Ownership structure and corporate governance: A comparative analysis between private enterprise and State-owned entities in China
-For a long time, some economists have believed that State-owned Enterprises (SOEs) have weaker performance which is mainly caused by their natural mechanisms. And there are three evidences to support this argument. First, SOEs are deeply influenced by politics, such as full employment is one of the goals for most SOEs, which ignores the efficiency of the company’s human resources. Second, the managers of SOEs usually are not professional managers, who lacks management capability. Finally, owner omission is another important reason of inefficient corporate governance. Now, disciplinary committee found many problems of corporate governance in current China’s state-owned enterprises reorganization. Looking at the recent financial crisis, governments have made an effort to intervene in matters corporate to avoid such crisis (Zhang and Gao, 2011). For instance, the Chinese Anti-corruption storm has involved about 70 listed companies. On the other hand, Zhang and Gao (2011) see that strategic growth of organizations are disproportionate of the ownership structures. Zhang and Gao (2011) see that when the ownership and corporate levels are significant, it is true that ownership affects the financial level of companies while corporate levels address issues on functionality and strategic orientations. One question that might come from this is, how has ownership structures and corporate governance affected performance and growth in companies? Although similar studies have been done earlier, it is with the crrent state of the competition in the industry that sees the athor concern with what the two variables of corporate governance and ownership of companies play a role in performance of organizations. The author looks at a case of China Mobile and Huawei, leading corporations in China. This presents the idea of the issue at hand in a state-owned entity, a foreign entity and a private-owned entity. The largest communication systems in China and a foreign bank are significant for this case. Several companies in China have different organizational structures and the corporate governance in these organizations might seem different in terms of how operations are carried out. It is majorly a significant condition of any organizations in the world to have certain levels of performance that is controlled by the decision makers involved. For instance, in China, there is evidence of state owned organizations, private organizations and foreign organizations. Such organizations such as The Asian Development Bank in china (ADB) is a foreign based bank in china (ADB, 2015). The foreign systems that govern the operations of the bank. To begin with, the ADB bank in china is a subsidiary of the Asian Development Bank that has its headquarters in Manila, Philipines (ADB, 2015). It is evident that the parent bank has ownership strategies and corporate strategies that govern its operations. It is evident from the literature developed that the leadership is generally composed of a president who heads the management of the bank. The president chairs the meetings such as the annual general meetings. The president has a final say in the few decisions that need clarity for the bank, especially in international relations. The bank has six vice presidents and the Managing Director General completes the overall heads (ADB, 2015). More so, ADB bank has Board of Directors elected by the members at the state levels, with 4 of others elected from other foreign nationals. The chair heads the BOD, who inturn directs the financial, administration and the direct responsibilities in the bank (ADB, 2015).The China Mobile Limited (CML), a state-owned company, based in Beijing, China, is the leading provider of telecommunications in China (Business weekly, 2010). Huawei telecommunications company, a privately owned leader, based in Shenzen and Guangdong, China (CMCC profile, 2011). CML has a chairman, who is the CEO and the vice-chairman who make corporate decisions for the company, even as the government of China interferes in many of these decisions (Nishizawa, 2011). On the other hand, Huawei limited, has a 14-member board of governors and a five member supervisory board (Nathaniel, 2013; Anuradha, 2011). More so, the Huawei company grew by over 30% in profits in 2010 while the CML had grown by 3% in 2010 (Anuradha, 2011). While the decisions made in Huawei are entirely made by the Board of Governors, the People’s Republic of China’s Government makes the decisions in the CML CMCC profile, 2011 & Nishizawa, 2011). According to the Business weekly (2010) and CMCC profile (2011), Huawei has grown into global markets such as Cananda, USA, Africa and other countries while CML has grown into Pakistan and taken over fewer companies, even though it is a world leader in mobile communication. It is clear that the decisions made by the corporate management are not interfered by Ren Zhengfei while the corporate decisions in CML is interfered by the government. 