The impact of China's labor contract law on firm performance: Empirical evidence from taiwanese investment in China

Chang Yen Tsai*, Chengli Tien

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)

Abstract

This study extends research on issues relating to China's Labor Contract Law to clarify the relationship between the introduction of the legislation and Taiwanese investments in China, interacting with any industry effect. It also examines how Taiwanese firms' degree of dependence on China is associated with their performance. Models, based mainly on eclectic theory and institutional theory, are employed to test hypotheses using panel data from 1,015 Taiwanese investments in China over twenty-five quarters. The findings reveal that the adoption of China's Labor Contract Law and Taiwanese firms' dependence on China are not always associated with firm performance, and industry factors can, under some circumstances, moderate the impact of the Law on firm performance. The findings provide business practitioners with evidence as to whether a new law (in this case, the Labor Contract Law of China) can have an impact on a firm and how much the industry effect matters.

Original languageEnglish
Pages (from-to)101-147
Number of pages47
JournalIssues and Studies
Volume46
Issue number4
Publication statusPublished - 2010 Dec

Keywords

  • Eclectic theory
  • FDI
  • Institutional theory
  • Labor contract law
  • OLI

ASJC Scopus subject areas

  • Sociology and Political Science
  • Political Science and International Relations

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