Chinese firms between hierarchy and market

by Derong Chen

This book explores the enterprise reform in China in general, and the Contract Management Responsibility System (CMRS) in particular. The latter is an institutional arrangement to deal with the relation between the government and the state-owned enterprise which has always been at the centre of the enterprise reform. This book is based on four in-depth case-studies and reveals the interaction taking place between the government and enterprise under the system. The research shows that to establish a market-type relation between the government and enterprise is a complicated and dynamic process. It involves understanding two different economic mechanisms, market and hierarchy, and the interactions taken by two parties. Drawing on empirical work, the CMRS is examined from an institutional perspective and provides a holistic view of the changes in Chinese enterprises.