Tigers are bound and monkeys are free: A comparative study of state-owned and township/village-owned enterprises in China

Abstract

Why is it that the shape and success of economic reform have varied across different industrial enterprises in China since the late 1970s? Why have collectively-owned enterprises, especially township/village-owned enterprises, developed rapidly while state-owned enterprises have suffered severe troubles in the past decade? By combining sociological theories of organization and the new institutional economics, the present study argues that changing institutional arrangements for industrial enterprises is the key factor in explaining the differences between state-owned and township/village-owned enterprises. This study is based on governmental policy documents and a nationwide survey data set on industrial enterprises that spans different regions, ownership structures, and management systems in China (750 industrial enterprises). The purpose of the study is to evaluate how governmental policies as the institutional environment affect management systems in Chinese industrial enterprises. This research not only extends knowledge of the relationship between environments and organizations, but also has significant policy implications.