saul estrin , zhixiang liang, daniel shapiro and michael...
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Saul Estrin, Zhixiang Liang, Daniel Shapiro and Michael Carney
State capitalism, economic systems and the performance of state owned firms Article (Accepted version) (Refereed)
Original citation: Estrin, Saul and Liang, Zhixiang and Shapiro, Daniel and Carney, Michael (2019) State capitalism, economic systems and the performance of state owned firms. Acta Oeconomica. ISSN 0001-6373 (In Press) © 2019 Akadémiai Kiadó Zrt. This version available at: http://eprints.lse.ac.uk/id/eprint/91944 Available in LSE Research Online: January 2019 LSE has developed LSE Research Online so that users may access research output of the School. Copyright © and Moral Rights for the papers on this site are retained by the individual authors and/or other copyright owners. Users may download and/or print one copy of any article(s) in LSE Research Online to facilitate their private study or for non-commercial research. You may not engage in further distribution of the material or use it for any profit-making activities or any commercial gain. You may freely distribute the URL (http://eprints.lse.ac.uk) of the LSE Research Online website. This document is the author’s final accepted version of the journal article. There may be differences between this version and the published version. You are advised to consult the publisher’s version if you wish to cite from it.
1
Sta
te C
ap
itali
sm,
Econ
om
ic S
yst
em
s a
nd
th
e P
erfo
rm
an
ce
of
Sta
te O
wn
ed
Fir
ms
Sau
l E
stri
n*
Lon
don
Sch
ool
of
Eco
no
mic
s L
on
don
, U
nit
ed K
ingd
om
Zh
ixia
ng L
ian
g
Joh
n M
ols
on
Sch
ool
of
Bu
sin
ess
Con
cord
ia U
niv
ersi
ty
Mon
tréa
l, Q
uéb
ec,
Can
ada
D
anie
l S
hap
iro
B
eed
ie S
cho
ol
of
Bu
sin
ess
Sim
on
Fra
ser
Un
iver
sity
V
anco
uver
, B
riti
sh C
olu
mbia
, C
anad
a
Mic
hae
l C
arn
ey
Joh
n M
ols
on
Sch
ool
of
Bu
sin
ess
Con
cord
ia U
niv
ersi
ty
Mon
tréa
l, Q
uéb
ec,
Can
ada
mic
hae
l.ca
rney
@co
nco
rdia
.ca
*C
orr
esp
on
din
g a
uth
or.
Au
thor
ord
er d
oes
not
refl
ect
con
trib
uti
on
, w
hic
h h
as b
een
equ
al.
2
Sta
te C
ap
ita
lism
, E
con
om
ic S
yst
ems
an
d t
he
Per
form
an
ce o
f S
tate
Ow
ned
Fir
ms
Ab
stra
ct
In
th
is p
aper
, w
e pu
rsu
e tw
o r
elat
ed r
esea
rch
qu
esti
on
s. F
irst
, w
e en
qu
ire
wh
eth
er s
tate
ow
ned
en
terp
rise
s (S
OE
s) p
erfo
rm
bet
ter
than
pri
vat
ely o
wn
ed f
irm
s in
a l
arg
e var
iety
of
emer
gin
g m
ark
ets.
To t
est
this
, w
e d
evel
op a
un
iqu
e d
atas
et u
sin
g f
irm
-lev
el
dat
a fr
om
th
e W
orl
d B
ank E
nte
rpri
se S
urv
ey (
WB
ES
), r
esu
ltin
g i
n a
sam
ple
of
over
50
,00
0 f
irm
s fr
om
57
un
der
stu
die
d c
ou
ntr
ies
incl
ud
ing e
mer
gin
g c
apit
alis
t, f
orm
er s
oci
alis
t an
d s
tate
cap
ital
ist
on
es.
Ou
r re
sult
s su
gges
t th
at S
OE
s d
o d
ispla
y p
rod
uct
ivit
y
adv
anta
ges
ov
er p
rivat
e fi
rms
in t
hes
e u
nd
erst
ud
ied
eco
no
mie
s. O
ur
seco
nd
res
earc
h q
ues
tion
ask
s w
het
her
th
e per
form
ance
of
stat
e-
ow
ned
fir
ms
in t
hes
e u
nd
erst
ud
ied
cou
ntr
ies
is c
on
tex
t sp
ecif
ic,
nam
ely w
het
her
per
form
ance
dep
end
s on
th
e in
stit
uti
on
al s
yst
em t
o
wh
ich
a c
ou
ntr
y i
s cl
assi
fied
. W
e re
fer
to t
hes
e sy
stem
s as
con
figu
rati
on
s. I
n p
arti
cula
r, w
e ar
e in
tere
sted
in
wh
eth
er s
tate
ow
ned
fir
ms
per
form
bet
ter
in “
stat
e ca
pit
alis
t” c
ou
ntr
ies
incl
ud
ing C
hin
a an
d V
ietn
am.
We
fin
d e
mpir
ical
sup
po
rt f
or
the
argu
men
t th
at t
he
“sta
te
led
” co
nfi
gu
rati
on
pro
vid
es b
ette
r in
stit
uti
on
al s
up
port
fo
r th
e ow
ner
ship
ad
van
tages
of
SO
Es
than
oth
ers.
Key
wo
rds:
co
mpar
ativ
e ec
on
om
ic s
yst
ems;
sta
te o
wn
ersh
ip;
Var
ieti
es o
f In
stit
uti
on
al S
yst
ems
(VIS
), f
irm
per
form
ance
JE
L C
od
es:
P5
, P
31
, L
44
3
INT
RO
DU
CT
ION
Th
ere
was
a c
on
sen
sus
in g
lobal
eco
no
mic
poli
cy m
akin
g f
rom
th
e 1
98
0s
un
til
per
hap
s th
e m
id-1
99
0s
bas
ed a
rou
nd
th
e vie
w
that
pri
vat
izat
ion
, li
ber
aliz
atio
n,
and
mac
ro-s
tabil
ity w
ere
at t
he
core
of
eco
no
mic
su
cces
s. T
his
per
spec
tiv
e, t
he
Was
hin
gto
n
Con
sen
sus
(Wil
liam
son
, 1
99
0),
has
sin
ce b
een
wid
ely c
riti
cise
d (
Kolo
dk
o,
19
99
; S
tigli
tz, 2
00
2;
Rod
rik,
20
06
), b
ut
beh
ind
th
e
Con
sen
sus
was
a v
iew
ab
ou
t ec
on
om
ic s
yst
ems
wh
ich
to s
om
e ex
ten
t re
tain
s it
s in
tell
ectu
al h
old
in
man
y d
evel
oped
eco
no
mie
s,
nam
ely t
hat
fre
e m
ark
et c
apit
alis
m i
s th
e on
ly s
yst
em c
apab
le o
f gen
erat
ing
su
stai
ned
eco
no
mic
gro
wth
an
d e
ffic
ien
cy.
Wh
ile
capit
alis
m i
s u
sual
ly d
efin
ed r
egar
din
g p
rivat
e ow
ner
ship
of
the
mea
ns
of
pro
du
ctio
n a
nd
fre
e m
arket
s, a
ccord
ing t
o N
uti
(2
01
8),
an
esse
nti
al c
om
pon
ent
of
soci
alis
m i
s th
e d
om
inan
ce o
f pu
bli
c pro
per
ty a
nd
en
terp
rise
. F
or
von
Hay
ek (
19
44
)) a
nd
Fri
edm
an (
19
62
), t
he
mar
ket
eco
no
my p
rovid
es t
he
on
ly r
esou
rce
allo
cati
on
mec
han
ism
cap
able
of
gen
erat
ing e
con
om
ic e
ffic
ien
cy a
nd
gro
wth
. T
his
seem
ed t
o b
e b
orn
e ou
t in
pra
ctic
e as
th
e so
cial
ist
pla
nn
ing s
yst
ems
of
Cen
tral
an
d E
aste
rn E
uro
pe
coll
apse
d u
nd
er t
he
wei
gh
t of
thei
r
inte
rnal
con
trad
icti
on
s af
ter
19
89
. T
his
see
med
to
su
gges
t th
at t
he
noti
on
of
the
co-e
xis
ten
ce o
f eq
ual
ly e
ffic
ien
t al
tern
ativ
e ec
on
om
ic
syst
ems
was
fu
nd
amen
tall
y f
law
ed,
and
, as
arg
ued
by H
ayek
, th
ere
was
on
ly a
sin
gle
eco
no
mic
syst
em w
hic
h s
atis
fied
th
e cr
iter
ion
of
econ
om
ic e
ffic
ien
cy –
th
e m
arket
syst
em.
How
ever
, as
Kolo
dk
o (
20
02
) am
on
gst
oth
ers
has
poin
ted
ou
t, t
he
pro
cess
of
tran
siti
on
fro
m s
oci
alis
m t
o c
apit
alis
m i
n C
entr
al
and
Eas
tern
Eu
rope
does
not
pro
vid
e co
nvin
cin
g e
vid
ence
in
su
pp
ort
of
the
Was
hin
gto
n C
on
sen
sus
appro
ach
to p
oli
cy. F
urt
her
more
,
in r
ecen
t yea
rs, th
ere
is a
lso n
ew e
vid
ence
em
ergin
g w
hic
h b
rin
gs
into
th
e q
ues
tion
th
e id
ea t
hat
th
ere
is o
nly
on
e sy
stem
ic p
ath
to
go
od
eco
no
mic
per
form
ance
: th
e ra
pid
ris
e of
the
Ch
ines
e ec
on
om
y a
nd
oth
er e
mer
gin
g m
arket
s, n
on
e o
f w
hic
h c
on
form
to t
he
4
trad
itio
nal
vie
w o
f a
free
mar
ket
eco
no
my.
Th
us,
for
exam
ple
, C
hin
ese
GD
P r
ose
fro
m j
ust
ov
er $
20
0 b
illi
on
in
19
78
, w
hen
Den
g
Xia
opin
g c
ame
to p
ow
er,
to m
ore
th
an $
12
,25
0 b
illi
on
in
20
17
; su
rely
evid
ence
of
sust
ain
ed s
tron
g e
con
om
ic p
erfo
rman
ce.
Sim
ilar
gro
wth
pat
hs
hav
e b
een
su
stai
ned
, th
ou
gh
fo
r sh
ort
er p
erio
ds,
in
soci
alis
t ec
on
om
ies
lik
e V
ietn
am,
as w
ell
as i
n s
tate
led
cap
ital
ist
on
es l
ike
Kore
a an
d S
ing
apo
re (
Wad
e, 2
00
2).
Yet
Ch
ina
can
not
be
con
sid
ered
a p
ure
fre
e m
ark
et e
con
om
y a
nd
is
oft
en r
efer
red
to a
s
“sta
te c
apit
alis
t” (
Eco
no
mis
t, J
anu
ary 2
1st
, 20
12
) bec
ause
of
the
cen
tral
role
pla
yed
in
th
e ec
on
om
y b
y s
tate
ow
ned
fir
ms.
Th
us
ou
r
anal
ysi
s o
f th
e ef
fect
s of
econ
om
ic s
yst
ems
nee
ds
to b
e ex
ten
ded
ex
pli
citl
y t
o t
ake
into
acc
ou
nt
the
new
in
stit
uti
on
al s
yst
ems
that
are
gu
idin
g t
he
econ
om
ies
of
Asi
a, L
atin
Am
eric
a, a
nd A
fric
a.
Th
ere
is l
ittl
e d
ou
bt
that
on
e o
f th
e m
ost
im
port
ant
way
s in
wh
ich
Ch
ina
and
oth
er s
ucc
essf
ul
emer
gin
g m
ark
ets
dev
iate
fro
m
the
free
mar
ket
par
adig
m c
on
cern
s th
e ro
le o
f th
e st
ate
in e
con
om
ic d
evel
op
men
t (W
ade,
20
03
; M
usa
cch
io a
nd
Laz
zari
ni,
20
14
). T
his
pap
er f
ocu
ses
on
an
im
po
rtan
t as
pec
t of
that
by c
on
sid
erin
g t
he
per
form
ance
eff
ects
of
stat
e o
wn
ersh
ip a
t th
e en
terp
rise
lev
el.
Giv
en
the
succ
essf
ul
econ
om
ic p
erfo
rman
ce o
f so
me
stat
e ca
pit
alis
t ec
on
om
ies,
it
is n
o l
on
ger
ob
vio
us
that
th
is w
ill
auto
mat
ical
ly b
e in
feri
or
to t
he
per
form
ance
of
com
par
able
pri
vat
ely o
wn
ed f
irm
s. U
nsu
rpri
sin
gly
, th
e W
ash
ingto
n C
on
sen
sus
argu
ed c
on
sist
entl
y f
or
the
pri
vat
isat
ion
of
stat
e ow
ned
en
terp
rise
s bas
ed o
n p
osi
tiv
e ev
iden
ce a
bou
t th
e im
pac
t of
pri
vat
isat
ion
: th
us
Gal
al e
t al
. (1
99
4)
esti
mat
ed
net
wel
fare
gai
ns
of
26
per
cen
t o
f sa
les
in B
rita
in,
Ch
ile,
Mal
aysi
a, a
nd
Mex
ico.
Sim
ilar
ly,
La
Port
a an
d L
op
ez-d
e-S
ilan
es (
19
99
)
fou
nd
th
at p
riv
atiz
ed M
exic
an S
OE
s ra
pid
ly c
lose
d a
lar
ge
per
form
ance
gap
wit
h i
nd
ust
ry-m
atch
ed p
rivat
e fi
rms.
