Determinants and performance effects of management consultancy adoption in listed Chinese companies
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As China seriously lacks trained and experienced personnel at its current stage of development, management consultancy may be adopted as an economical solution to improve efficiency and performance. However, as institutional theory suggests, it is likely that the adoption of management consultancy in China is driven more by mimetic isomorphism factors than by actual performance considerations. Using data from a survey of 219 listed Chinese firms, our results suggest that there are significant positive effects from mimetic isomorphism factors and adoption of management accounting and controls and information and communication technology. Our study provides strong evidence that the adoption of management consultancy has a positive effect on firm performance, yet we cannot conclude that management consultancy is adopted to improve firm performance. Moreover, state ownership held by state-owned enterprises (SOEs) has a significant and positive effect on management consultancy adoption, whereas state ownership held by government agencies does not. One interpretation is that firms controlled by SOEs have acquired increased autonomy and become more innovative.
KeywordsChina consultancy information technology innovation diffusion management accounting performance
Jason Xiao acknowledges financial support from a research grant of the National Natural Science Foundation, PRC (No. 71002005). The authors thank Chee Chow for useful guidance and close involvement and Lixin Zhao and Peking University Guanghua School of Management for the help provided in data collection. We also thank two anonymous reviewers for their helpful comments. All errors and omissions are the authors’ responsibility.
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