Rent appropriation of knowledge-based assets and firm performance when institutions are weak: A study of Chinese publicly listed firms
A firm's strategic investments in knowledge-based assets through research and development (R&D) can generate economic rents for the firm, and thus are expected to affect positively a firm's financial performance. However, weak protection of minority shareholders, weak property rights, and ineffective law enforcement can allow those rents to be appropriated disproportionately by a firm's powerful insiders such as large owners and top managers. Recent data on Chinese publicly listed firms during 2007-2012 were used to demonstrate that the expected positive relationship between knowledge assets and performance is weaker in transition economies when a firm's ownership is highly concentrated and its managers have wide discretion. Moreover, rent appropriation by insiders was shown to vary with the levels of institutional development in which a firm operates.
research and development, rent appropriation, principal-principal conflict, managerial discretion, transition economies, China
Organizational Behavior and Theory | Strategic Management Policy
Strategy and Organisation
Strategic Management Journal
Wiley: 24 months
QIAN, Cuili; WANG, Heli; GENG, Xuesong; and YU, Yangxin.
Rent appropriation of knowledge-based assets and firm performance when institutions are weak: A study of Chinese publicly listed firms. (2017). Strategic Management Journal. Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/4940