How
ever
, m
ore
rece
nt
wo
rk a
bou
t tr
ansi
tion
eco
nom
ies
and
dev
elopin
g e
con
om
ies
bri
ngs
that
con
clu
sion
in
to q
ues
tion
, w
ith
per
form
ance
eff
ects
bei
ng f
ou
nd
to b
e h
igh
ly c
on
tex
t sp
ecif
ic (
Jom
o,
20
08
; E
stri
n,
Han
ou
sek,
Koce
nd
a, S
vje
nar
, 2
00
9;
Est
rin
an
d P
elle
tier
, 2
01
8).
5
We
are
also
con
cern
ed w
ith
th
e re
lati
on
ship
bet
wee
n t
he
econ
om
ic s
yst
em a
nd
fir
m p
erfo
rman
ce.
Ou
r an
alysi
s is
un
der
tak
en
pri
mar
ily i
n t
he
con
tex
t o
f em
ergin
g m
ark
ets,
an
d w
e co
nsi
der
an
arr
ay o
f u
nd
erst
ud
ied
eco
no
mie
s w
hic
h d
o n
ot
fit
com
fort
ably
wit
hin
th
e ca
teg
ori
sati
on
of
capit
alis
t o
r so
cial
ist.
As
a re
sult
, w
e n
eed
to r
evis
it t
he
noti
on
of
econ
om
ic s
yst
em, an
d i
n d
oin
g t
his
, w
e
dra
w o
n r
ecen
t w
ork
by i
nst
itu
tion
al e
con
om
ists
. T
hu
s, i
n t
he
Var
ieti
es o
f C
apit
alis
m (
VO
C)
per
spec
tive
(Hal
l &
Sosk
ice,
20
01
), i
t
was
arg
ued
th
at t
her
e w
ere
two f
un
dam
enta
l sy
stem
s w
ith
in t
he
mar
ket
eco
no
my;
Lib
eral
Mar
ket
(L
ME
) su
ch a
s th
e U
S a
nd
UK
an
d
Co
ord
inat
ed M
arket
(C
ME
) ec
on
om
ies
such
as
Ger
man
y o
r F
ran
ce. T
his
cla
ssif
icat
ion
of
syst
ems
is b
ased
aro
un
d i
nst
itu
tion
al
com
ple
men
tari
ties
wit
hin
cou
ntr
ies
that
co
-ev
olv
e w
ith
th
ose
of
oth
er c
ou
ntr
ies
to p
rod
uce
dis
tin
ct g
over
nan
ce c
on
figu
rati
on
s; u
nli
ke
the
soci
alis
t-ca
pit
alis
t d
isti
nct
ion
no s
ingle
in
stit
uti
on
al c
har
acte
rist
ic,
such
as
pri
vat
e ow
ner
ship
, is
su
ffic
ien
t to
def
ine
the
syst
em.
How
ever
, th
e V
OC
ap
pro
ach
rem
ain
s h
igh
ly E
uro
cen
tric
an
d h
as n
ot
bee
n s
yst
emat
ical
ly e
xte
nd
ed t
o c
on
sid
er t
he
un
der
stu
die
d
emer
gin
g e
con
om
ies
wh
ich
are
th
e su
bje
ct o
f th
is p
aper
.
It
is n
ot
ou
r pu
rpose
in
th
is p
aper
to c
reat
e a
new
cla
ssif
icat
ion
of
econ
om
ic s
yst
ems
into
wh
ich
th
e m
ajor
new
em
ergin
g
econ
om
ies
can
be
com
fort
ably
fit
ted.
Ou
r obje
ctiv
e is
rat
her
more
mod
est;
to i
sola
te t
he
impac
t o
f st
ate
ow
ner
ship
on
fir
m
per
form
ance
an
d t
o e
xplo
re w
het
her
th
is i
s se
nsi
tive
to t
he
inst
itu
tion
al c
on
tex
t. I
n p
arti
cula
r, w
e ar
e in
tere
sted
in
th
e id
ea t
hat
fir
m
per
form
ance
is
con
tin
gen
t on
th
e ec
on
om
ic s
yst
em,
so t
hat
fo
r ex
ample
sta
te o
wn
ed f
irm
s m
ay p
erfo
rm w
ell
wit
hin
syst
ems
wh
ich
pro
vid
e su
itab
le i
nst
itu
tion
al s
up
port
, th
ou
gh
th
ey m
ay p
erfo
rm l
ess
wel
l in
les
s sy
mpat
het
ic e
nvir
on
men
ts.
We,
ther
efore
, d
raw
on
a
pre
-ex
isti
ng c
lass
ific
atio
n o
f ec
on
om
ic s
yst
ems
for
emer
gin
g m
ark
ets,
dev
eloped
by F
ain
shm
idt,
Ju
dge,
Agu
iler
a, a
nd
Sm
ith
,
hen
cefo
rth
FJA
S (
20
16
). F
JAS
use
th
e in
stit
uti
on
al s
tru
ctu
res
in e
mer
gin
g e
con
om
ies
to d
evel
op a
cat
egori
sati
on
th
at t
hey
ter
m t
he
6
Va
riet
ies
of
Inst
itu
tio
na
l Sys
tem
s (V
IS);
a t
axon
om
y c
om
pri
sin
g s
even
dis
tin
ct,
empir
ical
ly d
eriv
ed n
atio
nal
in
stit
uti
on
al s
yst
ems
call
ed c
onfi
gu
rati
ons.
We,
th
eref
ore
, pu
rsu
e tw
o r
elat
ed r
esea
rch
qu
esti
on
s. F
irst
, w
e en
qu
ire
wh
eth
er s
tate
ow
ned
en
terp
rise
s (S
OE
s) p
erfo
rm b
ette
r
than
pri
vat
ely o
wn
ed f
irm
s in
a l
arg
e var
iety
of
emer
gin
g m
arket
s. T
o t
est
this
, w
e d
evel
op a
un
iqu
e d
atas
et t
hat
co
mbin
es t
he
seven
FJA
S c
on
figu
rati
on
s w
ith
fir
m-l
evel
dat
a fr
om
th
e W
orl
d B
ank E
nte
rpri
se S
urv
ey (
WB
ES
), r
esu
ltin
g i
n a
sam
ple
of
over
50
,00
0 f
irm
s
from
57
un
der
stu
die
d c
ou
ntr
ies,
in
clu
din
g e
mer
gin
g c
apit
alis
t, f
orm
er s
oci
alis
t an
d s
tate
cap
ital
ist
on
es.
Ou
r re
sult
s su
gges
t th
at S
OE
s
do d
ispla
y p
rod
uct
ivit
y a
dvan
tages
over
pri
vat
e fi
rms
in t
hes
e u
nd
erst
ud
ied
eco
no
mie
s.
Ou
r se
con
d r
esea
rch
qu
esti
on
ask
s w
het
her
th
e per
form
ance
of
stat
e-ow
ned
fir
ms
in t
hes
e u
nd
erst
ud
ied
cou
ntr
ies
is c
on
tex
t
spec
ific
, n
amel
y w
het
her
per
form
ance
is
sen
siti
ve
to w
hic
h c
on
figu
rati
on
th
e co
un
try i
n w
hic
h t
he
stat
e ow
ned
fir
m i
s lo
cate
d b
elon
gs.
In p
arti
cula
r, w
e ar
e in
tere
sted
in
wh
eth
er s
tate
ow
ned
fir
ms
per
form
bet
ter
in t
he
con
figu
rati
on
, in
clu
din
g C
hin
a an
d V
ietn
am
, w
hic
h
is t
erm
ed
“sta
te c
apit
alis
t.”.
” W
e fi
nd
em
pir
ical
sup
port
fo
r th
e ar
gu
men
t th
at t
he
stat
e le
d c
on
figu
rati
on
pro
vid
es b
ette
r in
stit
uti
on
al
sup
port
fo
r th
e ow
ner
ship
ad
van
tages
of
SO
Es
than
all
th
e oth
ers.
Ou
r fi
nd
ings
also
in
dic
ate
that
th
e co
nfi
gu
rati
on
s ar
e im
port
ant
det
erm
inan
ts o
f b
oth
pri
vat
e an
d s
tate
-ow
ned
fir
m p
erfo
rman
ce.
In t
he
nex
t se
ctio
n,
we
con
sid
er t
he
lite
ratu
re o
n t
he
per
form
ance
of
stat
e o
wn
ed e
nte
rpri
ses
rela
tiv
e to
pri
vat
ely o
wn
ed o
nes
(PO
Es)
an
d d
iscu
ss t
he
rece
nt
evolu
tion
in
th
inkin
g a
bou
t ec
on
om
ic s
yst
ems
lead
ing t
o t
he
dev
elop
men
t of
the
FJA
S c
on
figu
rati
on
.
We
pre
sen
t th
e d
ata
and
met
hod
s in
th
e th
ird
sec
tion
an
d t
he
resu
lts
in t
he
fou
rth
. F
inal
ly,
we
dra
w o
ur
con
clu
sion
s.
7
TH
E E
FF
EC
TS
OF
ST
AT
E O
WN
ER
SH
IP O
N E
NT
ER
PR
ISE
PE
RF
OR
MA
NC
E A
ND
TH
E M
OD
ER
AT
ING
RO
LE
OF
EC
ON
OM
IC S
YS
TE
MS
Th
is p
aper
ad
dre
sses
tw
o r
elat
ed e
mpir
ical
qu
esti
on
s. T
he
firs
t co
nce
rns
the
rela
tiv
e per
form
ance
of
SO
Es
and
PO
Es
in
emer
gin
g m
ark
ets.
Th
ere
is a
lrea
dy c
on
sid
erab
le e
vid
ence
on
th
is m
atte
r fo
r d
evel
oped
eco
no
mie
s w
hic
h l
argel
y s
up
port
th
e v
iew
th
at
SO
Es
are
less
eff
icie
nt
(Boar
dm
an a
nd
Vin
ing,
19
89
; M
eggin
son
an
d N
ette
r, 2
00
1).
How
ever
, th
ere
is m
uch
les
s ev
iden
ce f
or
dev
elopin
g e
con
om
ies,
an
d t
he
fin
din
gs
con
cern
ing t
he
asso
ciat
ed q
ues
tion
of
the
impac
t of
pri
vat
isat
ion
are
mo
re a
mbig
uou
s in
th
e
dev
elopin
g t
han
dev
elop
ed e
con
om
y c
on
tex
t (E
stri
n a
nd
Pel
leti
er, 2
01
8).
Th
is l
eads
us
to e
xplo
re t
he
rela
tive
per
form
ance
of
SO
Es
and
PO
Es
in e
mer
gin
g e
con
om
ies.
We
are
also
in
tere
sted
in
th
e co
nte
xtu
al s
pec
ific
ity o
f th
e re
lati
on
ship
bet
wee
n e
nte
rpri
se
per
form
ance
an
d o
wn
ersh
ip s
tru
ctu
res.
We
un
der
tak
e th
is a
nal
ysi
s fo
r em
ergin
g e
con
om
ies
wit
h t
he
FJA
S f
ram
ework
in
wh
ich
th
ey
iden
tify
a t
axon
om
y o
f se
ven
con
figu
rati
on
s of
nat
ion
al e
con
om
ic s
yst
ems.
In
th
is s
ecti
on
, w
e su
mm
aris
e th
e li
tera
ture
ab
ou
t th
e
per
form
ance
eff
ects
of
stat
e ow
ner
ship
, an
d a
bou
t th
e im
pac
t o
f th
e in
stit
uti
on
al s
yst
em,
wit
h a
par
ticu
lar
emph
asis
on
em
erg
ing
econ
om
ies.
Sch
ola
rs u
sual
ly a
rgu
e th
at P
OE
S w
ill
ou
tper
form
SO
Es.
To u
nd
erst
and
wh
y o
ne
mu
st c
om
par
e co
mpan
y o
bje
ctiv
es a
nd
corp
ora
te g
over
nan
ce u
nd
er s
tate
an
d p
riv
ate
ow
ner
ship
. A
co
mm
on
arg
um
ent
is t
hat
th
e fu
nd
amen
tal
dif
fere
nce
res
ts i
n t
hei
r
org
anis
atio
nal
obje
ctiv
es:
PO
Es
focu
s ex
clu
sivel
y o
n p
rofi
t, w
hic
h l
ead
s to
clo
se a
tten
tion
to c
ost
s an
d c
ust
om
er d
eman
ds.
SO
Es
may
be
inte
rest
ed i
n p
rofi
ts t
oo,
bu
t st
ate
ow
ner
s m
ay a
lso e
xpec
t m
anag
ers
to s
atis
fy o
ther
obje
ctiv
es a
s w
ell,
oft
en o
f a
soci
al o
r p
oli
tica
l
type.
Th
us,
th
e st
ate
may
see
k t
o c
reat
e jo
bs
in k
ey p
oli
tica
l re
gio
ns,
or
to h
old
dow
n t
he
pri
ces
of
go
od
s th
at h
ave
a si
gn
ific
ant
effe
ct
8
on
th
e bu
dg
ets
of
poli
tica
l su
pp
ort
ers
and
man
ager
s m
ay e
xplo
it t
he
con
flic
t to
th
eir
pri
vat
e ben
efit
for
exam
ple
via
ren
t se
ekin
g.
In
gen
eral
, co
nfl
icti
ng o
bje
ctiv
es m
ake
it h
ard
er f
or
the
ow
ner
s to
spec
ify t
arg
ets
and
to m
on
itor
per
form
ance
, an
d t
his
th
en p
rovid
es
leew
ay f
or
dec
isio
n m
aker
s to
pu
rsu
e th
eir
per
son
al g
ain
s. H
ence
in
effi
cien
cies
can
th
riv
e bec
ause
th
ey a
re n
ot
a ce
ntr
al c
on
cern
of
the
ow
ner
, an
d m
anag
ers
can
explo
it t
he
lack
of
clar
ity i
n c
om
pan
y o
bje
ctiv
es t
o e
nsu
re a
n e
asy l
ife
for
them
selv
es a
nd
em
plo
yee
s
(Sh
leif
er a
nd
Vis
hn
y,
19
94
).
