Foreign ownership and productivity in Chinese newly listed firms: the moderating roles of founder’s human capital and social ties

This paper studies the effects of foreign ownership on firm-level productivity and examines the different moderating roles of the firm-founder’s human capital and social ties on the foreign ownership - productivity link. Leveraging a unique sample of 428 small and medium-sized firms listed on the Growth Enterprise Market in the Shenzhen Stock Exchange between 2009 and 2016, we find that the foreign ownership’s contribution to productivity is not linear and varies across different quantiles of the productivity distribution. Our findings also show that the founder’s education and foreign experience strengthen the foreign ownership - productivity link, while the founder’s political and managerial ties weaken it. Our results reveal the strategic importance of the founder and contribute to an improved understanding of why firms vary in their ability to enhance productivity in emerging economies.