Skip to main content
SpringerLink
Log in

Profitability, Ownership Structure and Technical Efficiency of Enterprises in the People's Republic of China: A Case of Manufacturing Industries in Shanghai

  • Published:
Asia Pacific Journal of Management Aims and scope Submit manuscript

Abstract

This paper studies the relationship between accounting profits and technical efficiency of manufacturing enterprises in Shanghai during the period 1989–1992 and examines which factors affect the profitability of manufacturing enterprises. We first estimate the average technical efficiency of four major manufacturing industries in Shanghai. Then, we test for the presence of ownership effects of technical efficiency on profits of those enterprises in these four industries.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

REFERENCES

  • Bain, J.S. 1951. Relationship of profit rate to industry concentration: American manufacturing, 1936–1940. Quarterly Journal of Economics, 65: 293–324.

    Google Scholar 

  • Bain, J.S. 1956. Barriers to Neu, Competition. Cambridge, MA: Harvard University Press.

    Google Scholar 

  • Bauer, P.W. 1990. Recent developments in the econometric estimation of frontiers. Journal of Econometrics, 46: 39–56.

    Google Scholar 

  • Beamish, P.W. 1993. The characteristics of joint ventures in the People's Republic of China. Journal of International Marketing, 1: 29–46.

    Google Scholar 

  • Breusch, T.S. and Pagan, A.R. 1979. A simple test for heteroskedasticity and random coefficient variation. Econometrica, 47: 1287–1294.

    Google Scholar 

  • Caves, R.E. and Barton, D.R. 1990. Efficiency in U.S. Manufacturing Industries. Cambridge, MA: MIT Press.

    Google Scholar 

  • Charnes, A., Cooper, W.W. and Rhodes, E. 1978. Measuring the efficiency of decision making units. European Journal of Operational Research, 2: 429–444.

    Google Scholar 

  • Charnes, A., Cooper, W.W. and Rhodes, E. 1990. Polyhedral cone-ratio DEA models with an illustrative application to large commercial banks. Journal of Econometrics, 46: 73–91.

    Google Scholar 

  • Charnes, A., Cooper, W.W., Seiford, L. and Stutz, J. 1983. Invariant multiplicative model efficiency and piecewise Cobb-Douglas envelopments. Operations Research Letters, 2: 101–103.

    Google Scholar 

  • Chen, K., Jefferson, G.H., Rawski, T.G., Wang, H. and Zheng, Y 1988. Productivity change in Chinese industry: 1953–1985. Journal of Comparative Economics, 12: 570–591.

    Google Scholar 

  • Chikan, A. and Whybark, D.C. 1990. Cross-national comparison of production-inventory management practices. Engineering Costs and Production Economics, 19: 149–156.

    Google Scholar 

  • Chow, C. and Fung, M. 1997. Firm size and performance of manufacturing enterprises in P.R. China: The case of Shanghai's manufacturing industries. Forthcoming in SmallBusiness Economics.

  • Demsetz, H. 1973. Industry structure, market rivalry, and public policy. Journal of Law and Economics, 16: 1–10.

    Google Scholar 

  • Gong, B. and Sickles, R. 1992 Finite sample evidence on the performance of stochastic frontiers and data envelopment analysis using panel data. Journal of Econometrics, 51: 259–284.

    Google Scholar 

  • Groves, T., Hong, Y, McMillan, J. and Naughton, B. 1994. Autonomy and incentives in Chinese state enterprises. Quarterly Journal of Economies, 109: 183–209.

    Google Scholar 

  • Handfield, R.B. and Withers, B. 1993. A comparison of logistic management in Hungary, China, Korea, and Japan. Journal of Business Logistics, 14: 81–109.

    Google Scholar 

  • Hu, M.Y and Chen, H. 1996. An empirical analysis of factors explaining foreign joint venture performance in China. Journal of Business Research, 35: 165–173.

    Google Scholar 

  • Jefferson, G. and Rawski, T.G. 1994. Enterprise reform in Chinese industry. Journal of Economic Perspectives, 8: 47–70.

    Google Scholar 

  • Jefferson, G., Rawski, T.G. and Zheng, Y 1992. Growth, efficiency, and convergence in Chinese state enterprises. Economic Development and Cultural Change, 40: 239–266.

    Google Scholar 

  • Jondrow, J., Lovell, C.A.K., Materov, I.S. and Schmidt, P. 1992. On the estimation of technical inefficiency in the stochastic frontier production function model. Journal of Econometrics, 19: 233–238.

    Google Scholar 

  • Jovanovic, B. 1982. Selection and the evolution of industry. Econometrica, 50: 649–670.

    Google Scholar 

  • Lippman, S.A. and Rumelt, R.P. 1982. Uncertain imitability: an analysis of interfirm differences in efficiency under competition. Bell Journal of Economics, 13: 418–438.

    Google Scholar 

  • Lockett, M. 1988. The urban collective economy. In S. Feuchtwang, A. Hussain, and T. Paircult (eds) Transforming China Economy in the Eighties, pp. 118–137. Boulder, Colorado: Westview Press.

