Collective Decision-Making and Innovation Efficiency of State Owned Enterprises: “Brainstorming” or “Responsibility Avoidance”?

Abstract

Collective decision-making mechanisms can enhance decision-making efficiency through power oversight and knowledge complementarity. However, they may also diminish decision effectiveness due to prolonged deliberation and responsibility avoidance. The “three important and one large” policy, implemented by China in 2010, mandates that all major decisions in state-owned enterprises (SOEs) must be made collectively by their management teams, providing an ideal quasi-natural experimental setting for evaluating collective decision-making mechanisms. This study investigates the impact of these systems on innovation efficiency within state-owned enterprises, using the implementation of the “three important and one large” decision-making system as a quasi-natural experiment. Employing the propensity score matching-difference-in-differences (PSM–DID) methodology with data from A-share listed companies spanning 2007 to 2024, we evaluate the system’s outcomes. The results show that the “three important and one large” collective decision-making system significantly enhances SOE innovation efficiency, primarily through power oversight and knowledge complementarity. This positive effect is stronger with heightened media and analyst attention and when executive teams have diverse educational and professional backgrounds. These findings provide new empirical evidence on the system’s effectiveness and offer actionable policy insights to refine collective decision-making and strengthen SOE innovation.

Keywords

“Three important and one large” / collective decision-making / state-owned enterprises / innovation efficiency / quasi-natural experiment

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Systems Engineering Society of China and Springer-Verlag GmbH Germany

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