According to the research by Boisot and Child (1988), fief is defined as a transaction-governance structure with low information codification and diffusion. Based on this definition, this article highlights the existence of fief-specific factors, such as state-ownership, in China's publicly listed firms. It is hypothesised that the state ownership, as a fief specific factor, has a negative effect on product diversification among the listed firms in China. The ownership also has a positive effect on the firms' stock marker, performance. Moreover, the effects can be moderated by several factors, such as firm size, age and managerial ownership. The authors collected data from listed firms in China and conducted an empirical study to test the hypotheses. The results support the hypothesised effects of the fief-specific factor and demonstrate the importance of studying fief factor to understanding organisational behaviours and performance in China. It is also indicated that the predictive validity of Western theories could be improved by taking into account the effects of fief-specific factors when studying organisational behaviours and performance in an emerging economy such as China. The paper concludes with a discussion of the theoretical and practical implications.
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