The Motivation and Effectiveness of Adopting EVA® in China’s Central Government-Owned Enterprises

Gao, Simon S; Zhang, J

Abstract

China’s central government-owned enterprises (CGOEs) were required to implement Economic Value Added (EVA®) in 2010 as a part of introducing innovative performance evaluation and management system required by the State-owned Assets Supervision and Administration Commission of the State Council. The aim of this paper is to shed light on the motivations in the process of implementing EVA in China’s CGOEs and concerns from
corporate managers. In particular, this paper studies the effectiveness of EVA application in Chinese CGOEs and the willingness of applying EVA by CGOE managers.
This study is based on qualitative research methodology with the interview data collection method. Based on nine interviews we find that EVA as a concept has been widely known at the senior management level in Chinese CGOEs, but less known at the divisional level. While divisional managers and employees are less interested in implementing EVA as they do not see much
benefits of exercising EVA-based measures, senior managers view the implementation of EVA as a good opportunity to demonstrate the success of their leadership and discharge their accountability to the central government.
Senior managers also see the potentials of employing EVA as a corporate control mechanism. Our results suggest that the adoption of EVA performance measurement in China has been largely driven by political motivations with a view to justifying that CGOEs have made contributions to the economy under the Socialist Market Economic System as they have produced a positive EVA.

Citation

Gao, S. S., & Zhang, J. (2015). The Motivation and Effectiveness of Adopting EVA® in China’s Central Government-Owned Enterprises. In Proceedings of World Business Research Conference

• Conference Name: World Business Research Conference
• Start Date: Jun 11, 2015
• End Date: Jun 13, 2015
• Online Publication Date: Jun 11, 2015
• Publication Date: Jun 11, 2015
• Deposit Date: Oct 5, 2016
• Book Title: Proceedings of World Business Research Conference
• ISBN: 978-1-922069-78-8
• Keywords: Economic Value Added, EVA®, performance evaluation, China,
• Public URL: http://researchrepository.napier.ac.uk/Output/398469