CCP committees, worker benefits and firm performance: empirical evidence from Chinese private firms

Abstract

PurposeWith an increasing number of Chinese private firms establishing primary level CPC Party committees, it is important to study the role of Party organizations in these firms. Using a nationwide survey of private firms in 2006, we empirically study the firm-level CCP committee's effect on workers' benefits and firm performance.Design/methodology/approachTo overcome the potential endogeneity, we employ the regression discontinuity approach by utilizing the following rule from the Constitution of the CCP: Primary party committees should be established in any basic work unit with more than 3 full party members.FindingsOur empirical results show that party committees in private firms have positive and statistically significant effects on many types of workers' benefits, including pension, unemployment insurance and workplace safety.Originality/valueThis paper highlights CCP committees as an important alternative mechanism in coordinating labor relationships in China when formal labor protecting institutions are weak.