Conclusion and Implications

The financial performances of enterprises in China have deteriorated markedly over the past years. The majority of SOEs are at best marginally profitable and a large portion of collective enterprises were also in serious financial difficulties. The poor financial performances were attributable to a range of factors. These include excess capacity built up during the investment boom earlier in the 1990s; heavy financial burdens from high debt loads, surplus labor, and social welfare expenses normally borne by government or society at large in other countries. The government, therefore, came up with a new restructuring strategy to speed up China’s enterprise reform. One strategy was to improve financial performance by getting rid of bad debts, laying off redundant workers, and hardening budget constraints in the short term; with the ultimate goal of achieving sustained improvement in efficiency and competitive viability in the long term.

Radical restructuring and privatization, coupled with irresponsible actions of firms, brought severe problems of social instability, and a wide range of stakeholder reactions like labor protests. Issues of social responsibility arising from restructuring, therefore, have increasingly gained the attention of governments, management and academic researchers. Against that background, this study set out to empirically explore the phenomena of CSR, socially responsible restructuring and firm’s performance in Chinese enterprises.