Enterprise reform and technical efficiency of China's state-owned enterprises

Abstract

This study investigates whether the enterprise reforms were helpful for the technical efficiency of China's state-owned enterprises. A stochastic varying coefficients frontier approach is applied on enterprise survey data in 1992. The results suggest that exposure to market competition (or less state intervention) is positively correlated with firms' level of technical efficiency. There is no evidence, however, of positive contribution by adoption of the new enterprise institutions to technical efficiency.