T
his
pro
ble
m c
entr
es o
n t
he
asym
met
ry o
f in
form
atio
n h
eld
by m
anag
ers
and
ow
ner
s ab
ou
t th
e p
erfo
rman
ce o
f th
e fi
rm;
ou
tsid
e ow
ner
s – p
rivat
e or
stat
e – c
an n
ever
hav
e fu
ll a
cces
s to
su
ch i
nfo
rmat
ion
wh
ich
is
con
cen
trat
ed i
s in
th
e h
and
s of
man
ager
s.
Th
us,
it
is h
ard
fo
r th
em t
o e
stab
lish
wh
eth
er p
oor
resu
lts
are
a co
nse
qu
ence
of
un
fore
seen
cir
cum
stan
ces
or
man
ager
s ex
plo
itin
g f
irm
pro
fits
fo
r th
eir
pu
rpose
s.
Wh
enev
er o
wn
ersh
ip a
nd
con
trol
are
separ
ated
, p
rivat
e ben
efit
s (f
irm
-spec
ific
ren
ts)
can
be
siph
on
ed o
ut
of
the
com
pan
y b
y m
anag
ers.
H
ow
ever
, th
e n
orm
al a
rgu
men
t is
th
at,
rela
tive
to s
tate
ow
ner
ship
, a
pri
vat
e ow
ner
ship
syst
em p
lace
s m
ore
effe
ctiv
e li
mit
s on
th
is b
ehav
iou
r via
con
stra
ints
fro
m p
rod
uct
an
d c
apit
al m
arket
s. T
hes
e oper
ate
pri
mar
ily b
y p
rod
uct
mar
ket
com
pet
itio
n (
Vic
ker
s an
d Y
arro
w,
19
88
) an
d t
hro
ugh
th
e m
arket
s fo
r re
cru
itm
ent
of
man
ager
s an
d c
orp
ora
te c
on
trol
(Est
rin
an
d
Per
oti
n,
19
91
). T
he
key
con
stra
int
is s
een
to b
e th
e st
ock
mar
ket
s (M
eggin
son
, 2
00
5).
T
he
qu
alit
y o
f m
anag
eria
l d
ecis
ion
-mak
ing a
nd
the
exte
nt
of
man
ager
ial
dis
cret
ion
are
an
in
pu
t in
th
e ch
oic
es o
f tr
ader
s in
equ
ity m
ark
ets,
wh
ose
ju
dgem
ent
on
co
mpan
y p
erfo
rman
ce
is s
um
mar
ised
in
th
e sh
are
pri
ce.
If t
he
man
ager
ial
team
is
thou
gh
t to
be
inco
mpet
ent
or
inef
fici
ent,
th
e sh
are
pri
ces
wil
l be
red
uce
d,
pu
ttin
g p
ress
ure
on
man
ager
s to
im
pro
ve
thei
r per
form
ance
. A
per
sist
entl
y p
oor
show
ing b
y a
qu
ote
d c
om
pan
y m
ay a
lso g
ener
ate
9
exte
rnal
pre
ssu
re b
y e
nco
ura
gin
g a
tak
e-o
ver
bid
. M
ore
over
, in
th
e m
anag
eria
l m
arket
, in
div
idu
al p
erfo
rman
ce a
nd
pay
are
lar
gel
y
asse
ssed
by s
har
e pri
ces.
It i
s n
orm
ally
arg
ued
(E
stri
n e
t al
., 2
00
9)
that
it
is h
ard
for
the
stat
e to
im
itat
e th
ese
mar
ket
-bas
ed c
on
stra
ints
. S
tate
ow
ned
firm
s ar
e u
sual
ly n
ot
subje
ct t
o c
apit
al m
ark
et d
isci
pli
nes
, so
nei
ther
th
e co
mpet
itiv
ely d
riven
in
form
atio
nal
str
uct
ure
nor
the
mar
ket
bas
ed g
over
nan
ce m
ech
anis
ms
can
op
erat
e. S
OE
s in
Eu
rop
e w
ere
trad
itio
nal
ly m
anag
ed b
y c
ivil
ser
van
ts a
nd
did
not
com
pet
e in
th
e
wid
er m
anag
eria
l m
ark
et. M
anag
ers
are
also
hel
d t
o a
soft
bu
dg
et c
on
stra
int
(Ko
rnai
, 1
99
0)
that
goes
wit
h t
he
poli
tica
l d
eter
min
atio
n
of
reso
urc
e al
loca
tion
was
als
o s
een
as
a fu
rth
er s
ou
rce
of
ince
nti
ve
pro
ble
ms
sin
ce m
anag
ers
did
not
hav
e to
bea
r th
e co
nse
qu
ence
s
for
thei
r ac
tion
s.
H
ow
ever
, ev
en t
his
bri
ef d
escr
ipti
on
mak
es c
lear
th
at t
he
mec
han
ism
s u
nd
erly
ing t
he
adv
anta
ges
of
PO
Es
com
par
ed w
ith
SO
Es
are
con
tex
t sp
ecif
ic a
nd
may
be
hig
hly
sen
siti
ve
to i
nst
itu
tion
al a
rran
gem
ents
. F
or
exam
ple
, th
e ex
iste
nce
of
an e
ffec
tiv
e m
arket
for
corp
ora
te c
on
trol
reli
es u
pon
a h
igh
lev
el o
f d
evel
opm
ent
and
soph
isti
cati
on
of
capit
al m
ark
ets.
In
man
y e
mer
gin
g e
con
om
ies,
capit
al m
arket
s, i
n p
arti
cula
r, a
re s
erio
usl
y u
nd
erd
evel
oped
, bei
ng r
elia
nt
on
oth
er c
riti
cal
inst
itu
tion
al c
har
acte
rist
ics
such
as
the
rule
of
law
an
d t
he
pro
tect
ion
of
pri
vat
e pro
per
ty r
igh
ts a
nd
th
e ev
iden
ce s
ug
ges
ts t
hat
th
is i
s fa
r fr
om
gu
aran
teed
(K
han
na
and
Pal
epu
,
20
10
; H
osk
isso
n,
Wri
gh
t, F
ilat
otc
hev
&
Pen
g,
20
13
; G
ugle
r, P
eev &
Seg
alla
, 2
01
3).
Th
us
the
pri
nci
pal
mec
han
ism
en
suri
ng
th
e
super
ior
per
form
ance
of
PO
Es
may
not
be
op
erat
ion
al i
n m
any e
mer
gin
g m
ark
ets
con
tex
ts.
In t
hat
cas
e, t
he
rela
tive
per
form
ance
of
SO
Es
and
PO
Es
dep
end
s up
on
det
aile
d g
over
nan
ce a
rran
gem
ents
, bu
t th
e fa
ct t
hat
sta
te o
wn
ersh
ip i
s h
igh
ly c
on
cen
trat
ed w
hil
e
pri
vat
e ow
ner
ship
may
not
pro
vid
e on
e li
ne
of
arg
um
ent
that
th
e b
alan
ce o
fad
van
tage
cou
ld s
om
etim
e re
st w
ith
SO
Es.
10
In
th
is p
aper
, w
e fo
cus
on
th
e im
pac
t o
f n
atio
nal
in
stit
uti
on
al c
on
tex
t w
ith
ref
eren
ce t
o t
he
econ
om
ic s
yst
em –
th
e V
IS
con
figu
rati
on
s- r
ath
er t
han
con
cern
ing p
arti
cula
r in
stit
uti
on
s or
cou
ntr
ies.
Nat
ion
al i
nst
itu
tion
al s
yst
ems
pro
vid
e th
e fo
rmal
an
d
info
rmal
ru
les
of
the
gam
e to
wh
ich
dom
esti
c an
d f
ore
ign
fir
ms
mu
st a
dap
t th
eir
go
ver
nan
ce a
nd
ow
ner
ship
str
uct
ure
s (N
ort
h,
19
94).
How
ever
, w
hy s
hou
ld d
iffe
ren
ces
in i
nst
itu
tion
al s
yst
ems
expla
in f
irm
per
form
ance
(A
gu
iler
a &
Cre
spi-
Cla
der
a, 2
01
6)?
Th
e V
OC
lite
ratu
re (
Hal
l &
Sosk
ice,
20
01
) id
enti
fies
a s
oci
al d
emo
crat
ic e
con
om
ic m
od
el o
f ca
pit
alis
m i
n n
ort
h E
uro
pea
n c
ou
ntr
ies
as a
via
ble
alte
rnat
ive
arch
itec
ture
of
nat
ion
al c
om
pet
itiv
enes
s to
lib
eral
mar
ket
eco
no
mie
s an
d p
rop
ose
tw
o p
rin
cip
al m
ech
anis
ms
lin
kin
g f
irm
per
form
ance
an
d i
nst
itu
tion
al s
yst
em.
Th
e re
ason
fir
st c
on
cern
s in
stit
uti
on
al c
om
ple
men
tari
ty.
An
eco
no
my h
as s
ever
al i
nst
ituti
on
al
sph
eres
, n
ota
bly
th
e fi
nan
cial
sec
tor,
th
e la
bo
r, a
nd i
nd
ust
rial
rel
atio
ns
regim
e, a
nd
th
e ed
uca
tion
al a
nd
skil
ls t
rain
ing s
yst
ems.
Inst
itu
tion
al v
aria
tion
ari
ses
fro
m t
he
way
dif
fere
nt
nat
ion
al i
nst
itu
tion
al s
yst
ems
ach
ieve
coh
esio
n a
nd
way
s of
‘han
gin
g t
og
eth
er’
to
sup
port
hig
h-p
erfo
rmin
g f
irm
s an
d a
chie
ve
hig
h e
con
om
ic g
row
th (
Pec
k &
Zh
ang,
20
13).
Th
ese
inst
itu
tion
al c
om
ple
men
tari
ties
wit
hin
cou
ntr
ies
can
co-e
volv
e w
ith
th
ose
of
oth
er c
ou
ntr
ies
to p
rod
uce
dis
tin
ct g
over
nan
ce c
on
figu
rati
on
s.
T
he
seco
nd
key
con
cept
is i
som
orp
his
m. E
ach
var
iety
of
capit
alis
m i
s sa
id t
o p
rod
uce
an
‘em
ble
mat
ic f
irm
’ (B
oyer
, 2
00
5),
an
org
anis
atio
nal
form
par
ticu
larl
y w
ell
adap
ted
to i
ts n
atio
nal
in
stit
uti
on
al s
yst
em.
Th
e em
ble
mat
ic f
irm
in
th
e L
iber
al M
ark
et E
con
om
y
(LM
E),
as
we
hav
e al
read
y s
een
, is
a c
apit
al m
ark
et-g
ov
ern
ed, m
anag
eria
lly c
on
troll
ed, sh
areh
old
er v
alu
e-m
axim
izin
g f
irm
. M
ore
rece
ntl
y,
emer
gin
g m
ark
et s
chola
rs p
rop
ose
th
e d
iver
sifi
ed b
usi
nes
s gro
up a
s th
e em
ble
mat
ic f
orm
of
corp
ora
te o
rgan
izat
ion
in
th
e
hig
h-p
erfo
rmin
g A
sian
eco
no
mie
s (C
arn
ey,
Ged
ajlo
vic
, &
Yan
g,
20
09
). A
rgu
ably
, th
e S
OE
may
be
the
emble
mat
ic f
irm
in
sta
te
capit
alis
t sy
stem
s (M
asu
cch
io,
Laz
zari
ni,
Agu
iler
a, 2
01
5).
Th
e in
stit
uti
on
al s
yst
em,
ther
efore
, su
ppli
es f
irm
s w
ith
‘in
stit
uti
on
al
11
capit
al’
so t
hat
fir
ms
fit,
or
bec
om
e is
om
orp
hic
wit
h, pre
vai
lin
g m
od
es o
f in
stit
uti
on
al f
un
ctio
nin
g.
Nat
ion
al i
nst
itu
tion
al s
yst
ems
wil
l
dif
fer
in t
he
way
th
ey i
nfl
uen
ce t
he
stru
ctu
re o
f em
ble
mat
ic f
irm
s, a
nd
th
eir
capac
ity t
o a
cco
mm
od
ate
non
-em
ble
mat
ic f
irm
s, a
nd
isom
orp
hic
pro
cess
es i
n d
iffe
ren
t co
nfi
gu
rati
on
s, t
her
efore
, re
sult
in
var
ied
fo
rms
of
com
par
ativ
e in
stit
uti
on
al a
dv
anta
ge
(Sch
nei
der
,
Sch
ulz
e-B
entr
op &
Pau
nes
cu, 2
01
0).
Th
us,
as
firm
s st
rive
to a
cces
s re
sou
rces
in
th
eir
loca
l en
vir
on
men
t, t
hey
are
lik
ely t
o d
evel
op
sim
ilar
pra
ctic
es a
dap
ted
to t
hei
r par
ticu
lar
inst
itu
tion
al c
on
figu
rati
on
(H
all
& S
osk
ice,
20
01).
