Justin Tan

Organizational Slack and Firm Performance During Economic Transitions: Two Studies from an Emerging Economy

How does organizational slack affect firm performance? Organization theory posits that slack, despite its costs, has a positive impact on firm performance. In contrast, agency theory suggests that slack breeds inefficiency and inhibits performance. The empirical evidence, largely from developed economies, has been inconclusive. Moreover, little effort has been made to empirically test whether such an impact (positive or negative) is linear or curvilinear. This article joins the debate by extending empirical work to the largely unexplored context of economic transitions. Specifically, two studies, based on survey and archival data (N = 57 and 1532 firms, respectively), are undertaken in China’s emerging economy. Our results suggest (1) that organization theory generates stronger predictions when dealing with unabsorbed slack, and (2) that agency theory yields stronger validity when focusing on absorbed slack. Furthermore, we also find that the impact of slack on performance is curvilinear, which resembles inverse U-shaped curves. Overall, our findings call for a contingency perspective to specify the nature of slack when discussing its impact on firm performance.

Key Components and Implications of Entrepreneurship: A 4-P Framework

Entrepreneurship has been gaining increasing respect from the research community as a field of scholarly study as well as practical application worldwide as a means to achieve wealth creation and personal fulfillment. Yet, entrepreneurship, as a theoretical construct and practical phenomenon, remains poorly defined and its interpretation fragmented. This article attempts an eclectic account of the major ingredients of entrepreneurship and dissects the entrepreneurship process through a parsimonious 4-P framework: pioneer, perspective, practice, and performance. It is expected that this framework will help us better understand the essence of entrepreneurship: its theoretical underpinnings as well as its practical implications.

Impact of Ownership Type on Environment–Strategy Linkage and Performance: Evidence from a Transitional Economy

In this study I contend that the ownership type has a significant impact on the environment-strategy configurations amongst different firms in a transitional economy. The influence of ownership type on the environment-strategy configuration is tested, based on an analysis of surveys of 201 managers from four types of companies in China: state-owned, collectively-owned, privately-owned, and foreign joint ventures. Results support the central notion that each ownership type exhibits a distinct environment-strategy configuration, which in turn has important performance implications for the firms.

Venturing in Turbulent Water: A Historical Perspective of Economic Reform and Entrepreneurial Transformation

In this study, a staged model is developed to examine the changes in organizational environment and firm strategic adaptations in the last 24 years in China. The study found that compared with 1990, in 2002, the business environment in China has become more conducive to entrepreneurial activities, and managers in state-owned enterprises (SOEs) have reacted favorably with more willingness to commit to future growth and make more innovative and risk-oriented decisions. It is also found that since 1990 newly founded firms have exhibited rather distinctively strategic orientations, compared to their counterparts from the pre-1990 era. They are far more innovative and risk oriented. Research and policy implications are discussed.

Strategic Response to a Volatile Environment: The Case of Cross-Cultural Cooperative Ventures

Unlike free-standing companies, joint ventures involve more complex governance structures and organizational systems. Because of interpartner dependence in the managerial process, it is more difficult for joint ventures to configure their strategies with environmental dynamics. Without such configuration, however, joint ventures will suffer from operational instability and resource misallocation. This study assesses the strategic response of joint ventures to a dynamic environment. Based on a survey of top managers in international joint ventures (IJVs) in China, it is found that managerial perceptions of increased environmental complexity and hostility are positively related to an Analyzer strategy. Proactive and Defensive strategies are either negatively or non-significantly linked with perceived environmental dynamics. Further, the Analyzer strategy is associated with superior performance for IJVs in the context of an emerging economy.

Entrepreneurial strategies in a transitional economy: Chinese state and non-state enterprises compared and contrasted

This study compares and contrasts certain characteristics of entrepreneurial orientations in response to Chinas emerging business environment among state owned enterprises (SOEs) and township/village enterprises (TVEs). A survey of SOE and TVE managers shows that, in comparison to SOEs, TVEs tend to be more innovative, adaptive and proactive in response to the dynamism and munificence of the business environment. SOE-TVE differences are less pronounced, however, with regard to environmental complexity. Implications for entrepreneurship research and practice as well as for the future performance of SOEs and TVEs are delineated.

Firm growth in an emerging market economy: the experience of a Chinese IT entrepreneur

Using a case-based approach to study firm growth in high-tech ventures in the PRC, this paper discusses some unique issues emerging from Chinas economic transition and presents insights from the study of a Chinese high-tech startup. Implications for research and practice are then discussed.

TRANSFORMATION OF ORGANIZATIONAL ENVIRONMENT AND STRATEGIES: A LONGITUDINAL STUDY OF CHINESE SOEs.

This article examines the environment-strategy configuration and its impact on firm performance among Chinese state-owned enterprises (SOEs) in the electronics industry starting in 2002, the year after Chinas entry into the World Trade Organization. Several environmental dimensions were identified and examined in the Chinese electronics industry. These dimensions include complexity, dynamism, and hostility. These environmental dimensions have been shown to have significant impact on variables subject to managerial control, and provide a framework for examining the environmental challenges influencing strategic choice in transitional economies. Since the Tan and Litschert study in 1990, many changes have occurred in China. Under the pressure of external political and economic forces and motivated by the desperate fight for legitimacy and survival, the Chinese policy makers have instituted various changes to reform legal institutions in order to improve the clarity of the system and provide more protection...

BEIJING JEEP AT A CROSSROADS: FACING THE CHALLENGE OF CHINA'S ENTRY INTO THE WTO

Beijing Jeep Corporation (BJC) was founded in 1984 as one of the first and largest joint venture between an American company (American Motors Corporation) and a Chinese enterprise. Early in its operation, BJC had been given preferential treatment on tariffs and foreign exchange. Since over forty percent of the content of BJC was produced in China, it had operated as a local manufacturer under heavy protection from imports for all of its short life. All this appeared to be on the brink of changing when trade negotiators for the United States and China announced, after thirteen years of on and off negotiations, the agreement on the terms for Chinas entry into the World Trade Organization. The terms of the agreement called for a steep reduction in tariffs for imported automobiles from nearly one hundred percent to twenty-five percent by 2006. This would have a direct impact on BJC performance. The case focuses on the strategic challenges facing companies in the changing trade and economic environment.

Strategic adaptation under changing environment: how Amway reinvented and revitalised itself in China

This case documents how the American direct marketer, Amway, entered the Chinese market and significantly altered its business model when the Chinese Government suddenly banned direct selling in April 1998. Facing the prospect of having to reorganise its internationally renowned sales system or leaving China, Amway (China) made unprecedented modification to its business model for long-term growth potential in the rapidly growing Chinese market.