Performance and Growth of Large Firms in China

This study examines the impacts of several factors, such as internal capital markets, technology transfer via FDI, and in-house R&D activities on the performance and growth of firms using data gathered from the top 200 companies in China during the period 1998-2003. A finance company, as an affiliate in the business group, is used as proxy for the internal capital market. The foreign joint venture firms and in-house research center are used as proxies for technology transfer and for the existence of in-house R&D activities, respectively. This paper finds that having foreign joint ventures is positively correlated with the firms' growth but not with the financial and market performance of firms. In contrast, doing in-house R&D activities is positively correlated with the financial and market performances, as well as the growth of firms.