Comparing apples with apples: the performance of state-and privately owned Chinese football clubs

Abstract An often-discussed topic in the literature on state capitalism is performance effects of state ownership, not least in China. However, in China analysis of performance is nearly impossible because the Chinese economy is bifurcated, with state-and privately owned enterprises operating in separate industries. Seeking a better basis for comparison, we therefore analyze the performance of state-owned Chinese football clubs. We furthermore test the mediating effect of resources on performance. This allows us to discriminate between some of the main theories of Chinese SOEs. We find a positive but insignificant direct performance effect of state ownership. However, mediation analyses suggest that Chinese state-owned clubs have fewer financial resources, which in turns negatively impacts their performance (relative to private firms). Our results challenge two commonly found assumptions in the literature, namely that, relative to private firms, Chinese SOEs have superior access to financial resources and that their corporate governance is weak.