1.1 Research objective and research questionsThe main objective of this study was to find out whether ownership structures have a significant effect on corporate governance and enterprise performance in China.The specific objectives are;1. To evaluate the governance structures in state owned entities, private owned entitiea and overseas funded entities in China.2. To determine the different types of regulatory frameworks for state owned entities, private owned entitiea and overseas funded entities in China.3. To evaluate the different models of corporate governance in Chinese companies.4. To find out the gaps in the corporate performance of and the influence of corporate governance in state owned entities, private owned entitiea and overseas funded entities in China.5. To determine improvement programs for organizations in China.1.2 Significance of the study To begin with, the findings of this study will be significant in identifying the significance of ownership structures and the governing structures in the enterprises that help improve the performance of organization. On the other hand, the findings presented in this study will be significant in identifying the various performance frameworks that have been employed in many performing organizations. More so, the research findings will be significant in presenting the main role of owners of organizations, the leadership of organizations such as the board members, directors and the employees in any organizations. 1.3 Limitations of the study With the current state of affairs in China, especially with the crackdown on the corruption in institutions, the researcher found it difficult to get the data from the Chinese companies. However, the researcher sought to address the main purpose of the study to the concerned respondents so as to get their concent while performing the study. additionally, the research was majorly based on the Chinese companies as opposed to many more in Asia and around the world. The study, would address the major organizations such that have grown in sizes in the recent past with an aim to have results that would address a larger spectrum. 1.4 Structure of this research This chapter has identified the major objectives of this study. More so, this chapter has presented the main reason for performing the study through the background presented in this chapter. The second chapter presents the literature material that addresses the main objectives of the study as presented by several authors. Additionally, the third chapter gives the research methodology employed by the researcher to collect the data for this study. The fourth chapter shows the results obtained during the study while the fifth chapter discusses the findings made during the study by analyzing the data collected. Chapter six describes the conclusions made from the analysed data while describing the implications and recommendation made during the study. Research methods (1500 words)3.1 Introduction Chapter 4 Data Analysis (2500 words)4.1 Introduction Data Findings and Presentation of the questionnaire Results AppendicesAppendix 1: References Required 80 to 85 sources (Mainly recent sources between 2005 to 2015) Nathaniel.A., (2013). “China’s Competitiveness Myth, Reality, and Lessons for the United States and Japan. Case Study: Huawei” (PDF). Center for Strategic and International Studies. Retrieved 3 October 2014.
Volume: 37 pages
Style: Harvard
UK English
Chapter 1 Introduction and Background (1000words)
Chapter 2 Literature review (3000words)2.1. Introduction2.2. Conclusion
3.2 Critically deductive approach and inductive approach 3.3 Research Design 3.4 Data Collection Methods and Sampling 3.5 Questionnaire design (One private company and one State-own company) 3.6 Data Analysis method3.7 Reliability and Validity 3.8 Conclusion
4.2ConclusionChapter 5 Conclusion and recommendations (2000 words)5.1. Introduction 5.2. Summary of Key Findings 5.3. Practical Implications of the study5.4. Limitation of this study 5.5. Recommendations and direction for further research
Chapter 6 Conclusions and Recommendations (1000 words)6.1. Introduction6.2. Conclusions6.3. Implications of the study6.4. Recommendations
Anuradha.S., (2011). Huawei maintained steady growth in 2010″.Computerworld.[online] available at www.news.idg.no/cw/art. cfm Retrieved 14 June 2011.Business weekely., 2010)., Huawei 2010 Profit Gains 30% on Higher International Sales”. Businessweek.[online] Available at. www.businessweekely.com. Retrieved 28 September 2011.CMCC Profile. 2011., CMCC Official Site onlione] available at http.chinamobile.com/en/mainland/about/profile_html retrieved 18th May 2011
Nishizawa.K.,2011., China Mobile, MTR, SJM Holdings, ZTE: Hong Kong Stocks Preview By, www.bloomberg.com.news –retrieved 17th May 2011 5:54 PM PT
Zhang.P., Gao. J., 2011. Exploring the Fit between Growth Strategy and Governance Structure in Chinese Entrepreneurial Firms Publisert: 7/2011 pg. 64-78