T
he
VO
C f
ram
ework
was
bas
ed o
n a
det
aile
d s
tud
y o
f a
few
dev
elop
ed e
con
om
ies,
an
d t
he
fram
ewo
rk d
oes
not
adeq
uat
ely
captu
re t
he
full
in
tern
atio
nal
het
ero
gen
eity
am
on
gst
in
stit
uti
on
al c
on
figu
rati
on
s (G
lober
man
an
d S
hap
iro,
20
02
). A
pply
ing f
uzz
y s
et
anal
ysi
s to
mu
ltip
le m
easu
rem
ents
of
nat
ion
al i
nst
itu
tion
al c
har
acte
rist
ics,
FJA
S (
20
16
) ex
ten
ded
th
e n
oti
on
of
the
inst
itu
tion
al s
yst
em
from
aty
polo
gy t
o a
n e
mpir
ical
ly b
ased
tax
on
om
y,
wh
ich
ex
pli
citl
y i
ncl
ud
ed e
mer
gin
g,
dev
elopin
g a
nd
tra
nsi
tion
cou
ntr
ies.
T
he
full
VIS
cla
ssif
icat
ion
of
nin
e n
atio
nal
syst
ems,
or
confi
gu
rati
ons,
is
pre
sen
ted
in
Tab
le 1
; th
e fi
rst
two a
re t
he
VO
C t
rad
itio
nal
LM
E a
nd
CM
E e
con
om
ies,
con
tain
ing d
evel
op
ed E
uro
pea
n a
nd
An
glo
-Sax
on
eco
no
mie
s. O
ur
rese
arch
con
sid
ers
on
ly t
he
latt
er s
even
con
figu
rati
on
, w
hic
h w
ere
dev
eloped
to c
over
th
e u
nd
erst
ud
ied
eco
no
mie
s of
Eas
tern
Eu
rope,
Asi
a, L
atin
Am
eric
a, a
nd A
fric
a. O
ur
pro
posi
tion
is
that
fir
m p
erfo
rman
ce w
ill
be
infl
uen
ced
by t
he
con
figu
rati
on
to w
hic
h a
cou
ntr
y b
elo
ngs,
in
ad
dit
ion
to s
tan
dar
d
per
form
ance
eff
ects
at
the
firm
an
d n
atio
nal
lev
el.
Th
us,
th
e w
ay t
hat
en
terp
rise
s m
igh
t re
solv
e in
tern
al c
on
trad
icti
on
s an
d i
nte
rnal
ise
exte
rnal
eff
ects
mig
ht
be
ver
y d
iffe
ren
t, f
or
exam
ple
, in
th
e em
ergin
g L
ME
(h
ence
fort
h c
on
figu
rati
on
1 b
ecau
se,
as s
how
n i
n T
able
2,
we
do n
ot
cover
th
e L
ME
an
d C
ME
con
figu
rati
on
s of
VIS
in
ou
r w
ork
) an
d s
tate
-led
(co
nfi
gu
rati
on
5)
con
figu
rati
on
s re
spec
tivel
y.
Pri
vat
e fi
rms
pro
bab
ly r
epre
sen
t th
e em
ble
mat
ic f
irm
s in
th
e fo
rmer
an
d S
OE
s in
th
e la
tter
(S
hap
iro a
nd
Glo
ber
man
, 2
01
2).
Oth
er V
IS
12
con
figu
rati
on
s m
ay a
lso h
ave
sett
led
in
to a
sta
ble
in
stit
uti
on
al e
qu
ilib
riu
m;
for
exam
ple
, th
e fa
mil
y-l
ed c
on
figu
rati
on
(co
nfi
gu
rati
on
2
in T
able
2)
is d
om
inat
ed b
y p
ow
erfu
l re
nt-
seek
ing
bu
sin
ess
gro
ups,
whic
h r
esis
t in
stit
uti
on
al d
evel
op
men
ts t
hat
ch
alle
nge
thei
r re
nts
(Car
ney
, D
ura
n,
van
Ess
en &
Sh
apir
o,
20
17
).
DA
TA
AN
D M
ET
HO
DS
Ou
r d
atas
et h
as t
hre
e d
imen
sion
s –
fir
m;
cou
ntr
y;
and
tim
e. T
he
info
rmat
ion
ab
ou
t fi
rms
der
ives
fro
m t
he
Wo
rld
Ban
k E
nte
rpri
se
Su
rvey
(W
BE
S)
(htt
p:/
/dat
a.w
orl
dban
k.o
rg/d
ata-
cata
log/e
nte
rpri
se-s
urv
eys)
; an
en
terp
rise
dat
abas
e1 c
oll
ecte
d b
y s
urv
eys
of
over
12
0,0
00
fir
ms
in m
ore
th
an 1
30
cou
ntr
ies
acro
ss A
sia,
Lat
in A
mer
ica,
Eas
tern
an
d C
entr
al E
uro
pe,
an
d A
fric
a b
etw
een
20
06
an
d 2
01
6
(Worl
d B
ank, 2
01
1).
Th
e W
orl
d B
ank c
on
du
cted
th
e su
rvey
s at
dif
fere
nt
dat
es w
ith
so
me
cou
ntr
ies
hav
ing o
nly
on
e w
ave
(e.g
., B
razi
l
and
In
dia
), m
ost
hav
ing t
wo a
nd
a f
ew h
avin
g t
hre
e (e
.g.,
Bu
lgar
ia a
nd
DR
Con
go).
T
he
VIS
typ
olo
gy o
f in
stit
uti
on
al s
yst
ems
in T
able
1 i
ncl
ud
es m
any o
f th
e co
un
trie
s su
rvey
ed b
y W
BE
S2;
of
the
68
cou
ntr
ies
in V
IS,
the
WB
ES
dat
aset
co
ver
s 5
7. T
able
2 l
ists
th
em a
nd
sh
ow
s h
ow
th
eir
clas
sifi
cati
on
in
to t
he
seven
VIS
con
figu
rati
on
s (c
onfi
gs)
,
as w
ell
as p
rovid
ing i
nfo
rmat
ion
ab
ou
t th
e n
um
ber
of
firm
s in
eac
h c
ou
ntr
y s
ample
. U
sin
g t
hes
e 5
7 c
ou
ntr
ies
giv
es u
s a
max
imu
m
sam
ple
of
over
86
,00
0 f
irm
s, b
ut
we
excl
ud
e m
icro
-fir
ms
(few
er t
han
10
) fo
r th
e co
mpar
ison
of
SO
Es
and
PO
Es,
red
uci
ng t
he
sam
ple
to a
rou
nd
55
,00
0 f
irm
s.
We
also
can
not
anal
yse
all
of
the
con
figu
rati
on
s b
ecau
se w
e d
o n
ot
hav
e d
ata
abou
t an
y c
ou
ntr
y i
n
con
figu
rati
on
4 (
cen
tral
ized
tri
be)
in
th
e W
BE
S s
ample
. W
e u
se d
um
my v
aria
ble
s to
all
oca
te e
ach
of
the
57
cou
ntr
ies
in t
he
sam
ple
to
1 T
he
sa
mp
lin
g is
ran
do
m w
ith
re
pla
cem
en
t a
nd
str
ati
fie
d t
o b
e c
ou
ntr
y r
ep
rese
nta
tiv
e w
ith
re
spe
ct t
o f
irm
siz
e,
bu
sin
ess
se
cto
r, a
nd
ge
og
rap
hic
re
gio
n.
2 T
he
cla
ssif
ica
tio
n i
s b
ase
d o
n d
ata
co
lle
cte
d f
rom
a p
an
el
of
exp
ert
s w
hic
h i
s a
na
lyse
d t
o i
de
nti
fy s
ev
en
in
stit
uti
on
al
syst
em
s th
at
cate
go
rize
go
ve
rna
nce
arr
an
ge
me
nt
for
68
un
de
rstu
die
d c
ou
ntr
ies.
13
the
appro
pri
ate
on
e of
the
six
av
aila
ble
VIS
con
figu
rati
on
s as
in
Tab
le 2
. In
ou
r re
gre
ssio
ns,
we
alw
ays
use
as
ou
r p
oin
t of
refe
ren
ce
con
figu
rati
on
5,
emer
gen
t li
ber
al m
arket
eco
nom
ies
(EL
ME
s);
this
rep
rese
nts
for
ou
r sa
mple
of
un
der
stu
die
d e
con
om
ies
the
inst
itu
tion
al s
yst
em c
lose
st t
o t
he
trad
itio
nal
An
glo
-Sax
on
go
ver
nan
ce m
od
el.
-Ta
ble
s 1 &
2:
ab
ou
t h
ere-
O
ur
mea
sure
of
firm
per
form
ance
is
lab
or
pro
du
ctiv
ity (
LP
RO
D),
def
ined
in
th
e W
BE
S a
s re
al s
ales
per
work
er. W
e an
alyse
stat
e ow
ner
ship
(S
OE
) re
gar
din
g m
ajori
ty o
wn
ersh
ip a
nd
so l
oad
it
as a
du
mm
y v
aria
ble
tak
ing t
he
val
ue
un
ity w
hen
th
e st
ate
ow
ns
more
th
an 5
0%
of
the
equ
ity i
n t
he
firm
. W
e co
ntr
ol
for
oth
er f
acto
rs l
ikel
y t
o i
nfl
uen
ce f
irm
per
form
ance
. T
he
most
im
port
ant
of
thes
e at
th
e co
un
try l
evel
is
the
level
of
nat
ion
al e
con
om
ic d
evel
op
men
t w
hic
h w
e m
easu
re a
s G
DP
per
cap
ita
(GD
Pp
c) m
easu
red i
n
logs.
We
also
con
trol
in t
hes
e d
evel
opin
g c
ou
ntr
ies
for
FD
I an
d t
he
impac
t of
spil
lover
s fr
om
dev
eloped
eco
no
mie
s u
sin
g c
ou
ntr
y-
lev
el d
ata
on
th
e so
urc
e o
f F
DI,
nam
ely t
he
per
cen
tag
e of
the
FD
I st
ock
der
ived
fro
m d
evel
op
ed e
con
om
ies,
als
o m
easu
red
in
lo
gs.
Bec
ause
of
thes
e p
ote
nti
al e
xte
rnal
eff
ects
fro
m f
ore
ign
ow
ned
fir
ms,
we
expec
t fi
rm p
erfo
rman
ce t
o b
e h
igh
er t
he
gre
ater
th
e
per
cen
tage
of
FD
I to
a h
ost
eco
no
my f
rom
dev
eloped
eco
no
mie
s.
We
also
em
plo
y t
wo f
irm
-lev
el c
on
trols
for
com
pan
y p
erfo
rman
ce,
ente
red
in
lo
gs.
Th
us,
we
incl
ud
e a
mea
sure
of
firm
siz
e
and
fir
m a
ge;
lar
ger
fir
ms
and
mat
ure
fir
ms
are
typic
ally
ass
oci
ated
wit
h h
igh
er l
evel
s of
pro
du
ctiv
ity (
Hal
l &
Wei
ss,
19
67;
Moen
,
19
99
). W
e al
so i
ncl
ud
e in
du
stry
an
d t
ime
fix
ed e
ffec
ts.
We
rep
ort
var
iable
def
init
ion
s an
d s
ou
rces
for
all
dep
end
ent
and
in
dep
end
ent
var
iable
s in
Tab
le 3
.
Co
mm
en
t [A
P1
]: D
o y
ou
ta
ke
in
to
acc
ou
nt
M&
A o
ve
r th
e p
eri
od
an
d
oth
er
typ
es
of
ow
ne
rsh
ip c
ha
nge
s?
Fo
r in
sta
nce
, if
a c
om
pa
ny
be
com
es
sta
te-o
wn
ed
, o
r p
riv
ati
sed
? I
f so
, h
ow
ma
ny
co
’s d
oe
s th
at
con
cern
?
14
-Ta
ble
3:
ab
ou
t h
ere-
We
rep
ort
des
crip
tive
stat
isti
cs i
n T
able
4 a
nd
corr
elat
ion
coef
fici
ents
in
Tab
le 5
. W
e fi
nd
in
Tab
le 4
, w
hic
h r
eport
s d
escr
ipti
ve
stat
isti
cs t
hat
th
e av
erag
e fi
rm e
mplo
ys
arou
nd
11
0 w
ork
ers
and
is
18
yea
rs o
ld.
Most
fir
ms
focu
s o
n t
hei
r d
om
esti
c m
arket
(th
e sh
are
of
exp
ort
s av
erag
es 7
.5%
sal
es).
So
me
5%
of
firm
s in
th
e sa
mple
are
sta
te-o
wn
ed,
and
an
oth
er 5
% a
re (
maj
ori
ty)
fore
ign
ow
ned
. O
n
aver
age,
aro
un
d o
ne-
thir
d o
f F
DI
der
ives
fro
m o
ther
em
ergin
g a
nd
dev
elopin
g c
ou
ntr
ies.
Tab
le 5
rev
eals
th
at t
he
corr
elat
ion
coef
fici
ents
bet
wee
n t
he
ind
epen
den
t var
iable
s ar
e al
most
all
rat
her
sm
all,
most
ly w
ell
bel
ow
0.3
, su
gges
tin
g t
hat
mu
ltic
oll
inea
rity
is
not
a se
riou
s is
sue
in o
ur
dat
a3.
-Ta
ble
s 4
& 5
ab
ou
t h
ere-
Ou
r m
od
el i
s th
eref
ore
:
Ln
(L
PR
OD
) =
a1 +
a2 ln
(fi
rm a
ge)
= a
3 ln
(fi
rm s
ize)
+ a
4 (
FD
I st
ock
) +
a5 ln
(G
DP
pc)
+ a
6 ∑
I =
1..
6 (
Con
fig) i
+ a
7 S
OE
+ a
8 S
OE
*∑
i =
1..
6 (
Con
fig) i
+ ∑
ind
ust
ry d
um
mie
s +
∑ t
ime
du
mm
ies.
