors.” In Shanghai, it is more important for transformation to set up polycentric governance regime when meeting the need towards city functional integration.
Should companies disclose related information at the first time in crisis management?: an empirical study based on Chinese listed firms' 116 crisis events
Business Management Journal,2015,Vol 37,No. 01
In the West, crisis management is also called as crisis communication management, which fully indicates the importance of information disclosure and communication with stakeholders in crisis management. However, in the context of China, firms usually choose to hide crisis information or even to deny the existence of crisis at the first time when facing a crisis event. In recent years, the fact that many Chinese coal mining enterprises tried to conceal production safety accident incidents is a typical example. Then, we wonder that whether the traditional method of Chinese enterprises in dealing with crises is the best crisis management practice. In other words, when facing a crisis event, should focal firms disclose crisis information at the first time or try to delay information disclosure? Yet, so far we know little about how to effectively conduct crisis information disclosure and crisis communication management. In particular, extant literature in crisis management has long focused on the strategic framework level in China. Few studies, if any, have examined whether and how micro processing strategy (e. g., disclose detailed economic damage information, announce response plan) may affect the outcome of crisis management. Therefore, this study aims to fill up these research gaps. Using a data set of 116 crisis events happening in Chinese A-share listed companies from 01/01/2007 to 09/30/2013, this study empirically explores the roles of several micro factors(e. g., timeliness of information disclosure, details of information disclosure, response plan) on the effect of crisis management, as measured by short-term market reaction of investors, i. e., cumulative abnormal return (CAR). We find that investors significantly and negatively react to information disclosure announcement of crises. More important, we find that there is a significant and positive relationship between the timeliness of crisis information disclosure and CAR, and this relationship is found to be stronger in severer crises. This finding suggests that the timeliness of crisis information disclosure is able to help target firms achieve a better effect of crisis management, and the severity of crises would strengthen the importance of the timeliness of crisis information disclosure. Moreover, contrary to our predictions, to disclose detailed information about economic loss and start a response plan would exacerbate investors' negative market reaction to the crises. We argue that this contrary finding is largely resulted from adverse selection behaviors of small and medium-sized investors in China's capital market with underdeveloped information environment. That is, in China, external small and medium-sized investors tend to regard the announcement of response plan as a signal for the severity of crisis event rather than taking it as a good crisis processing practice. Our findings provide several practical implications. First, firms involving crises should respond and disclose crisis information at the first time when facing crises, for the sake of meeting outside investors' information demand and thus taking the initiative in the practice of crisis communication management. Second, from the short-term perspective, the China securities regulatory commission and other related regulators should further standardize the information disclosure procedure of crisis events and perfect the compiling method and announcement program of crisis response plan for listed companies, and compress and reduce the free space and discretion power of listed companies in the crisis information disclosure as far as possible, in order to prevent endless speculation and subsequent inefficient investment behaviors exerted by external investors when facing non-standard information disclosure and thus avoid distorting the optimal allocation of scarce capital. Finally, from the long-term perspective, regulators should improve the system of information disclosure and corresponding punishment mechanisms for listed companies, thereby effectively solving several long-standing serious information disclosure problems such as information hiding, information processing, inadequate information disclosure, untimely information disclosure, formal informal disclosure without substantive content, among others, so as to induce external investors to better understand and use the information disclosure of listed companies to make rational investment decisions. Only the well match between information supply and demand can ultimately solve adverse selection problems like “Bad money drives out good” between investors and listed companies. In particular, since IPO registration system reform has recently been initiated by the CSRC, how to strengthen the supervision of information disclosure has become increasingly important.
