Management structure and technology diffusion in Chinese state-owned enterprises

This paper identifies factors that can explain the variation in the diffusion of continuous casting technology among Chinese steel firms during the period 1985-1995. Potential factors affecting firm-level diffusion of continuous casting technology are tested econometrically using data from 75 Chinese steel firms. The results suggest that institutional factors, such as management structure, have had a significant influence on a firm's rate of diffusion. In particular, the results show that although centrally managed firms are typically the first to acquire a new technology, complete integration of the technology into the production process occurs more rapidly in firms that are locally managed. Furthermore, the results suggest that certain market factors are important in a locally managed firm's decision to convert, but seem to have played a lesser role in centrally managed firms. These results imply that although centrally managed firms have better access to new technologies due to their close ties to the central government, locally managed firms may possess a greater incentive to improve production efficiency through the incorporation of new technology.