Xu, Lu, & Gu (2014). Organizational Forms and Multi-population Dynamics: Economic Transition in China

Dean Xu – Faculty of Business and Economics, The University of Melbourne
Jane W. Lu – NUS Business School, National University of Singapore
Qian Gu – Robinson College of Business, Georgia State University

Martina Mountauti – IE Business School
Michele Piazzai – Delft University of Technology

Article link: http://asq.sagepub.com/content/early/2014/06/25/0001839214541866

Question 1. You make a very interesting addition to ecological research. By considering only two organizational populations, previous studies have not captured the multi-population dynamics you set out to explore. Three-way dynamics and second-order legitimacy transfers represent your foremost theoretical contributions: how did you develop these ideas, and when did you realize they would make a good basis for a paper?

One of us (Dean) had always dreamed of explaining China’s economic transition from the angle of organization theories, and in a “big picture”. In the past this was difficult to accomplish due to data constraints. In around 2007, after he had completed another study using a population-wide database from China’s National Bureau of Statistics, it suddenly dawned on him that this database was perfect for realizing his dream. Population ecology was a natural choice of theoretical lens because economic transition could be viewed as a population-level form change. The idea of a transitional organizational form, between the new and old forms (and hence three-way population dynamics and second-order legitimacy transfers, although the latter term was suggested by a reviewer), also came naturally as an important theoretical task in this paper was to explain gradualism in the Chinese transition, which suggested some kind of middle stage, or hybrid form.

Question 2. China is a compelling empirical context, but it can be daunting for scholars who are less familiar with its unique economic history. Do you think this is the reason why it remains somewhat exotic for empirical studies? What advantages does China offer compared to Western markets in your opinion, and what are the challenges?

In the review process we were urged by one of the reviewers to provide a more in-depth historical account of the Chinese context. This approach may have helped readers better understand China’s institutional context. The disadvantage, however, is that readers may get the impression that our context is very much China-specific and history-dependent; hence the issue of lack of generalizability. We would like to emphasize, however, that the empirical context in this study is actually quite straightforward. You have three organizational forms: state-owned enterprise (SOE), standing for the old form; privately owned enterprise (POE), standing for the new form; and collectively owned enterprise (COE), which is our focal, transitional form. Although the COE as a specific ownership form is somewhat unique to China and other Socialist countries, transitional forms of various kinds that combine the identities of both the new and old forms are quite common in other contexts and in our everyday organizational life, and our paper has provided some examples.

Question 3. Your analysis encompasses firms across different industries. In this sense, you present results about the inter-population dynamics within the Chinese economy as a whole. However, particular sectors such as banking could be more averse to POEs than average. Would the inter-population dynamics you describe be slightly different in this case, e.g. because SOEs are less threatened by private enterprise, or do you expect them to hold?

Our sample only includes industrial enterprises and not financial institutions such as banks. However, we believe the ecological processes we observed may also occur in the financial sector, perhaps not immediately but more likely on the long run. Although the banking industry in China is still very much controlled by the government so far, there have been banks with mixed ownership forms. Once policy constraints are lifted, these mixed-ownership banks may serve as a transitional form that provides legitimation for the new form—purely privately owned banks. Of course this doesn’t mean the large SOE banks will be “annihilated” by private banks. Ecological processes may cause the rise and fall of a population through the change in density. But even when reduced in number, the remaining SOEs may still grow in size for reasons other than population dynamics—in our case government support. So we are likely to see, in the banking industry as well as in other industries, a small number of large SOEs and a large number of smaller private firms.

Question 4. You have an extensive and novel dataset, which seems to lend itself well to a variety of research questions. In addition to firms’ mortality, it could be used to analyze age dependence: beyond ecology, it could be used to investigate institutional change in the Chinese economy. Do you have plans with this particular dataset for future papers? If so, what are you working on next?

You are absolutely right. The database provides a good context in which to examine age dependence, and one of us has worked on this topic, as well as on interpopulation density dependence between foreign and local firms.

Question 5. We would like to know more about your experience with the reviewing process at ASQ. Did reviewers substantially affect the final version of the paper? What advice would you give to Ph.D. students who consider ASQ for their future submissions?

We benefited greatly from the review process at ASQ. We could easily figure out that all three reviewers were highly established scholars. Two of them were obviously ecologists and were extremely enlightening and encouraging with their constructive comments. The third reviewer disagreed with our assessment of China’s transition process. He/she kept challenging our views, which proved very helpful to us as we were pushed to strengthen our theory, clarify our context, and improve our analysis. Although our basic theoretical framework did not change in the process, the overall quality of the manuscript was substantially improved as a result of the many detailed reviews. Further, each of the four rounds of review took just over a month to come back to us. We strongly encourage PhD students to consider ASQ as a possible outlet and not to refrain from doing so simply because ASQ is the most prestigious journal in management and organization theory—the review process is very constructive and efficient. In our case, as we told our Action Editor in a response letter, we had gone through an intellectually fulfilling journey.

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