The Management of Enterprises in the People’s Republic of China

pp 241-273

Decentralized Enterprise Reform: Notes on the Transformation of State-Owned Enterprises

  • Marshall W. MeyerAffiliated withUniversity of Pennsylvania
  • , Yuan LuAffiliated withThe Chinese University of Hong Kong
  • , Hailin LanAffiliated withSouth China University of Technology
  • , Xiaohui LuAffiliated withUniversity of Pennsylvania

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This chapter compares three models of enterprise reform: shock therapy, incrementalism, and decentralized reform, whereby local governments and enterprises themselves largely control the reform process. Decentralized reform leads to abrupt and inconsistent changes in enterprise management since the reform process is largely unguided—it is reform without a rule book. We argue that China is illustrative of decentralized enterprise reform and that the decentralized nature of China’s reform process has resulted in vast differences in forms of state ownership structure and capabilities among Chinese state-owned enterprises.