Study On Optimization Of Vertical Governance Of Industrial Chain Of China’s Equipment-manufacturing-industry

Big-but-not-strong and low-end-locked are the serious problems preventing China’s equipment-manufacturing-industry from enhancing the capacity of sustainable development. After the international financial crisis, developed countries have turned to revitalize manufacturing industry. Against such background, the gap between China’s equipment-manufacturing-industry and the one of the developed countries will be widened if those serious problems are not solved.As to the way to solve the problems of Big-but-not-strong and low-end-locked, the most important is to establish a comprehensive view of the industrial chain. With the rapid development of technology and economy, the industry organization has evolved in the direction of deepening the vertical division and networking. Against such background, this thesis sets the topic of optimization of vertical governance of industrial chain of China’s equipment-manufacturing-industry.The optimization of vertical governance of industrial chain includes two aspects which are the optimization of vertical governance structure and the optimization of vertical governance mechanism. The thesis studies the topic theoretically and empirically. The main contents and conclusions of this thesis are embodied in the following aspects:1. The fundamental reason of disintegration and networking of China’s equipment-manufacturing-industry is that coordination and cooperation improve the efficiency of interfirm network. The purpose of disintegration and networking is to pursue the high efficiency of interfirm network. And the fundamental source of such high efficiency is the coordination and cooperation. The thesis proves the viewpoint of the fundamental reason of disintegration and networking in two aspects:firstly, construct the cooperative game model to prove the creation of joint-surplus from cooperation; secondly, prove that coordination and cooperation can improve the efficiency of interfirm network by the method of logical reasoning and case analysis.2. The factors affecting the vertical disintegration and networking are asset specificity, technical and economic infrastructure and institutional infrastructure conditions.Firstly, according to the theory of transaction cost economics, asset specificity is the most important factor deciding the governance structure. With the rapid development of technology and economy, the degree of asset specificity is decreasing, which promotes the vertical disintegration and networking.Secondly, the development of technical and economic infrastructure reduces the market transaction cost, which promotes the vertical disintegration and networking. Technical and economic infrastructure mainly refers to the development of information technology, telecommunication industry and transportation industry. Among the above infrastructure, the function of the information technology on the evolution of the vertical governance structure is especially remarkable.Thirdly, the development of institutional infrastructure can also promote the vertical disintegration of industrial chain by reducing transaction costs. Institutional infrastructure discussed in this thesis mainly refers to the development of the market economic system and the legal system. The high market transaction cost mainly dues to the lack of institution. The appearance of hierarchy is the natural response to the lack of institution. With the development of the market economy system and the legal system, the vertical governance structure of industrial chain will evolve in the direction of vertical disintegration.3. Empirical study confirms that, for most industries of China’s equipment-manufacturing-industry, the vertical disintegration process significantly prove the productivity, and vertical disintegration process is affected significantly by asset specificity, technical and economic infrastructure and institutional infrastructure. The thesis establishes two panel data models to explore the productivity effect of vertical disintegration and the affecting factors of vertical disintegration.The results of the econometric analysis reveal that, for most industries of China’s equipment-manufacturing-industry, the vertical disintegration of industrial chain has a significant positive effect on TFP; the degree of asset specificity has a significant negative effect on vertical disintegration; the development of technical and economic infrastructure and institutional infrastructure has a significant positive effect on vertical disintegration. Based on the above empirical study results, the conclusions can be drawn as following:With the rapid development, China’s technical and economic infrastructure and institutional infrastructure have reached a high level, which effectively reduces market transaction cost. And this is the reason why vertical disintegration promotes the TFP significantly and why the development of those infrastructures promotes the vertical disintegration significantly.4. The direction of optimization of vertical governance structure of China’s equipment-manufacturing-industry should be vertical disintegration and networking. The thesis analyze various types of interfirm network. The various types include enterprise clusters, strategic alliance, sub-contracting, outsourcing, enterprise group, virtual enterprise and supply chain integration. The type of interfirm network should be chosen according to the degree of asset specificity of transaction. The higher the degree of asset specificity, the stronger the coordinating function of the authority of the interfirm network.In order to promote the process of