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 nberg, 2008). Perceived leadership effectiveness, job-satiportant implications for researchers, business owners, policy makers and future research.