The Dynamic Role of Subnational Regions in Firm Performance

51 Pages Posted: 7 Sep 2017 Last revised: 19 Jan 2024

See all articles by Haibing Shu

Haibing Shu

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management

V. Brian Viard

Cheung Kong Graduate School of Business

Date Written: April 12, 2019

Abstract

This study investigates dynamics of subnational regions in determining firm performance over time and by ownership type. We explain theoretically how subnational regions affect firm performance over time in the context of path dependence and the institution-based view and test these predictions using annual data of manufacturing firms in China from 2000 to 2014 – before and after a major negative institutional shock (2008 financial crisis). Consistent with path dependence, regional institutional quality diverges across regions before 2008, a pattern that is disrupted post-2008. Firm performance is increasing in institutional quality so that location effects are increasingly important before the financial crisis but less so post-crisis. These effects are greater for private- than state-owned enterprises consistent with differences in organizational objectives under the institution-based view.

Keywords: subnational region; firm performance; dynamic profit components; institutional environment, path dependence

JEL Classification: D02, O43, O53

Suggested Citation

Shu, Haibing and Viard, V. Brian, The Dynamic Role of Subnational Regions in Firm Performance (April 12, 2019). Available at SSRN: https://ssrn.com/abstract=3032315 or http://dx.doi.org/10.2139/ssrn.3032315

Haibing Shu

Shanghai Jiao Tong University (SJTU) - Antai College of Economics and Management ( email )

No.1954 Huashan Road
Shanghai Jiao Tong University
Shanghai, Shanghai 200052
China

V. Brian Viard (Contact Author)

Cheung Kong Graduate School of Business ( email )

Oriental Plaza, Tower E3
One East Chang An Avenue
Beijing, 100738
China
86-10-8518-8858 (Phone)
86-10-8518-6800 (Fax)

HOME PAGE: http://english.ckgsb.edu.cn/faculty_content/brian-viard

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
55
Abstract Views
559
Rank
571,022
PlumX Metrics