Asia Pacific Journal of Management

, Volume 23, Issue 4, pp 467–483 | Cite as

Business group affiliation and firm performance in a transition economy: A focus on ownership voids

  • Xufei Ma
  • Xiaotao Yao
  • Youmin Xi


In a transition economy, how does business group affiliation make a difference in firm performance? Under the broad label of institutional voids, what specific voids can business groups fill? This paper addresses these questions by drawing on insights from property rights theory and an institutional perspective. We argue that ownership voids, as a subset of institutional voids, occur due to the lack of unambiguously specified ownership of state assets in transition economies, and that business groups emerge to serve as the direct owners of state-owned enterprises to replace such voids. Based on a sample of 1,119 publicly-listed Chinese companies, we find that the interaction of business group affiliation and state ownership has a significant and positive effect on firm performance. Our findings point to business group’s substitution role in filling ownership voids in China’s transition economy.


Business group Performance Property rights theory Institutional perspective Transition economy 


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Copyright information

© Springer Science+Business Media, LLC 2006

Authors and Affiliations

  1. 1.Business Policy Department, NUS Business SchoolNational University of SingaporeSingaporeSingapore
  2. 2.Organization and Management Department, School of ManagementXi’an Jiaotong UniversityXi’anChina

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