(
1)
3 O
ne
exc
ep
tio
n i
s th
e p
osi
tiv
e c
orr
ela
tio
n b
etw
ee
n F
DI
sto
ck f
rom
de
ve
lop
ed
eco
no
mie
s a
nd
GD
P p
er
cap
ita
. H
ow
ev
er,
in
un
rep
ort
ed
re
gre
ssio
ns
we
fin
d t
ha
t
om
issi
on
of
the
fo
rme
r d
oe
s n
ot
infl
ue
nce
th
e r
esu
lts
con
cern
ing
th
e h
yp
oth
ese
s, s
o w
e i
ncl
ud
e b
oth
va
ria
ble
s in
ou
r re
po
rte
d r
eg
ress
ion
s.
Co
mm
en
t [A
P2
]: I
kn
ow
th
at
pu
ttin
g in
fir
m d
um
mie
s w
ill w
ipe
ou
t
the
SO
E d
um
my
, h
ow
eve
r, I
th
ink it
wo
uld
be
go
od
to
dis
cuss
th
at
in t
he
lim
ita
tio
ns,
esp
. a
fte
r a
ll t
he
lit
t. I
n
eco
n r
eg
ard
ing
th
e im
pa
ct o
f
ma
na
ge
me
nt
on
fir
ms’
pro
du
ctiv
ity
(Va
n R
ee
ne
n e
t a
l.).
Als
o,
pe
rha
ps
as
rob
ust
ne
ss,
yo
u
try
alt
ern
ati
ve
de
pe
nd
en
t v
ari
ab
les,
for
inst
an
ce R
OC
E p
rofi
tab
ilit
y
Co
mm
en
t [A
P3
]: D
o y
ou
ha
ve
in
fo
on
all o
f th
em
? D
ep
en
din
g o
n t
he
da
tab
ase
th
ere
is
a lo
t o
f m
issi
ng
in
fo
for
this
va
ria
ble
. It
wo
uld
be
go
od
to
kn
ow
wh
eth
er
the
sa
mp
le is
red
uce
d
or
no
t a
fte
r in
clu
din
g t
his
va
r. (
N is
mis
sin
g in
th
e d
esc
rip
tive
sta
ts.)
Co
mm
en
t [A
P4
]: T
he
re’s
a t
yp
o
he
re
Co
mm
en
t [A
P5
]: H
av
e y
ou
r tr
ied
log
to
tal
ass
ets
as
an
alt
ern
ati
ve
?
So
me
tim
es
info
on
em
plo
ye
es
is le
ss
acc
ura
te t
ha
n t
ota
l a
sse
ts
Co
mm
en
t [A
P6
]: I
f y
ou
ha
ve
tim
e
du
mm
ies,
yo
u n
ee
d t
ime
in
dic
es.
Als
o
firm
in
dic
es,
as
the
da
ta is
at
the
fir
m
lev
el
Ha
ve
yo
ur
trie
d t
o p
ut
cou
ntr
y
du
mm
ies?
Th
ey
ma
y n
ot
com
ple
tely
ov
erl
ap
wit
h y
ou
r co
nfi
gu
rati
on
du
mm
ies.
Th
at
cou
ld b
e d
on
e a
s a
rob
ust
ne
ss t
est
.
Co
mm
en
t [A
P7
]: S
tan
da
rd e
rro
rs
sho
uld
be
clu
ste
red
at
the
fir
m le
ve
l
15
We
esti
mat
e fi
ve
mod
els
usi
ng O
LS
. In
th
e fi
rst,
we
incl
ud
e th
e co
ntr
ol
var
iable
s ex
clu
din
g c
on
figs;
fo
r m
od
el 2
we
add
th
e fi
ve
is
con
figu
rati
on
du
mm
y v
aria
ble
s (c
on
figs
1,
2, 3
, 6
, an
d 7
) an
d f
or
mod
el 3
we
incl
ud
e on
ly t
he
con
trol
var
iable
s an
d t
he
SO
E m
ajori
ty
du
mm
y.
Mod
el 4
, th
en i
ncl
ud
es a
ll f
ive
con
figu
rati
on
s d
um
mie
s an
d S
OE
as
wel
l as
th
e co
ntr
ol
var
iable
s. F
inal
ly,
in m
od
el 5
, w
e ad
d
the
fiv
e in
tera
ctio
n t
erm
s bet
wee
n t
he
con
figu
rati
on
du
mm
ies
and
SO
E. T
he
test
of
the
per
form
ance
eff
ect
of
stat
e ow
ner
ship
dep
end
s
on
th
e si
gn
an
d s
ign
ific
ance
of
a7,
wh
ile
the
imp
act
of
inst
itu
tion
al s
yst
ems
dep
end
s on
a6. T
he
mod
erat
ing e
ffec
ts o
f th
e in
stit
uti
on
al
syst
em o
n S
OE
per
form
ance
rel
ativ
e to
PO
Es
com
es f
rom
th
e co
effi
cien
ts o
n t
he
coef
fici
ent
a 8.
RE
SU
LT
S
We
rep
ort
ou
r re
sult
s in
Tab
le 5
, m
od
els
1-5
. W
e h
ave
just
un
der
55
,00
0 o
bse
rvat
ion
s ac
ross
57
co
un
trie
s in
ou
r sa
mple
, an
d i
n o
ur
full
spec
ific
atio
n,
we
exp
lain
so
me
22
% o
f th
e var
iati
on
in
th
e d
epen
den
t v
aria
ble
. W
e n
ote
fro
m m
od
el 1
th
at t
he
con
trol
var
iable
s ar
e
all
sign
ific
ant
wit
h t
he
expec
ted
sig
n,
and
fro
m m
od
el 2
th
at f
irm
per
form
ance
is
sign
ific
antl
y i
nfl
uen
ced
by l
oca
tion
wit
hin
a
par
ticu
lar
con
figu
rati
on
. In
par
ticu
lar,
th
e om
itte
d c
on
figu
rati
on
, n
um
ber
4 (
emer
gen
t L
ME
) is
th
e m
ost
su
pp
ort
ive
of
pro
du
ctiv
ity a
t
the
firm
lev
el,
foll
ow
ed b
y c
on
figs
1 (
stat
e le
d)
and
5 (
coll
abora
tive)
. T
her
e is
a s
econ
d c
lust
er o
f co
nfi
gu
rati
on
s w
ith
per
form
ance
effe
cts
qu
ite
sim
ilar
to e
ach
oth
er b
ut
sign
ific
antl
y w
ors
e th
an c
on
figs1
an
d 5
, n
amel
y c
on
figs
7 (
hie
rarc
hic
ally
co
ord
inat
ed);
2
(fra
gm
ente
d)
and
fin
ally
3 (
fam
ily l
ed).
Th
is r
ankin
g o
f th
e p
rod
uct
ivit
y e
ffec
ts o
f co
nfi
gu
rati
on
s d
oes
not
chan
ge
in t
he
dif
fere
nt
spec
ific
atio
ns.
16
-Ta
ble
5:
ab
ou
t h
ere-
T
he
coef
fici
ent
on
sta
te o
wn
ersh
ip i
s fo
un
d t
o b
e p
osi
tiv
e an
d s
ign
ific
ant
in a
ll t
he
mod
els
in w
hic
h i
t is
in
clu
ded
. T
his
ind
icat
es t
hat
in
ou
r sa
mple
of
un
der
stu
die
d e
con
om
ies,
sta
te o
wn
ersh
ip i
s fo
un
d t
o i
ncr
ease
lab
ou
r pro
du
ctiv
ity,
all
oth
er t
hin
gs
equ
al.
Th
is r
esu
lt h
old
s w
hen
th
e S
OE
du
mm
y i
s en
tere
d w
ith
ou
t co
nfi
gs
in m
od
el 3
, an
d w
ith
con
figs
in m
od
el 4
. T
he
coef
fici
ent
and
stan
dar
d e
rror
on
th
e S
OE
var
iable
are
not
sign
ific
antl
y a
lter
ed b
y t
he
incl
usi
on
of
the
con
fig d
um
mie
s.
M
od
el 5
all
ow
s u
s to
sim
ult
aneo
usl
y c
on
sid
er t
he
pro
du
ctiv
ity e
ffec
ts o
f st
ate
ow
ner
ship
an
d t
he
mod
erat
ing i
mp
act
of
con
figu
rati
on
s an
d t
ells
a m
ore
co
mple
x s
tory
th
an o
ur
anal
ysi
s h
ith
erto
. In
th
is m
od
el,
we
do n
ot
fin
d t
hat
sta
te o
wn
ed f
irm
s h
ave
a
hig
her
lev
el o
f la
bou
r p
rod
uct
ivit
y t
han
pri
vat
e on
es;
the
SO
E d
um
my i
nd
icat
es t
hat
th
ere
is n
o s
ign
ific
ant
dif
fere
nce
bet
wee
n S
OE
s
and
PO
Es
regar
din
g p
rod
uct
ivit
y.
How
ever
, as
pre
vio
usl
y,
pro
du
ctiv
ity i
s fo
un
d t
o b
e h
igh
er i
n l
arg
er a
nd
old
er f
irm
s, a
nd
in
cou
ntr
ies
wit
h h
igh
er l
evel
of
dev
elop
men
t (G
PP
pc)
an
d w
ith
gre
ater
FD
I fr
om
dev
eloped
eco
no
mie
s (%
of
FD
I st
ock
). F
urt
her
more
,
pro
du
ctiv
ity r
emai
ns
sign
ific
antl
y a
ffec
ted
by t
he
inst
itu
tion
al s
yst
em o
f th
e co
un
try i
n w
hic
h t
he
firm
is
loca
ted.
Ho
wev
er,
in m
od
el 5
we
also
id
enti
fy t
he
con
figu
rati
on
for
wh
ich
th
e S
OE
may
be
con
sid
ered
th
e “e
mble
mat
ic f
irm
”. T
hu
s, w
hil
e th
e co
effi
cien
t on
th
e
SO
E d
um
my i
s in
sign
ific
ant
in m
od
el 5
, it
is
not
wh
en i
nte
ract
ed w
ith
th
e “s
tate
led
” co
nfi
gu
rati
on
du
mm
y.
In s
hort
, in
ou
r sa
mple
of
17
un
der
stu
die
d e
con
om
ies,
SO
Es
and
PO
Es
do n
ot
dis
pla
y s
ign
ific
antl
y d
iffe
ren
t le
vel
s o
f la
bou
r p
rod
uct
ivit
y,
and
th
is h
old
s in
ev
ery
con
figu
rati
on
ex
cept
the
stat
e le
d o
ne.
How
ever
, in
th
e st
ate
led
con
figu
rati
on
(co
nfi
g 1
), p
rod
uct
ivit
y i
s h
igh
er i
n s
tate
ow
ned
fir
ms4
.
CO
NC
LU
SIO
NS
In t
his
pap
er,
we
firs
t ad
van
ce t
he
lite
ratu
re o
n b
oth
sta
te o
wn
ersh
ip a
nd
nat
ion
al i
nst
itu
tion
al s
yst
ems
by f
ocu
sin
g o
n t
he
impac
t of
thes
e sy
stem
s on
th
e p
erfo
rman
ce o
f fi
rms
fro
m e
mer
gin
g a
nd
dev
elo
pin
g e
con
om
ies.
We
test
an
d v
alid
ate
FJA
S’s
(2
01
6)
tax
on
om
y o
f in
stit
uti
on
al s
yst
ems
and
dem
on
stra
te t
hat
th
e co
nfi
gu
rati
on
s pro
vid
e a
n i
nd
epen
den
t an
d s
tati
stic
ally
sig
nif
ican
t
expla
nat
ion
of
the
var
iati
on
in
fir
m p
erfo
rman
ce a
cross
cou
ntr
ies.
Fu
rth
erm
ore
, F
JAS
’s v
arie
ties
of
inst
itu
tion
al s
yst
ems
per
spec
tiv
e
intr
od
uce
for
un
der
stu
die
d c
ou
ntr
ies
a n
ew e
lem
ent
that
is
con
spic
uou
sly a
bse
nt
from
th
e V
OC
per
spec
tiv
e, n
amel
y a
mo
re p
rom
inen
t
role
for
the
stat
e.
S
econ
dly
, ou
r re
sult
s sh
ed l
igh
t on
th
e kin
ds
of
inst
itu
tion
al a
rran
gem
ents
th
at w
ill
sup
port
bet
ter
ente
rpri
se p
erfo
rman
ce.
Wit
h
its
dep
icti
on
of
pat
h-d
epen
den
t in
stit
uti
on
al c
han
ge
(Hal
l &
Th
elan
, 2
00
9),
th
e co
mp
arat
ive
capit
alis
m l
iter
atu
re h
as e
mph
asiz
ed
inst
itu
tion
al c
on
tin
uit
y a
nd
th
e p
ersi
sten
ce o
f var
iety
in
cap
ital
ist
stru
ctu
res
(Jac
kso
n &
Dee
g, 2
00
8).
Th
is c
har
acte
riza
tion
may
be
app
ropri
ate
in t
he
con
tex
t of
mat
ure
in
stit
uti
on
al s
etti
ngs,
bu
t le
ss s
o i
n u
nd
erst
ud
ied
cou
ntr
ies
wh
ich
co
mpri
se a
wid
e ar
ray o
f
tran
siti
on
al,
soci
alis
t, a
nd
au
thori
tari
an r
egim
es.
Ou
r ra
nkin
g r
esu
lts
shed
so
me
pre
lim
inar
y a
nd
ad
mit
ted
ly t
enta
tive
ligh
t on
th
ese
deb
ates
, s
ug
ges
tin
g a
ran
ge
of
dis
tin
ctiv
e tr
ajec
tori
es o
f in
stit
uti
on
al c
han
ge
and
fir
m p
erfo
rman
ce.