Business Management Journal,2015,Vol 37,No. 01
As the donation grant in the world, the evolution of corporate philanthropy in United States has already gone through more than two hundred years. Compares to the United States, Chinese corporate philanthropy is still in the initial stage of development, the number of total charitable donations are 21 times less than American. Therefore, it is exigent to absorb nutrients from American Corporate Philanthropy's historical operating mechanism. This paper divided this history into five stages——illegal period, related-philanthropy period, unrelated-philanthropy, social responsibility period and strategic period according to changes within social environment, religion, jurisprudence, government policy and the emergence of non-profit charitable organizations. At first the Corporate Philanthropy in United States is under an embargo and been see as Ultra vires activity, it will do harm to the interests of the minority stockholders based on the principle of profit maximization. But with the changes of social environment such as The World War I and World War II, three times of American economic depression, immigration waves after Civil War, contradictions gradually emerge between the material need of social and the limited ability of government. The decadent economic need enterprise donation to recover and at the same time religion also restrict the behavior of the enterprise philanthropy as they indicate the rich is guilty. At the same time, Red Cross emerged to adapt to the needs of the war and created a new pattern which allow company put the money in organization and get dividends and bonuses from its donation activities. This pattern building bridges between the public and the rich company and at some extent it helped company to choose a appropriate recipients. So corporate philanthropy became legalization and the government issued a lot of policies and regulations like reduction in tax, impose an excess profits tax, carry out federal assistant programs to encourage companies to donate. And non-profit organizations are on the rise in USA, played an important role in the development of corporate philanthropy and already became the core force in the system of social philanthropy. This paper firstly use Zucker's institutional change theory, Carroll's social responsibility theory and Poter's strategic philanthropy theory to reveal the driving internal factors which make philanthropy from passive to active, illegal to legitimate and immature to mature. Secondly, try to find a long-term mechanism which relate the government, nonprofit, public, academic institutions and other stakeholders, surround their own strategic development axis, gives a detailed analysis about what the various stakeholders can or should do in corporate philanthropy. According to the summarize the long-term mechanism of enterprise philanthropy, this paper put forward ‘Star' model including five stakeholders about corporate, government, non-profit organizations, public and the media and the academic institution to guide the social to blossom corporate philanthropy, strive to win both economic benefit and social effect using corporate philanthropy strategy. At last, this paper point out the obstacles and problems of corporate philanthropy in China through various notorious events. Facing this significant question, this paper use the contents of the long-term mechanism above to explore the development road for Chinese corporate philanthropy from three aspects, government can use fiscal and tax policy as hard power such as establish philanthropy law, tax preference, create charity fund; non-profit organizations and academic institution can give pay to consensus and scientific research as soft power; company itself can apply strategic philanthropy to guide their behaviors. Only in this way Chinese corporate philanthropy can achieve long-term development.
A study on the impact of VAT reform on value creation efficiency of intellectual capital: evidence from China’s listed firms from 2007 to 2012
Business Management Journal,2015,Vol 37,No. 01
In the era of knowledge economy, intellectual capital has become the firm’s strategic resource and value-creating driver. Although a fairly large body of literature analyzes the value creation mechanism of intellectual capital from various aspects, the relationship between the change of macroeconomic policy and the value creating capacity of intellectual capital has not yet been taken into account. In fact, being a microeconomic subject, the behavior decision and operating activity of the enterprise will be inevitably affected by any change of the tax, finance or industrial policies. Especially the tax system reform would directly change the tax amount payable and the profit of a firm, and influence the invest and financing decision and the production plan, then the allocation of resources between intellectual capital and physical capital, and eventually the efficiencies of value added by a firm through these capital. Under the natural experiment background of the Value-Added-Tax (VAT) reform from the production type to consumption type in 2009, this paper attempts to adopt Difference-in-Difference method (DID) to empirically analyze the impact of VAT reform on the value added efficiency of intellectual capital with a panel data sample of China’s A-share listed firms from 2007 to 2012. Our results demonstrate that the change of VAT system significantly improves the value added efficiency of intellectual capital, which eventually promotes the total efficiency of value added by a firm. However, the effects of the tax reform vary with the ownership nature of the ultimate controller, financing constraints and the capacity for value creation by intellectual capital. The specific results are as follows: (a) The VAT reform could hardly promote the value added efficiencies of intellectual capital and physical capital for the state-owned firms, but can significantly increase the value added efficiency of intellectual capital and that of total factors for non-state-owned firms. (b) No mater a firm is more or less financially constrained, the VAT reform can significantly increase the efficiencies of value added by intellectual capital and total factors. And such influences are much stronger for the firms which are more financially constrained. (c) For the firms with greater capacities for value creating through human capital, the VAT reform can significantly improve their efficiencies of value added by intellectual capital, and eventually promote the value added efficiencies of all resources. However, these influences of the VAT reform are weaker for those having weak capacities for value creating by human capital. (d) No matter a firm’s capacity for value creating through structural capital is strong or weak, the impacts of the change of VAT policy on the value added efficiencies of intellectual capital and total resources are significantly positive. And such effects become much stronger when a firm has a greater capacity for value creating by structural capital. Finally, the paper gives rise to some suggestions for the on-going tax system reform and changing of economic growth mode. First of all, the firms those are more financially constrained or have stronger capacities for value creating through human capital should be considered as the key support subjects in current tax reform, and be provided with more tax incentives, for example, replacing the business tax with value-added tax. Secondly, for state-owned enterprises, we should not only strengthen the supervision of the shareholders and board over the managers, but also construct an intellectual capital oriented performance measure system for the management in order to inspire them to pursue long-term shareholders’ wealth growth. Thirdly, the government should encourage the firms to continuously invest in and maintain their human capital, and develop the skills and ability of optimal allocation of resources to make sure that they be able to react rapidly and raise production efficiency in case of any change of the public policy.