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State-Owned Enterprises in Chinese Economic Transformation: Institutional Functionality and Credibility in Alternative Perspectives

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  • Dic Lo

Abstract

The institutions of China’s state-owned enterprises have deviated fundamentally from the principle of individual(istic) property rights. The paradox is that the enterprises appear to have performed well in terms of productivity and profitability. This article examines the institutions in the light of alternative theoretical perspectives. The central message is two-fold. First, regarding functionality, the long-term oriented institutions could be conducive to productive efficiency but could also be detrimental to allocative efficiency. Second, regarding credibility, the actual performance hinges on the appropriate match between the institutions and the broader developmental conditions. The efficiency attributes are thus found to be context-specific. Further discussion on the notion of context-specificity reveals that relative efficiency is conjunctural rather than structural in the determination of the functionality and credibility. In the spirit of Original Evolutionary and Institutional Economics, it is submitted that the attributes of relative efficiency are themselves subject to the particular “social valuation” of China’s prevailing political-economic conditions.

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  • Dic Lo, 2020. "State-Owned Enterprises in Chinese Economic Transformation: Institutional Functionality and Credibility in Alternative Perspectives," Journal of Economic Issues, Taylor & Francis Journals, vol. 54(3), pages 813-837, July.
    • Handle: RePEc:mes:jeciss:v:54:y:2020:i:3:p:813-837
    DOI: 10.1080/00213624.2020.1791579
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    Cited by:

    1. Jiwei Qian & Tuan‐Hwee Sng, 2021. "The state in Chinese economic history," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 61(3), pages 359-395, November.
    2. Lo, Dic & Gao, Ling & Lin, Yuchen, 2022. "State ownership and innovations: Lessons from the mixed-ownership reforms of China's listed companies," Structural Change and Economic Dynamics, Elsevier, vol. 60(C), pages 302-314.
    3. Li, Dongkun & Chen, Yufeng & Miao, Jiafeng, 2022. "Does ICT create a new driving force for manufacturing?—Evidence from Chinese manufacturing firms," Telecommunications Policy, Elsevier, vol. 46(1).
    4. Hu, Jianxiong & Zou, Qing & Yin, Qianqian, 2023. "Research on the effect of ESG performance on stock price synchronicity: Empirical evidence from China's capital markets," Finance Research Letters, Elsevier, vol. 55(PA).
    5. Vatn, Arild, 2023. "The credibility thesis – A commentary from an original institutionalist position," Land Use Policy, Elsevier, vol. 131(C).
    6. Goyal, Yugank & Choudhury, Pranab Ranjan & Ghosh, Ranjan Kumar, 2022. "Informal land leasing in rural India persists because it is credible," Land Use Policy, Elsevier, vol. 120(C).

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