For
exam
ple
, ou
r ev
iden
ce p
oin
ts
4 W
e co
nsi
der
in
un
rep
ort
ed r
egre
ssio
ns
the
resu
lts
from
a b
road
er s
ample
in
clu
din
g a
ll t
he
smal
l fi
rms
(< 1
0 w
ork
ers)
. T
his
in
crea
sed
th
e sa
mple
siz
e b
y a
rou
nd
30
%,
and
more
so i
n f
rag
men
ted
an
d f
amil
y-l
ed c
on
figu
rati
on
s. W
e re
-est
imat
ed m
od
els
4 a
nd
5 o
n t
hes
e sa
mple
s, a
nd
th
e re
sult
s w
ere
extr
emel
y s
imil
ar i
n a
ll k
ey r
espec
ts.
18
to t
hre
e re
lati
vel
y h
igh
-per
form
ing c
on
figu
rati
on
s: e
mer
gen
t L
ME
s (c
on
fig
2),
in
wh
ich
fir
ms
ran
k f
irst
in
pro
du
ctiv
ity,
coll
abora
tiv
e
agglo
mer
atio
ns
(con
fig 6
) a
nd
sta
te l
ed (
con
fig 1
). T
he
latt
er f
ind
ing m
igh
t be
a sh
ock
to s
tron
g b
elei
ver
s o
f th
e W
ash
ingto
n
Con
sen
sus,
bu
t per
hap
s le
ss s
o t
o o
bse
rver
s of
the
rise
of
Ch
ina
and
oth
er s
tate
led
eco
no
mie
s in
Eas
t A
sia
and
els
ewh
ere.
W
e
char
acte
rize
th
e d
evel
op
men
tal
traj
ecto
ries
of
this
con
figu
rati
on
s in
dyn
amic
ter
ms
wh
ere
rela
tivel
y s
tron
g-s
tate
s ar
e pro
acti
ve
in
bu
ild
ing c
om
ple
men
tari
ties
to a
dd
ress
in
stit
uti
on
al c
on
trad
icti
on
s an
d s
eekin
g t
o d
evel
op a
coh
eren
t m
ark
et-b
ased
in
stit
uti
on
al
fram
ewo
rk.
In t
hes
e se
ttin
gs,
wh
ere
mar
ket
s an
d o
ther
sel
ecti
on
mec
han
ism
s ar
e in
ten
sifi
ed,
and d
om
esti
c fi
rms
are
ince
nti
viz
ed t
o
adap
t an
d i
mpro
ve
thei
r pra
ctic
es,
hig
h l
evel
s o
f per
form
ance
can
be
ach
iev
ed. S
tron
g s
tate
s re
tain
wh
at E
van
s’ (
19
89
) d
escr
ibes
as
emb
edd
ed a
uto
no
my,
and
av
oid
dep
end
ence
up
on
pow
erfu
l oli
gar
chs
or
fam
ily e
lite
s. T
he
pro
min
ent
role
of
the
stat
e is
su
gges
tive
of
a g
ov
ern
men
t p
oli
cy c
hoic
e fa
vo
rin
g e
xp
ort
-ori
ente
d d
evel
op
men
t, a
wel
l-tr
od
den
pat
h f
or
late
-in
du
stri
aliz
ing s
tate
s (A
msd
en,
19
91
).
Imp
ort
antl
y,
stat
e le
d c
ou
ntr
ies
do n
ot
app
ear
to b
e co
nv
ergin
g o
n e
ith
er t
he
CM
E o
r L
ME
var
ieti
es o
f ca
pit
alis
m;
inst
ead
, it
may
repre
sen
t an
alt
ern
ativ
e, h
ybri
diz
ed f
orm
of
stat
e ca
pit
alis
m.
Man
y o
f th
e co
un
trie
s in
th
ese
con
figu
rati
on
s ar
e re
lati
vel
y s
table
sin
gle
-
par
ty s
tate
s w
ith
lon
g t
ime
ho
rizo
ns
and
in
cen
tiv
es t
o a
dopt
open
tra
de
poli
cies
th
at i
mpro
ve
lon
g-t
erm
eco
nom
ic p
erfo
rman
ce.
Th
e
impli
cati
on
is
that
sta
te l
ead
ersh
ip o
f th
e ec
on
om
y b
eco
mes
a p
erm
anen
t fe
atu
re o
f th
ese
econ
om
ic s
yst
ems.
W
e co
ncl
ud
e b
y a
ckn
ow
led
gin
g s
om
e li
mit
atio
ns
of
this
stu
dy a
nd
pro
vid
ing s
om
e fu
rth
er g
uid
ance
fo
r fu
ture
res
earc
h.
Ou
r
stu
dy f
aces
lim
itat
ion
s at
both
th
e th
eore
tica
l an
d e
mpir
ical
lev
els.
Co
mm
enci
ng w
ith
th
eory
, w
e h
ave
foll
ow
ed t
he
lite
ratu
re i
n b
asin
g
ou
r cl
assi
fica
tion
of
inst
itu
tion
al s
yst
ems
up
on
tax
on
om
ies,
wh
ich
der
ive
thei
r cl
assi
fica
tory
dis
tin
ctio
ns
from
em
pir
ical
ly o
bse
rved
clu
ster
s o
f ch
arac
teri
stic
s, r
ath
er t
han
fro
m a
n u
nd
erly
ing c
on
ceptu
aliz
atio
n a
s w
ou
ld b
e th
e bas
is f
or
a ty
polo
gy.
Giv
en t
hat
19
un
der
stu
die
d e
con
om
ies
are
typ
ical
ly e
volv
ing r
apid
ly a
nd
are
oft
en s
ubje
ct t
o s
ign
ific
ant
inst
itu
tio
nal
ch
anges
, so
met
imes
rel
ated
to
rev
olu
tion
, ci
vil
war
or
maj
or
econ
om
ic a
nd
so
cial
dev
elop
men
t (C
oll
ier,
20
07
), o
ur
tax
on
om
y m
ay p
rovid
e an
un
stab
le b
asis
for
lon
g-
term
an
alysi
s. F
urt
her
mo
re,
we
hav
e ch
ose
n t
o b
ase
ou
r st
ud
y o
n t
he
VIS
cla
ssif
icat
ion
, w
ith
ou
r co
ntr
ibu
tion
pri
mar
ily f
ocu
sed
on
explo
rin
g t
he
com
ple
x i
nte
r-re
lati
on
ship
s am
on
g i
nst
itu
tion
al s
yst
ems,
en
terp
rise
go
ver
nan
ce s
yst
em,
and
fir
m p
erfo
rman
ce.
Wh
ile
ou
r re
sear
ch h
as p
rovid
ed s
om
e ev
iden
ce o
f th
e v
alid
ity o
f th
e V
IS t
axon
om
y i
n e
xpla
inin
g f
irm
per
form
ance
in
un
der
stu
die
d
econ
om
ies,
fu
ture
res
earc
her
s m
ay w
ish
to r
evis
it t
he
tax
on
om
y i
tsel
f to
ex
plo
re w
het
her
clu
ster
an
alysi
s b
ased
on
a r
ich
er
char
acte
riza
tion
of
inst
itu
tion
s ca
n p
rovid
e an
equ
ally
val
id b
ut
more
fin
e-g
rain
ed s
pec
ific
atio
n o
f in
stit
uti
on
al s
yst
ems
in
un
der
stu
die
d e
con
om
ies.
On
th
e em
pir
ical
sid
e, w
e h
ave
ben
efit
ted
fro
m t
he
Worl
d B
ank’s
vas
t d
ata
coll
ecti
on
ex
erci
se a
t th
e en
terp
rise
lev
el o
n
un
der
stu
die
d e
con
om
ies.
How
ever
, th
e W
BE
S d
atas
et a
lso i
mp
ose
s so
me
lim
itat
ion
s. M
ost
im
po
rtan
tly,
thou
gh
th
ere
are
a fe
w
cou
ntr
ies
surv
eyed
th
ree
tim
es,
the
bu
lk o
f th
e d
atas
et c
om
pri
ses
eith
er s
ingle
yea
r obse
rvat
ion
s or
obse
rvat
ion
s fr
om
on
ly t
wo w
aves
.
Th
is h
as m
ade
it i
mp
oss
ible
to u
se e
mpir
ical
met
hod
s th
at d
isti
ngu
ish
bet
wee
n f
irm
-lev
el, co
un
try-l
evel
, an
d c
on
figu
rati
on
eff
ects
.
Fu
ture
wo
rk m
ay,
ther
efo
re,
nee
d t
o s
eek e
ith
er p
anel
dat
a fo
r u
nd
erst
ud
ied
eco
no
mie
s or
focu
s pri
mar
ily o
n t
he
cou
ntr
ies
wit
h t
hre
e
wav
es t
o e
xplo
re t
hes
e d
isti
nct
ion
s. F
urt
her
more
, th
e d
ata
do h
ave
cert
ain
lim
itat
ion
s, c
on
cern
ing p
erfo
rman
ce a
nd
ow
ner
ship
mea
sure
s, a
nd
fu
ture
res
earc
h s
hou
ld i
nves
tig
ate
way
s to
im
pro
ve
thes
e m
easu
res.
Ou
r an
alysi
s w
ou
ld,
in p
arti
cula
r, b
e im
pro
ved
by
usi
ng a
mea
sure
of
tota
l fa
ctor
pro
du
ctiv
ity
.
20
In
su
mm
ary,
we
pro
pose
an
d f
ind
evid
ence
for
the
argu
men
t th
at,
wh
en w
e tu
rn o
ur
atte
nti
on
to u
nd
erst
ud
ied
econ
om
ies,
sta
te o
wn
ed f
irm
s ca
n p
erfo
rm b
ette
r th
an p
riv
ate
on
es,
thou
gh
on
ly i
n t
he
righ
t in
stit
uti
on
al e
nvir
on
men
t. W
e h
ave
fou
nd
this
“ri
gh
t in
stit
uti
on
al e
nvir
on
men
t” t
o b
e th
e on
e re
ferr
ed t
o w
ith
in t
he
VIS
cla
ssif
icat
ion
as
“sta
te l
ed,”
an
d u
nsu
rpri
sin
gly
it
incl
ud
es s
om
e o
f th
e su
cces
sfu
l ec
on
om
ies
of
Eas
t A
sia
such
as
Ch
ina.
Th
us
in e
con
om
ic s
yst
ems
in w
hic
h t
he
stat
e ac
ts a
s th
e piv
ota
l
coo
rdin
ator
of
econ
om
ic a
ctiv
ity a
nd
pro
vid
es t
he
sup
port
an
d c
om
ple
men
tari
ties
gen
erat
ing e
con
om
ic d
evel
opm
ent,
sta
te o
wn
ed
firm
s ar
e m
ore
pro
du
ctiv
e th
an p
rivat
e on
es.
We
hav
e n
ot
in t
his
pap
er c
on
sid
ered
th
e m
ech
anis
ms
wh
ereb
y t
he
stat
e pro
vid
es s
up
port
to S
OE
s in
sta
te-l
ed e
con
om
ies,
an
d t
his
may
in
clu
de
stat
e-pro
vid
ed s
ubsi
die
s, p
refe
rred
acc
ess
to c
riti
cal
inpu
t re
sou
rces
, an
d
mon
op
oly
pow
er i
n o
utp
ut
mar
ket
s. T
his
is
an i
mp
ort
ant
topic
for
futu
re r
esea
rch
.
21
BIB
LIO
GR
AP
HY
Agu
iler
a, R
. V
., &
Cre
spi-
Cla
der
a, R
. (2
01
6).
Glo
bal
corp
ora
te g
over
nan
ce:
On
th
e re
levan
ce o
f fi
rms’
ow
ner
ship
str
uct
ure
. Jo
urn
al
of
Wo
rld
Busi
nes
s, 5
1(1
), 5
0-5
7.
Am
sden
, A
. H
. (1
99
1).
Dif
fusi
on
of
dev
elop
men
t: T
he
late
-in
du
stri
aliz
ing m
od
el a
nd
gre
ater
Eas
t A
sia.
A
mer
ica
n E
con
om
ic
Rev
iew
, 8
1(2
), 2
82
-28
6.
Boar
dm
an,
A.,
an
d A
. V
inin
g.
19
89
. “O
wn
ersh
ip a
nd
Per
form
ance
in
Co
mpet
itiv
e E
nvir
on
men
ts:
A
Com
par
ison
of
the
Per
form
ance
of
Pri
vat
e, M
ixed
, an
d S
tate
-Ow
ned
En
terp
rise
s.”
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rna
l of
La
w a
nd E
con
om
ics
32
(1
): 1
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3.
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ney
, M
., G
edaj
lovic
, E
., &
Yan
g,
X.
(20
09
). V
arie
ties
of
Asi
an c
apit
alis
m:
Tow
ard
an
in
stit
uti
on
al t
heo
ry o
f A
sian
en
terp
rise
. A
sia
Pa
cifi
c Jo
urn
al
of
Ma
nag
emen
t, 2
6(3
), 3
61
-38
0.
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ney
, M
., D
ura
n,
P.,
van
Ess
en,
M.,
Sh
apir
o,
D.
(20
17
). F
amil
y f
irm
s an
d n
atio
nal
com
pet
itiv
enes
s: d
oes
fam
ily f
irm
pre
val
ence
m
atte
r? J
ou
rna
l of
Fa
mil
y B
usi
nes
s S
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y on
lin
e.
Coll
ier,
P.
(20
07
). T
he
Bo
tto
m B
illi
on
. O
xfo
rd:
Ox
ford
Un
iver
sity
Pre
ss.