vertical disintegration and networking of China’s equipment-manufacturing-industry, the major obstacles on the process should be identified and resolved. Such obstacles include property rights institution, corporate governance institution, the development of productive service industry and small and medium-sized enterprises.5. For promoting the optimization of vertical governance structure, the vertical governance mechanisms should be designed and optimized. Because the optimization of vertical governance structure mainly refers to the vertical disintegration and networking, the optimization of vertical governance mechanisms here refers to the designing of vertical governance mechanisms of interfirm network. The vertical governance mechanisms of interfirm network include the mechanisms promote stabilization and the mechanisms promote efficiency. The former is the basis of the latter, and the latter promotes the former.The governance mechanisms promoting stabilization mainly include two aspects:first, the mechanisms reducing the opportunistic earnings. Such mechanisms include those enhancing bargaining power or establishing multiple transaction relationships. Second, the mechanisms raising cost of opportunism. Such mechanisms include those of self-enhancing of pledge of asset, those of self-enhancing of reputation, those of punishment of opportunism and those of three-party-governance.The governance mechanisms promoting efficiency mainly include three aspects:first, explicit incentive mechanisms. Such mechanisms put emphasis on the decision on the optimal incentive coefficient in order to encourage the investment on the relationship specific assets which can raise the joint surplus. Second, implicit incentive mechanisms. Such mechanisms are more suitable for the actual situation in China’s. equipment-manufacturing-industry. Such mechanisms involve supplier qualification management system and supplier dynamic management system. Third, the incentive regulation of contract menu. Such mechanism can be designed to solve the problem of adverse selection and moral hazard which are associated with information asymmetry.Compared with the existing similar research, the innovations of this thesis are as following:1. The thesis tries to form a relatively complete analysis framework of optimizing the vertical governance of industrial chain of equipment-manufacturing-industry by combine the optimization of vertical governance structure with the optimization of vertical governance mechanism. The optimization of vertical governance structure puts emphasis on the choice of various governance structures according to the development status of external environment concerning technologies, economy and institutions. And the optimization of vertical governance structure is mainly based on the transaction cost economics and the theory of interfirm network. The optimization of vertical governance mechanism puts emphasis on the design of mechanism in order to promote the stable and efficient operation of vertical governance structure. And the optimization of vertical governance mechanism is mainly based on cooperative game theory, principal-agent theory and new regulation theory.2. The thesis tries to offer a comprehensive explanation on the evolution of vertical disintegration and networking of China’s equipment-manufacturing-industry from two aspects such as fundamental reason and affecting factors. The fundamental reason of vertical disintegration and networking lies in the fact that coordination and cooperation can promote the efficiency of interfirm network. While the factors affecting the vertical disintegration and networking involve degree of asset specificity, the development of technical and economic infrastructure and institutional infrastructure. The above fundamental reason and affecting factors act on the evolution of vertical governance structure via influencing the efficiency of interfirm network.3. The thesis studies the vertical governance mechanism systematically and deeply, and tries to apply new regulation theory into the research on vertical governance mechanism. The thesis divides the vertical governance mechanisms into those promoting stabilization and those promoting efficiency. In the research of the mechanisms promoting efficiency, the incentive regulation theory of contract menu is introduced into the design of mechanisms in order to solve comprehensively the cooperation problems caused by the asymmetric information.4. The thesis offers a comprehensive and rigorous empirical verification on the cause and influencing factors of the evolution of vertical governance structure of China’s equipment-manufacturing-industry. For every sub-industry of equipment-manufacturing-industry, two panel data models, the model of vertical integration’s effect on TFP and the model of vertical integration’s influencing factors, are established. The empirical verification reveals the degree and direction of the impact of influencing factors.Of course, due to the limited academic learning and research perspectives, the research still needs to be improved, some opinions and conclusions also need to accept the test of practice. Specifically, in the aspect of theory research, the analysis uses the paradigm of mainstream economics theories, and gives less consideration on the special internal and external environment of China’s enterprises. In the aspect of empirical study, because of the availability of data, the data used in the analysis are mainly the panel data of sub-industry of equipment-manufacturing-industry. And the analysis based on the enterprise’s micro data is insufficient in the thesis. The shortages mentioned above need to be solved in further study.