TITLE:
The Impact of Import Competition on Enterprise Decentralization: Evidence from China
AUTHORS:
Chong Zhang
KEYWORDS:
Import Competition, Decentralization, Centralization
JOURNAL NAME:
Modern Economy,
Vol.15 No.9,
September
2,
2024
ABSTRACT: With the deepening of China’s opening to the outside world and the intensification of import competition, the devolution of power in the operation and management of Chinese enterprises may be affected. Using a sample of more than ten thousand manufacturing enterprises, this paper empirically studies the impact of import competition on the decentralization of Chinese enterprises. The results show that import competition significantly promotes a greater degree of centralization. The results of heterogeneity analysis show that when general manager is inexperienced and faced with import competition, they will be more inclined to centralize power; compared with SOEs, import competition has a bigger effect on the centralized management of private firms; when the technical capability of the enterprise is stronger and the complexity of the operation is higher, the more centralized power will be reduced. To deal with the endogeneity problem, the instrumental variable method is adopted to construct the tariff reduction indicator as the instrumental variable of import competition, and the estimation results are basically consistent with the benchmark regression results.