The micromechanism of “co-beneficial” cooperation between government and business in the context of Chinese transition economy: the case of “Daqing–Geely mode”

Abstract

Purpose This study aims to answer few questions, such as which factors influence the local government’s choice of private firm investments; what factors influence private firms’ choice of specific local government to make a local investment; and why do some private firms gain a competitive edge by choosing a stakeholder management model of “running the government” in the context of the Chinese transition economy. Design/methodology/approach Using a case study approach, this paper provides an in-depth analysis of the Daqing–Geely Case, 2010, and explains why Geely chose Daqing considering the firm perspective and why the Daqing city Government chose Geely considering the local governments’ perspective. Findings This study highlights the concept of “co-beneficial” cooperation between government–business by virtue of the institutional innovation of the quasi-property system. In addition, it reveals that the private firms and local governments in the “Daqing–Geely mode” work together for mutual benefits by putting fair negotiation and contract mechanisms in place. Resultantly, private firms secure the commercial interests, and the local governments bring in improved efficiency. Originality/value This study consolidates the theory of stakeholders, thereby strengthening the current understanding of “special offer” and “universal offer.”