Modern Enterprise System Research Articles

Problems and Countermeasures on Corporate Internal Audit in China

Along with the increasing embeddedness of corporate reform, current China has to confront the significant issues of how to establish and improve corporate governance structure, optimize internal control, promote effective use of corporate resources, and avoid fraud and waste. Corporate internal audit is the auditing, monitoring and evaluating on corporate internal economic activities, so as to strengthen internal management and increase economic efficiency. Its purpose is to expose and reflect real status of corporate assets, debts, profit and loss, to investigate various illegal problems on corporate financial receipts and expenditures, to maintain China’s ownership rights, to promote clean government establishment, to prevent the loss of state-owned assets, and to serve the governmental macro-control. Therefore, based on relevant theories of internal audit, this paper is to analyze several problems on internal audit and propose countermeasures to the internal audit problems under China’s modern enterprise system.

A Review Of The Evaluation Methods Of The Value Of Human Capital Of The Manager In China

Recent directives of the Chinese government specify property rights and income distribution for factors of production. The study as to how these factors are allotted appropriate shares of business income is becoming essential to the establishment of the China’s modern enterprise system. When the manager is regarded as one of the factors of production, how one measures the value-added becomes a component of the income distribution system of the business. This paper surveys traditional views of the manager as a human capital, and offers an alternative suggestion for the measurement of the human capital of the manager which can more accurately reflect the reality of the operation of the business.

China's state‐owned enterprises: economic reform and organizational restructuring

PurposeThe purpose of this paper is to examine how the Chinese economic reform process has engendered significant changes in the structure and management of work organizations. Central to this process has been the “marketization” of state‐owned enterprises (SOEs). The paper reviews the attempts to reform SOEs as conducted, primarily, under the modern enterprise system (MES) and group company system (GCS) programmes.Design/methodology/approachThe paper analyses institutional issues relating to organizational restructuring, describes the evolution of the SOE “problem” in China, and discusses case evidence of enterprise reform in one of the largest SOE‐dominated industries, iron and steel. Qualitative field data, collected regularly (mostly yearly) since 1995, were derived from in‐depth interviews with executives of ten large SOEs that have restructured as part of MES and GCS programmes.FindingsIt is suggested that the historic reluctance of SOEs to embrace reform stems from three main factors – the opaque nature of property rights, the failure of ministries to produce a firm strategy for channelling surplus labour and the inability of government agencies to offer a sense of managerial autonomy to SOE executives. Recent policies designed to overcome these problems together with kindred ones for separating government functions from business operations in the drive to prepare SOEs for global markets are described. It can be argued that China's preference for gradual reform reflects the wider reform context where economic restructuring has not been accompanied by a greater expression of political democracy.Originality/valueThe paper's findings offer insights from a major longitudinal field study of two of the main programmes of China's reform period.

Problems and Countermeasures in the Construction of China’s Entrepreneur Team

This paper is a part of the project “Leading Cadres and Enterprise Talents’ Quality Evaluation Mechanism Research and System Development” (2005401012) funded by the Department of Science & Technology of Liaoning.AbstractEntrepreneur is the engine of an enterprise’s sustainable development. To strengthen the construction of entrepreneur team is a must for the construction and perfection of modern enterprise system, and the realization of stable and fast economic development. By defining the connotation of entrepreneur, this paper analyzes the present construction of entrepreneur team in China, puts forward the problems in the construction, and advances relevant countermeasures.

Assessing the impact of regulatory reforms on China's electricity generation industry

In the past two decades, China has experienced a series of regulatory reforms in its electricity industry, aimed at improving power production efficiency. The central planning system was broken up and the market-oriented modern enterprise system was established. Furthermore, the former vertically integrated electricity utilities were divested and the generation sector was separated from the transmission and distribution networks. In this paper, we intend to estimate the impact of regulatory reforms on production efficiency of fossil-fired generation plants using the plant-level national survey data collected in 1995 and 2004. Applying the econometric method of Differences-in-Differences, we estimate the effects of these reforms on the demand for inputs of employees, fuel and nonfuel materials. The results show that the net efficiency improvement in labor input associated with the regulatory reforms is roughly 29% and the gains in nonfuel materials are about 35%, while there is no evidence of efficiency gains in fuel input associated with the electricity reforms.

The efficiency and profitability effects of China's modern enterprise restructuring programme

PurposeIn the mid‐1990s, China introduced the Modern Enterprise System (MES) to selected state‐owned enterprises (SOE). The paper aims to examine whether this reform led to improved efficiency and profitability.Design/methodology approachThe efficiency and performance of enterprises before and after the economic restructuring are examined. Univariate and multivariate (regression) analyses are used to investigate whether there has been a significant change in an enterprise's performance.FindingsThe paper finds there is no improvement in efficiency and profitability after the restructuring. This can be attributed the lack of improvement to the state's ownership of enterprises, bureaucratic management, and poor corporate governance. These things have to change in order to improve corporate efficiency and performance.Originality/valueChina's reform of SOEs is very important to the economic well‐being of the country. This paper is the first to investigate the MES as applied to wholly state‐owned enterprises.

What kind of modern school system do we need?

The marketization of education cannot serve as the guiding principle in constructing the modern school system, nor can it be directly transplanted from modern enterprise system. Because the modern school system is a kind of “educational institution” rather than an “economical institution”, what it should focus on is not the ownership of property or the distinction of property, but on the core educational issue, that is, the students’ development. Such a kind of modern school system requires that the government delegates power to schools to realize academic autonomy in schools (selfgovernance).

