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

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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  • Xufei Ma
  • Xiaotao Yao
  • Youmin Xi


Original languageEnglish
Pages (from-to)467-483
Journal / PublicationAsia Pacific Journal of Management
Issue number4
Online published14 Dec 2006
Publication statusPublished - Dec 2006
Externally publishedYes


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.

Research Area(s)

  • Business group, Institutional perspective, Performance, Property rights theory, Transition economy