New research on enterprise reform, technological innovation in emerging economies

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Can governments turn underperforming state-owned enterprises (SOEs) into global champions? A research team led by Justin Tan, the Newmont Chair in Business Strategy at York University’s Schulich School of Business, attempted to address this question by investigating the innovative performance of restructured SOEs in China’s high-speed train sector.

A photo of Justin Tan
Justin Tan

The research findings, reported in a new paper forthcoming in Journal of International Business Studiesbuilds on institutional theory and distinguishes state governance via equity ownership and administrative affiliation in an emerging economy with market-hierarchy institutional conflicts. Under such conflicts, restructured SOEs experience institutional logic dissonance, which hinders organizational change for technological innovation. The research was based on a comprehensive proprietary panel data of high-speed train manufacturers in China between 1989 and 2015. This study contributes to the institution-based theory of technological innovation in emerging economies.

For policymakers and business leaders, the research findings suggest that emerging states may adopt arms-length governance to spur SOE innovation and unleash these dynamic dynamos to fuel sustainable economic growth. This line of research has profound implications for Canadian economic interests, especially given the significant role Canadian companies such as Bombardier have played in the development of the Chinese rail transportation equipment manufacturing industry.

The research paper, titled “State Governance and Technological Innovation in Emerging Economies: State-Owned Enterprise Restructuration and Institutional Logic Dissonance in China’s High-Speed Train Sector?”, was co-authored with Aurora Liu Genin, assistant professor of management at University of Massachusetts Amherst in the U.S., and Juan Song, associate professor at Central South University in China

A copy of the study can be found here.