Institutional Evolution Of The Modern Chinese Joint-stock Limited Company

The thesis is guided with the New Institutional Economics to approach the organizational development of the Liu Hongsheng's joint-stock limited company. It is intended to answer two questions: how did the Modern Chinese joint-stock limited company develop organizationally, and why? In organization, the Liu's joint-stock companies had grown from unitary-unit business to big multi-unit business. Special Joint-stock Cpmpany was even organized, in which the government had the controlling stocks. In particular, the Liu's company had seen the following different forms: unitary-unit company, loose company groups .cartel, syndicate, trust(or multi-unit company ),Special Joint-stock Company. In fact, during the period of the Republic of China, the Chinese joint-stock limited company on the whole, obviously trended as the Liu's business. Though, the forms might exist at the same time, in organizational development, it showed a tendency. The particularity of the Liu's companies is that they had seen all the forms. From this respect, we say the development history of the Liu's joint-stock limited companies is the epitome of the modern Chinese joint-stock limited company.Though the Chinese modern joint-stock limited company showed similar develop tendency with the western, which is from unitary-unit company to multi-unit company, the cause was quite different. In America, the big multi-unit business was organized to meet the produce and sale in huge scale, which had been caused by the great development of the technology. While in modern China it was rather complex. It lays in the modern Chinese business institutional demands and provision. The demands are mainly from competition with the foreign business and the lack of the particular market. During the 1920's-1930's, business competition between the Chinese and the foreign became violent, the Chinese businessmen needed to strengthen their competitive power to protect the national economy. It was under the direct dangerous force of competition that some Chinese big company, such as the Liu's Chinese Match Company, was organized. The reason why the modern Chinese big company would develop into multi-unit, besides the need of produce and sale in large scale ,the lack of the particular market was more important . Because t relevant industries were rather behind, the businesses felt very difficult to buy what it needed in modern Chinese market ,they had to import . In order to save costs, the big company establish factories to produce what they wanted. The Chinese demands for the big multi-unit company were quite different from the American. As for the institutional provision, policies of government, the necessary knowledge, technology and communication are the main factors. The policies produced the essential environment of law, and provided the institutional structure as well. The necessary knowledge of the big multi-unit company told the businessmen how to organize and manage a big multi-unit company. Therefore, the western multi-unit company served as example for the Chinese businessman to organize their own. The development of technology and communication made it possible to set up and manage the numerous units in areas.