Est
rin
, S
., a
nd
Per
oti
n,
V.,
(1
99
1):
"D
oes
Ow
ner
ship
Alw
ays
Mat
ter"
, In
tern
ati
on
al
Jou
rna
l of
Ind
ust
ria
l O
rga
niz
ati
on,
Vol.
9, p
p.
55
-7
2.
Est
rin
, S
., H
anou
sek,
J., K
oče
nd
a, E
., &
Sv
ejn
ar,
J. (
20
09
). T
he
effe
cts
of
pri
vat
izat
ion
an
d o
wn
ersh
ip i
n t
ran
siti
on
ec
on
om
ies.
Jo
urn
al
of
Eco
no
mic
Lit
era
ture
, 4
7(3
), 6
99-7
28
.
Est
rin
, S
. &
Pel
leti
er, A
. (2
01
8).
Pri
vat
izat
ion
in
Dev
elopin
g C
ou
ntr
ies:
Wh
at A
re t
he
Les
son
s of
Rec
ent
Ex
per
ien
ce?
Wo
rld
Ba
nk
Eco
no
mic
Rev
iew
, 2
01
8,
33
, 6
5-1
02
.
Evan
s, P
. (
19
95
).
Em
bed
ded
Au
ton
om
y: S
tate
s a
nd
In
dust
ria
l A
uto
no
my
Pri
nce
ton
: P
rin
ceto
n U
niv
ersi
ty P
ress
. F
ain
shm
idt,
S.,
Ju
dge,
W.
Q.,
Agu
iler
a, R
. V
., &
Sm
ith
, A
. (2
01
6).
Var
ieti
es o
f in
stit
uti
on
al s
yst
ems:
A c
on
tex
tual
tax
on
om
y o
f u
nd
erst
ud
ied
cou
ntr
ies.
Jo
urn
al
of
Wo
rld
Busi
nes
s. o
nli
ne
22
Fri
edm
an,
M.,
(1
96
2),
Cap
ital
ism
an
d F
reed
om
, C
hic
ago:
Un
iver
sity
of
Ch
icag
o P
ress
. G
alal
, A
., L
. Jo
nes
, T
and
on
, P
. an
d V
og
elsa
ng,
I. (
19
94
). W
elfa
re C
on
seq
uen
ces
of
Sel
ling
Pu
bli
c E
nte
rpri
ses.
Ox
ford
: O
xfo
rd
Un
iver
sity
Pre
ss.
Glo
ber
man
S,
and
Sh
apir
o D
. (2
00
2).
Glo
bal
fo
reig
n d
irec
t in
ves
tmen
t fl
ow
s: T
he
role
of
go
ver
nan
ce i
nfr
astr
uct
ure
s. W
orl
d
Dev
elop
men
t 3
0(1
1):
18
99
-19
19
.
Gu
gle
r, K
., P
eev,
E.,
& S
egal
la, E
. (2
01
3).
Th
e in
tern
al w
ork
ings
of
inte
rnal
cap
ital
mar
ket
s: C
ross
-cou
ntr
y e
vid
ence
. Jo
urn
al
of
Co
rpo
rate
Fin
an
ce, 2
0,
59-7
3.
Hal
l, P
. A
., &
Sosk
ice,
D.
W.
(20
01
). V
ari
etie
s of
cap
ita
lism
: T
he
inst
itu
tion
al
fou
nd
ati
ons
of
com
pa
rati
ve a
dva
nta
ge. O
xfo
rd:
Ox
ford
U
niv
ersi
ty P
ress
. H
all,
P.
A.,
& T
hel
en,
K.
(20
09
). I
nst
itu
tion
al c
han
ge
in v
arie
ties
of
capit
alis
m.
So
cio
-Eco
no
mic
Rev
iew
, 7(1
), 7
-34
. H
all,
M.,
& W
eiss
, L
. (1
96
7).
Fir
m s
ize
and
pro
fita
bil
ity.
Th
e R
evie
w o
f E
con
om
ics
an
d S
tati
stic
s, 4
9(3
), 3
19
-33
1.
Hay
ek,
von
F.A
. (1
94
4).
Th
e R
oa
d t
o S
erfd
om
. L
on
don
: R
ou
tled
ge.
H
osk
isso
n,
R.
E.,
Wri
gh
t, M
., F
ilat
otc
hev
, I.
, &
Pen
g,
M.
W.
(20
13
). E
mer
gin
g m
ult
inat
ion
als
from
mid
-ran
ge
econ
om
ies:
Th
e in
flu
ence
of
inst
itu
tion
s an
d f
acto
r m
arket
s. J
ou
rna
l of
Ma
nag
emen
t S
tud
ies,
50(7
), 1
29
5-1
32
1.
Jack
son
G.
& D
eeg,
R.
(2
00
8).
C
om
par
ing c
apit
alis
ms:
u
nd
erst
and
ing i
nst
itu
tion
al d
iver
sity
an
d i
ts i
mpli
cati
on
s f
or
in
tern
atio
nal
bu
sin
ess,
Jo
urn
al
of
In
tern
ati
on
al
Busi
nes
s S
tud
ies,
39
, 4
, 5
40
-56
1.
Jom
o,
K.
S.
(20
08).
“A
Cri
tica
l R
evie
w o
f th
e E
vo
lvin
g P
riv
atiz
atio
n D
ebat
e.”
In P
riva
tiza
tio
n:
Su
cces
ses
an
d F
ail
ure
s, e
dit
ed b
y G
. R
ola
nd
, 1
99
–2
12
. N
ew Y
ork
: C
olu
mbia
Un
iver
sity
Pre
ss.
Kh
ann
a, T
., &
Pal
epu
, K
. G
. (2
01
0).
Win
nin
g i
n e
mer
gin
g m
ark
ets:
A r
oa
d m
ap
fo
r st
rate
gy
an
d e
xecu
tio
n. H
arvar
d B
usi
nes
s P
ress
.
23
Kolo
dk
o,
G.
(19
99
). T
ran
siti
on
to a
mar
ket
eco
no
my a
nd
su
stai
ned
gro
wth
. Im
pli
cati
on
s fo
r th
e p
ost
-Was
hin
gto
n c
on
sen
sus,
C
om
mu
nis
t a
nd
Post
-Com
mu
nis
t S
tud
ies
32
(3
), 2
33
-26
1.
Kolo
dk
o,
G.
(20
02
). F
rom
sh
ock
to
th
erap
y: t
he
po
liti
cal
eco
no
my
of
post
soci
ali
st t
ransf
orm
ati
on
, O
xfo
rd:
Ox
ford
Un
iver
sity
Pre
ss.
Korn
ai, J.
(1990):
The
Road t
o a
Fre
e E
conom
y. S
hif
ting f
rom
a S
oci
ali
st S
yste
m:
The
Exa
mple
of
Hungary
, N
ew Y
ork
: W
. W
. N
ort
on a
nd
Budap
est:
HV
G K
iadó.
La
Port
a, R
., &
Lop
ez-d
e-S
ilan
es, F
. (1
99
9).
“B
enef
its
of
Pri
vat
izat
ion
-Evid
ence
fro
m M
exic
o.”
Qu
art
erly
Jo
urn
al
of
Eco
no
mic
s 1
14
(4
): 1
19
3–2
42
. M
usa
cch
io,
A.
& L
azza
rin
i, S
. (2
01
4)
Rei
nve
nti
ng
Sta
te C
ap
ita
lism
: L
evia
tha
n i
n B
usi
nes
s, B
razi
l an
d B
eyo
nd
. 1
st e
d. C
amb
rid
ge,
M
ass.
: H
arvar
d U
niv
ersi
ty P
ress
. M
usa
cch
io,
A.,
& L
azza
rin
i, S
. G
& A
gu
iler
a, R
. V
. (
20
15
). N
ew v
arie
ties
of
stat
e ca
pit
alis
m:
Str
ateg
ic a
nd
go
ver
nan
ce
impli
cati
on
s. A
cad
emy
of
Ma
na
gem
ent
Per
spec
tive
s, 2
9(1
), 1
15-1
31
.
Meg
gin
son
W.
(20
05
): T
he
Fin
an
cia
l E
con
om
ics
of
Pri
vati
zati
on
, O
xfo
rd U
niv
ersi
ty P
ress
, N
ew Y
ork
. M
eggin
son
, W
. &
Net
ter,
J.
(20
01
). “
Fro
m S
tate
to
Mar
ket
: A
Su
rvey
of
Em
pir
ical
Stu
die
s on
Pri
vat
izat
ion
.” J
ou
rna
l of
Eco
no
mic
Lit
era
ture
39
(2
): 3
21
–8
9.
Moen
, Ø
. (1
99
9).
Th
e re
lati
on
ship
bet
wee
n f
irm
siz
e, c
om
pet
itiv
e ad
van
tag
es a
nd
ex
port
per
form
ance
rev
isit
ed.
Inte
rna
tio
na
l S
ma
ll
Busi
nes
s Jo
urn
al,
18(1
), 5
3-7
2.
No
rth
, D
. C
. (1
99
4).
E
con
om
ic p
erfo
rman
ce t
hro
ugh
tim
e. A
mer
ica
n E
con
om
ic R
evie
w, 8
4, 3
59
-68
. N
uti
, D
.M.
(20
18
). T
he
Ris
e, F
all
an
d F
utu
re o
f S
oci
ali
sm,
EA
CE
S C
on
fere
nce
20
18
Key
note
Ad
dre
ss
Rod
rik,
D.
(20
06
). G
ood
bye
Was
hin
gto
n C
on
sen
sus,
Hel
lo W
ash
ingto
n C
on
fusi
on
? A
Rev
iew
of
the
Worl
d B
ank's
Eco
no
mic
Gro
wth
in
th
e 1
99
0s:
Lea
rnin
g f
rom
a D
ecad
e of
Ref
orm
. Jo
urn
al
of
Eco
no
mic
Lit
era
ture
, 4
4 (
4):
97
3-9
87
. S
hap
iro,
D.
& G
lob
erm
an,
S.
(20
12
). “
Th
e In
tern
atio
nal
Act
ivit
ies
and
Im
pac
ts o
f S
tate
-Ow
ned
En
terp
rise
s” i
n S
ove
reig
n I
nve
stm
ent:
24
Co
nce
rns
an
d P
oli
cy R
eact
ion
s, K
arl
P.
Sau
van
t, L
isa
Sac
hs
and
Wou
ter
P.F
. S
chm
it J
on
gblo
ed (
edit
ors
), O
xfo
rd U
niv
ersi
ty P
ress
, 2
01
2 (
Ch
apte
r 5
).
Sh
leif
er, A
. &
Vis
hn
y,
R.
(19
94
): “
Poli
tici
ans
and
Fir
ms.
” Q
ua
rter
ly J
ou
rna
l of
Eco
no
mic
s 4
6:
99
5-1
02
5
Sch
nei
der
, M
. R
., S
chu
lze-
Ben
trop,
C.,
& P
aun
escu
, M
. (2
01
0).
Map
pin
g t
he
inst
itu
tion
al c
apit
al o
f h
igh
-tec
h f
irm
s: A
fu
zzy-s
et
anal
ysi
s o
f ca
pit
alis
t var
iety
an
d e
xp
ort
per
form
ance
. Jo
urn
al
of
Inte
rna
tio
na
l B
usi
nes
s S
tud
ies,
41(2
), 2
46
-26
6.
Sti
gli
tz, J.
E.
(19
98)
“More
In
stru
men
ts a
nd
Bro
ader
Goal
s: M
ovin
g T
ow
ard
th
e P
ost
-Was
hin
gto
n C
on
sen
sus,
” th
e 1
99
8 W
IDE
R
An
nu
al L
ectu
re,
Hel
sin
ki,
Jan
uar
y 1
99
8,
repri
nte
d C
hap
ter
1 i
n T
he
Reb
el W
ith
in,
Ha-
Joon
Ch
ang (
ed.)
, L
on
don
: W
imble
do
n
Publi
shin
g C
om
pan
y,
20
01
, p
p.
17
-56
. W
ade,
R.
(20
03
) G
ove
rnin
g t
he
Ma
rket
: E
con
om
ic T
heo
ry a
nd
th
e R
ole
of
Go
vern
men
t in
East
Asi
an
In
dust
ria
liza
tio
n. P
rin
ceto
n, N
J:
Pri
nce
ton
Un
iver
sity
Pre
ss.
Wil
liam
son
, J.
(1
99
0)
“Wh
at W
ash
ingto
n M
ean
s b
y P
oli
cy R
eform
,” C
hap
ter
2 i
n L
ati
n
Am
eric
an
Adju
stm
ent:
Ho
w M
uch
Has
Hap
pen
ed?
Joh
n W
illi
amso
n (
ed.)
, 1
99
0,
Was
hin
gto
n:
Inst
itu
te f
or
Inte
rnat
ion
al E
con
om
ics.
Vic
ker
s, J
., a
nd
G.
Yar
row
. (1
98
8).
Pri
vati
zati
on
: A
n E
con
om
ic A
na
lysi
s. C
ambri
dg
e, M
A:
MIT
Pre
ss.
Wo
rld
Ban
k (
20
11
), U
nd
erst
an
din
g t
he
Qu
esti
on
na
ire.
Av
aila
ble
fro
m:
htt
ps:
//w
ww
.en
terp
rise
surv
eys.
org
/~/m
edia
/GIA
WB
/En
terp
rise
Su
rvey
s/D
ocu
men
ts/M
eth
od
olo
gy/Q
ues
tion
nai
re-M
anu
al.p
df.
(A
cces
sed
: 1
9 O
ctob
er 2
01
7).