    Google Scholar 

  • Newman, W.H. 1992. ‘Focused joint ventures’ in transforming economies. Academy of Management Executive, 6: 67–75.

    Google Scholar 

  • McGuckin, R.H. and Nguyen, S.V. 1993. Post-reform industrial productivity performance of China: New evidence from the 1985 industrial census data. Economic Inquiry, 31: 323–341.

    Google Scholar 

  • Majumdar, S.K. and Chang, H. 1996. Scale efficiencies in U.S. telecommunications: An empirical analysis. Managerial and Decision Economics, 17: 303–318.

    Google Scholar 

  • McMillan, J. and Naughton, B. 1992. How to reform a planned economy: Lessons from China. Oxford Review of Economic Policy, 8: 130–143.

    Google Scholar 

  • Mun, K.C. 1988. Chinese retailing in a changing environment. In E. Kaynak (ed) Transnational Retailing. pp. 221–226. Walter Gryter & Co.: Berlin.

    Google Scholar 

  • Osland, G.E. 1994. Successful operating strategies in the performance of U.S.-China joint ventures. Journal of International Marketing, 2: 53–78.

    Google Scholar 

  • Peltzman, S. 1977. The gains and losses from industrial concentration. Journal of Lau, and Economics, 20: 229–263.

    Google Scholar 

  • Prime, P.B. 1992. Industry response to market liberalization in China: Evidence from Jiangsu province. Economic Development and Cultural Change, 41: 27–50.

    Google Scholar 

  • Qiang, Z.W. and Harris, P. 1990. Retailing reform and trends in China. InternationalJoarnal of Retail and Distribution Management, 18: 541–548.

    Google Scholar 

  • Scherer, F.M. and Ross, D. 1990. Industrial market structure and economic performance. Boston: Houghton Mifflin & Co.

    Google Scholar 

  • Schmalensee, R. 1985. Do markets differ much? American Economic Review, 75: 341–351.

    Google Scholar 

  • Schmidt, P. and Sickles, R.C. 1984. Production frontier and panel data. Journal of Business and Economics Statistics, 2: 36–74.

    Google Scholar 

  • Seiford, L. and Thrall, R.M. 1990. Recent developments in DEA: The mathematical programming approach to frontier analysis. Journal of Econometrics, 46: 7–38.

    Google Scholar 

  • Singh, 1., Ratha, D. and Xiao, G. 1993. Non-state enterprises as an engine of growth: An analysis of provincial industrial growth in post-reform China. Working paper, Transition and Macro Adjustment Division, The World Bank.

  • Smith, P. 1990. Data envelopment analysis applied to financial statements. Omega, 18: 131–138.

    Google Scholar 

  • Stelzer, L., Ma, C. and Banthin, J. 1992. Gauging investor satisfaction. China Business Review, 19: 54–56.

    Google Scholar 

  • The Economist. 1992. A survey on China. Nov 28th, pp. 1–18.

  • Thore, S., Kozmetsky, G. and Phillips, F. 1994. DEA of financial statements data: The U.S. computer industry. Journal of Productivity Analysis, 5: 229–48.

    Google Scholar 

  • Wacker, J.G. 1987. How advanced is modern Chinese manufacturing management? International Journal of Operations and Production Management, 7: 26–35.

    Google Scholar 

  • Weitzman, M.L. 1993. Economic transition: can theory help? European Economic Review, 37: 549–555.

    Google Scholar 

  • White, H. 1980 A heteroskedasticity-consistent covariance matrix estimator and a direct test of heteroskedasticity. Econometrica, 48: 817–838.

    Google Scholar 

  • Yeh, Q. 1996. The application of data envelopment analysis in conjunction with financial ratios for bank performance evaluation. Journal of the Operational Research Society, 47: 980–988.

    Google Scholar 

  • Young, S.T., Kwong, K., Li, C. and Fok, W. 1992. Global manufacturing strategies and practices: A study of two industries. International Journal of Operations and Production Management, 12: 5–17.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Decision Sciences & Managerial Economics, Faculty of Business Administration, Chinese University of Hong Kong, Shatin, NT, Hong Kong

    Michael Fung Ka Yiu & Ken Wan Kai Hong

  2. Department of Marketing & International Business and HK Institute of Business Studies Faculty of Business, Lingnan College, Tuen Mun, NT, Hong Kong

    Clement Chow Kong Wing

Authors
  1. Michael Fung Ka Yiu
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Clement Chow Kong Wing
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Ken Wan Kai Hong
    View author publications

    You can also search for this author in PubMed Google Scholar

Rights and permissions

Reprints and permissions

About this article

Cite this article

Yiu, M.F.K., Wing, C.C.K. & Hong, K.W.K. Profitability, Ownership Structure and Technical Efficiency of Enterprises in the People's Republic of China: A Case of Manufacturing Industries in Shanghai. Asia Pacific Journal of Management 16, 351–367 (1999). https://doi.org/10.1023/A:1015460130983

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1023/A:1015460130983

Keywords

Search

Navigation