Modern enterprise system and the role of the party and government in Chinese SOEs

This paper provides an overview of the reforms in the state owned sector in China, with particular attention to the iron and steel industry. It examines whether the currently practised Modern Enterprise System (MES) has resulted in the distancing of the government from the management of state owned enterprises. Although some of the problems of conflict and diffused responsibility appeared to have been solved by the new system, and the sector is apparently quite successful, some unintended consequences were noted in this empirical research study.

Corporate Governance in China: An Overview

NOTE: A Chinese translation of this paper is available at http://ssrn.com/abstract=1429722.Corporate governance (gongsi zhili) is a concept whose time seems definitely to have come in China. Chinese definitions of governance in the abstract tend to cover the system regulating relationships among all parties with interests in a business organization, usually spelling out shareholders as a particularly important group. But Chinese governance discourse in practice focuses almost exclusively on agency problems, and within only two types of firms: state-owned enterprises (SOEs), particularly after their transformation into one of the forms provided for under the Company Law, and listed companies, which must be companies limited by shares (CLS) under the Company Law. This article discusses Chinese governance in this narrow sense, and attempts to explain some perplexing features of its discourse, laws, and (abbreviated hereinafter as corporate governance laws and institutions or CGLI).A fundamental dilemma of Chinese CGLI stems from the state policy of maintaining a full or controlling ownership interest in enterprises in several sectors. The state wants the enterprises it owns to be run efficiently, but not solely for the purpose of wealth maximization. A necessary element of state control of an enterprise is the use of that control for purposes such as the maintenance of urban employment levels, direct control over sensitive industries, or politically-motivated job placement.This in turn creates several problems. First, many of these goals are not easily measured and there is no obvious way of balancing them one against the other. This creates monitoring difficulties. Second, the policy of continued state involvement sets up a conflict of interest between the state as controlling shareholder and other shareholders. In using its control for purposes other than value maximization, the state exploits minority shareholders who have no other way to benefit from their investment.The major theme of this article is that the state wants to make SOEs operate more efficiently by subjecting them to a new and different set of rules - the rules of organization under the modern enterprise system. Policymakers then find, however, that they must change and adjust the rules to take account of continuing state ownership. Moreover, the need to provide for the special circumstances of state-sector enterprises ends up hijacking the entire Company Law, so that instead of state-sector enterprises being made more efficient by being forced to follow the rules for private-sector enterprises (the original ambition), potential private-sector enterprises are hamstrung by having to follow rules that make sense only in a heavily state-invested economy.

Critiques on the Weberian Model of Modernization: The Case of Chinas State Industry Reform

Weberian model of modernization presumes that economic progress requires the replacement of traditional institutions and values with a modern burearcracy and a culture of law. Since the early 1990s, Chinese government not only introduced a variety of Western style "modern enterprise system" but also made efforts to establish a sound economic legal framework to provide the elements necessary for economic actors to carry out activities in a more market-oriented environment. However, this research shows that the introduction of impersonal market mechanism and its practices as well as the introduction of laws to support the market system have not caused the decline of informal-personal practices in China's state industry sector.

Privatization, Chinese‐style: economic reform and the state‐owned enterprises

This article reviews ‘corporatization’ and ‘marketization’, shorthands for privatization, in the Chinese economy. In particular it concentrates upon the most recent round of state‐owned enterprise reforms, the Modern Enterprise System and Group Company System, aimed at transforming China’s largest state‐owned enterprises into internationally competitive corporations. This represents a partial privatization, given that the state will retain majority ownership, while acquiring domestic and foreign capital via sharelistings and foreign and domestic joint ventures.Drawing upon interview material from a five‐year study of state‐owned enterprises, the authors will indicate that such part privatization has been pragmatic and relatively slow. It has been constrained and circumscribed by broader economic and social reform programmes and accompanied by political decentralization and reforms. Ultimately, the reform and pace of reform is shaped by the desire to avoid political and social unrest which could, potentially, threaten the harmony of the Chinese central state apparatus.

The Politics of Management in People's China: From CMRS to Modern Enterprise and Beyond

This study reviews and analyses the changes in management systems in the People's Republic of China over the last decade. Within the wider context of the Open Door policy, the modernization of industry and increased enterprise autonomy, the contract management responsibility system (CMRS) and, more recently, the modern enterprise system (MES) have been introduced. These both provide enterprises (and the managers within them) with a framework within which to practise. This analysis describes the CMRS and the IMES and then, on the basis of discussions and interviews with factory managers, and with officials responsible at the macro level for monitoring the itnplementation of policy, analyses the implications of the changes. The authors conclude that, despite the introduction of a degree of management discretion and independence, differences in opinion persist on what, precisely, are the current industrial problems, and therefore what to do to address them. There have, consequently, been mixed reports on the success or otherwise of both systems.

Industrial Change in China: Economic Restructuring and Conflicting Interests

Series Preface Preface Acknowledgements Map Introduction 1. The national interest versus particular interests: decentralisation, negotiation and manipulation 2. Managers' interests versus workers' interests: labour, housing and welfare reform 3. Banking, price and taxation reform: accounting for actually existing circumstances 4. Ownership reform: establishing a modern enterprise system Conclusion Notes Bibliography Index

Erratum

"Erratum." International Journal of Political Economy, 25(3), p. 88This article refers to:I. On the Establishment of a Modern Enterprise System

I. On the Establishment of a Modern Enterprise System

I. On the Establishment of a Modern Enterprise System