Journal of International Business Studies

, Volume 37, Issue 1, pp 127–147

Market liberalization and firm performance during China's economic transition


DOI: 10.1057/palgrave.jibs.8400178

Cite this article as:
Park, S., Li, S. & Tse, D. J Int Bus Stud (2006) 37: 127. doi:10.1057/palgrave.jibs.8400178


This paper examines the impact of market liberalization on firm performance through institutional changes during the economic reform in China. The conceptualization focuses on the decentralization of control, ownership restructuring, and industrial policy as the primary institutional changes to implement market liberalization in China. These institutional changes affect firm performance by shaping managerial incentives, affecting transaction and agency costs, and making selective resource allocations across and within industries. Using a large-scale data set including 23,577 firms between 1992 and 1996, the study examines how market liberalization affects the profitability and productivity of Chinese firms and the relationship between ownership change and the performance of state-owned enterprises.


market liberalization economic transition firm performance 

Copyright information

© Academy of International Business 2005

Authors and Affiliations

  1. 1.Samsung Economic Research Institute/CEIBSChao Yang DistrictPeople's Republic of China
  2. 2.Department of Business AdministrationOld Dominion UniversityNorfolkUSA
  3. 3.School of Business, University of Hong KongHong Kong

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