25
Tab
le 1
: F
JAS
(2
01
6)
VIS
Con
figu
rati
on
s in
68
Un
der
stu
die
d C
ou
ntr
ies
Sum
mar
y o
f cl
assi
fica
tion S
chem
e
M
arket
-bas
ed
Coll
abora
tive
Sta
te-L
ed
Fra
gm
ente
d w
ith
Fam
ily-
Cen
tral
ized
E
mer
gen
t C
oll
abora
tive
Hie
rarc
hic
ally
(L
ME
)*
(CM
E)*
Fra
gil
e S
tate
L
ed
Tri
be
LM
E
Agglo
mer
atio
ns
Coord
inat
ed
Aust
rali
a A
ust
ria
Arg
enti
na
Angola
A
lger
ia
Bah
rain
B
ots
wan
a C
zech
Rep
ub
lic
Bulg
aria
C
anad
a B
elgiu
m
Ban
gla
des
h
Cam
eroon
Aze
rbai
jan
Iran
C
hil
e E
stonia
G
eorg
ia
Irel
and
Den
mar
k
Bel
arus
D.R
. C
ongo
B
razi
l K
uw
ait
Hong K
ong
Hungar
y
Jord
an
New
Zea
land
Fin
land
Chin
a E
gyp
t C
olo
mb
ia
Qat
ar
Isra
el
Lat
via
K
azak
hst
an
Sw
itze
rlan
d
Fra
nce
**
India
E
thio
pia
M
exic
o
Sau
di
Ara
bia
N
amib
ia
Lit
huan
ia
Kore
a (S
outh
) U
K
Ger
man
y
Indones
ia
Ghan
a M
oro
cco
UA
E
Sin
gap
ore
P
ola
nd
Leb
anon
U
SA
It
aly**
Mal
aysi
a K
enya
Nig
eria
South
Afr
ica
Slo
vak
Rep
ubli
c R
om
ania
Ja
pan
M
ongoli
a R
wan
da
Per
u
Slo
ven
ia
Tai
wan
N
ether
lands
Pak
ista
n
Sen
egal
T
unis
ia
T
urk
ey
N
orw
ay
Phil
ippin
es
Sudan
Y
emen
Ukra
ine
P
ort
ugal
**
Russ
ia
Tan
zania
S
pai
n**
Sri
Lan
ka
Ugan
da
Sw
eden
T
hai
land
Ven
ezuel
a
V
ietn
am
* T
hes
e ec
onom
ies
hav
e b
een c
lass
ifie
d b
y H
all
and S
osk
ice
(2001)
and s
ub
sequen
t li
tera
ture
. T
he
LM
E g
roup
corr
esp
onds
to t
he
com
par
tmen
tali
zed s
yst
em i
n W
hit
ley’s
NB
S,
and t
he
CM
E e
nco
mpas
ses
var
ious
sub
typ
es o
f co
llab
ora
tive
syst
ems
incl
uded
in N
BS
such
as
coll
abora
tive,
hig
hly
coo
rdin
ated
, an
d c
oord
inat
ed i
ndust
rial
dis
tric
t.
** T
hes
e ec
onom
ies
are
oft
en c
lass
ifie
d a
s uniq
ue
sub
typ
es o
f co
llab
ora
tive
syst
ems
wher
e th
ere
is m
ore
sta
te d
om
inan
ce a
nd,
in s
om
e ca
ses,
rel
ativ
ely l
iber
al l
abor
rela
tions
(Sch
nei
der
, 2013;
Hal
l &
Thel
en,
2009;
Gro
svold
& B
ram
mer
, 2011).
26
Tab
le 2
: W
orl
d B
ank E
nte
rpri
se S
urv
ey S
ample
Cou
ntr
ies
wit
hin
th
e V
IS C
on
figu
rati
on
Str
uct
ure
an
d N
um
ber
of
Fir
ms
in e
ach
Cou
ntr
y
Con
fig1
C
on
fig2
C
on
fig3
C
on
fig5
C
on
fig6
C
on
fig7
Sta
te-l
ed
Fra
gm
ente
d/
frag
ile
stat
e F
amil
y l
ed
Em
ergen
t L
ME
C
oll
abora
tive
Ag
glo
mer
atio
ns
Hie
rarc
hic
ally
co
ord
inat
ed
Cou
ntr
y
Fre
q.
Cou
ntr
y
Fre
q.
Cou
ntr
y
Fre
q.
Cou
ntr
y
Fre
q.
Cou
ntr
y
Fre
q.
Cou
ntr
y
Fre
q.
Arg
enti
na
2,1
17
A
ng
ola
7
85
Aze
rbai
jan
7
70
Bots
wan
a 6
10
Cze
ch R
epu
bli
c 5
04
Bu
lgar
ia
1,5
96
Ban
gla
des
h
2,9
46
C
amer
oon
3
63
Bra
zil
1,8
02
Ch
ile
2,0
50
Est
on
ia
54
6
Geo
rgia
7
33
Bel
aru
s 6
33
D
R C
on
go
1
,22
8
Colo
mbia
1
,94
2
Isra
el
48
3
Hu
ng
ary
6
01
Jord
an
57
3
Ch
ina
2,7
00
E
gyp
t 2
,89
7
Mex
ico
2
,96
0
Nam
ibia
9
09
Lat
via
6
07
Kaz
akh
stan
1
,14
4
Ind
ia
9,2
81
E
thio
pia
1
,49
2
Moro
cco
4
07
Sou
th A
fric
a 9
37
Lit
hu
ania
5
46
Leb
anon
5
61
Ind
on
esia
2
,76
4
Gh
ana
1,2
14
Nig
eria
4
,56
7
Pola
nd
9
97
Rom
ania
1
,08
1
Mal
aysi
a 1
,00
0
Ken
ya
1,4
38
Per
u
1,6
32
Slo
vak
5
43
Tu
rkey
2
,49
6
Mon
goli
a 7
22
R
wan
da
45
3
Tu
nis
ia
59
2
Slo
ven
ia
54
6
Uk
rain
e 1
,85
3
Pak
ista
n
2,1
82
S
eneg
al
1,1
07
Yem
en
83
0
Ph
ilip
pin
es
2,6
61
S
ud
an
66
2
Ru
ssia
5
,22
4
Tan
zan
ia
1,2
32
Sri
Lan
ka
61
0
Ug
and
a 1
,32
5
Th
aila
nd
1
,00
0
Ven
ezu
ela
82
0
Vie
tnam
2
,04
9
Tota
l 3
6,7
09
T
ota
l 1
4,1
96
Tota
l 1
5,5
02
Tota
l 4
,98
9
Tota
l 4
,89
0
Tota
l 1
0,0
37
27
Tab
le 3
: D
efin
itio
ns
and
Sou
rces
of
Var
iable
s
Var
iable
D
efin
itio
n
Sou
rce
Pro
du
ctiv
ity (
Lo
g)
Lab
or
pro
du
ctiv
ity i
s re
al s
ales
(u
sin
g G
DP
d
efla
tors
) d
ivid
ed b
y f
ull
-tim
e per
man
ent
wo
rker
s W
BE
S
Exp
ort
(%
of
tota
l sa
les
that
are
ex
po
rted
dir
ectl
y)
S
ales
exp
ort
ed d
irec
tly a
s per
cen
tage
of
tota
l sa
les.
W
BE
S
Fir
m A
ge(
Lo
g)
Yea
r fi
rm b
egan
op
erat
ion
to y
ear
of
surv
ey
con
du
cted
W
BE
S
Fir
m S
ize
(Lo
g)
Lo
g o
f n
um
ber
of
per
man
ent
wo
rker
s W
BE
S
% o
f F
DI
sto
ck f
rom
D
evel
oped
Eco
nom
ies
(Lo
g)
Per
cen
tag
e of
FD
I fr
om
dev
eloped
cou
ntr
ies
to
sou
rce
econ
om
y
UN
CT
AD
's B
ilat
eral
FD
I S
tati
stic
s
GD
P p
er C
apit
a (L
og
)
GD
P p
er c
apit
a is
gro
ss d
om
esti
c pro
du
ct d
ivid
ed
by m
idyea
r p
opu
lati
on
. G
DP
is
the
sum
of
gro
ss
val
ue
add
ed b
y a
ll r
esid
ent
pro
du
cers
in
th
e ec
on
om
y p
lus
any p
rod
uct
tax
es a
nd
min
us
any
subsi
die
s n
ot
incl
ud
ed i
n t
he
val
ue
of
the
pro
du
cts.
It
is
calc
ula
ted
wit
hou
t m
akin
g d
edu
ctio
ns
for
dep
reci
atio
n o
f fa
bri
cate
d a
sset
s o
r fo
r d
eple
tion
an
d d
egra
dat
ion
of
nat
ura
l re
sou
rces
. D
ata
are
in
curr
ent
U.S
. d
oll
ars.
Th
e var
iable
is
load
ed i
n l
ogs.
Wo
rld
Ban
k W
orl
d
Dev
elop
men
t In
dic
ato
rs
Tab
le 4
: D
escr
ipti
ve
Sta
tist
ics
Var
iable
M
ean
S
td.
Dev
. M
in
Max
Lab
or
Pro
du
ctiv
ity(L
og)
13
.60
2
.79
-3.4
0
29
.00
Exp
ort
(%
of
tota
l sa
les
that
are
ex
port
ed d
irec
tly)
7
.54
8
22
.06
0
10
0
Fir
m A
ge
17
.72
1
4.9
1
0
21
0
Fir
m S
ize
1
12
.5
51
4.9
0
37
77
2
% o
f F
DI
sto
ck f
rom
Dev
elop
ed E
con
om
ies
64
.73
2
4.0
1
0
99
GD
P p
er C
apit
a 5
59
7.7
6
53
38
.56
24
6.8
03
36
28
1.2
Co
mm
en
t [A
P8
]: M
ay
be
ad
d
p2
5,
p5
0,
p7
5
28
Tab
le 5
: R
egre
ssio
n R
esu
lts;
Bas
e S
ample
Ex
clu
des
Sm
all
Fir
ms
Var
iable
L
abo
r P
rod
uct
ivit
y(L
og)
as D
epen
den
t V
aria
ble
Mo
del
1
Mo
del
2
Mo
del
3
Mo
del
4
Mo
del
5
Fir
m A
ge
(Lo
g)
0.0
50
**
-0.0
12
0.0
45
**
-0.0
16
-0.0
15
(0
.01
5)
(0.0
15
) (0
.01
5)
(0.0
15
) (0
.01
5)
Fir
m S
ize
(Lo
g)
0.0
81
**
0.0
53
**
0.0
75
**
0.0
48
**
0.0
49
**
(0
.00
9)
(0.0
09
) (0
.00
9)
(0.0
09
) (0
.00
9)
% o
f F
DI
stock
0
.26
7*
*
0.3
93
**
0.2
76
**
0.4
02
**
0.4
09
**
(0
.02
5)
(0.0
25
) (0
.02
5)
(0.0
25
) (0
.02
5)
GD
P p
er C
apit
a -0
.86
3*
*
-1.0
90
**
-0.8
62
**
-1.0
93
**
-1.0
96
**
(0
.01
5)
(0.0
21
) (0
.01
5)
(0.0
21
) (0
.02
1)
Co
n1 (
Sta
te l
ed)
-1
.82
2*
*
-1
.83
5*
*
-1.8
49
**
(0
.06
1)
(0
.06
1)
(0.0
61
)
Co
n2 (
Fra
gm
ente
d)
-2
.91
7*
*
-2
.92
5*
*
-2.9
25
**
(0
.07
0)
(0
.07
0)
(0.0
70
)
Co
n3 (
Fam
ily l
ed)
-3
.06
6*
*
-3
.07
4*
*
-3.0
76
**
(0
.05
6)
(0
.05
6)
(0.0
56
)
Co
n6 (
Coll
abo
rati
ve)
-1.9
10
**
-1
.91
4*
*
-1.9
14
**
(0
.07
1)
(0
.07
1)
(0.0
71
)
Co
n7 (
Hie
rarc
hic
ally
)
-2.8
61
**
-2
.85
7*
*
-2.8
53
**
(0.0
63
)
(0.0
63
) (0
.06
3)
SO
E m
ajo
rity
1
.32
3*
*
1.2
76
**
-1.4
85
(0
.13
7)
(0.1
32
) (1
.23
4)
SO
E* C
on
1
3.3
68
**
(1
.24
5)
SO
E* C
on
2
1.5
15
(1
.30
0)
SO
E* C
on
3
1.3
76
(1
.31
7)
SO
E* C
on
6
2.2
93
(1
.35
9)
SO
E* C
on
7
0.8
86
(1
.34
2)
Co
nst
ant
18
.72
4*
*
24
.54
6*
*
18
.76
8*
*
24
.61
8*
*
24
.65
9*
*
29
Note
: F
igu
res
in p
aren
thes
es a
re s
tan
dar
d e
rrors
. *
**
den
ote
d s
tati
stic
al s
ign
ific
ance
at
the
99
.9%
lev
el;
**
den
ote
d s
tati
stic
al
sign
ific
ance
at
the
99
% l
evel
; *
den
ote
d s
tati
stic
al s
ign
ific
ance
at
the
95
% l
evel
.
(0
.19
1)
(0.2
51
) (0
.19
1)
(0.2
51
) (0
.25
1)
Ind
ust
ry C
on
trol
Yes
Y
es
Yes
Y
es
Yes
Y
ear
Co
ntr
ol
Yes
Y
es
Yes
Y
es
Yes
Ob
s 5
4,9
85
54
,98
5
54
,98
5
54
,98
5
54
,98
5
F
36
7.8
0
47
2.7
8
35
8.9
2
46
2.3
9
40
4.7
7
Adj
R-s
qu
ared
0
.15
7
0.2
21
0.1
59
0.2
22
0.2
23