The Performance of Chinese Private Firms in Coping with a Global Financial Crisis: Who Is Best Positioned?

Abstract

Using organizational flexibility as a research lens, we investigate how private firms, especially SMEs, in China cope with the 2008 financial crisis. Testing data from a large sample of private firms (N=3,459) by difference-indifferences analysis, we find that firms with industrial diversification, geographic expansion and political connections perform better during the crisis than those without. These results are less affected by self-selection problems (as the abrupt crisis provides a natural experiment) and hold up against endogeneity and several other challenges in robustness tests. The findings offer important implications for researchers, business owners, policy makers and future research.

Keywords

crisis / flexibility / industrial diversification / geographic expansion / political connections / Chinese private firms

RIGHTS & PERMISSIONS

2017 Higher Education Press and Brill