Institutional Innovation Research Of Military Industry Enterprise In Our Country

Nowadays, the reform of state-owned enterprises (SOE) in our country has gone into deepening stage. The government has worked out some policies for the reform of monopoly SOE, but it is mainly directed against property rights (for rough guidelines only). The reform of complement system has been neglected to a certain extent. Moreover, there are many hot potatoes and dispute in the trend and way of reformation.This paper goes deep into the specialized field from the perspective of studying the military industry enterprise, and give comprehensive and thorough analysis and discussion about internal and external system for influence on development of our war-industry.This paper comes up with an idea that the reform of war-industry shall not merely aim at maximum profits. The reform should head for different ways from single restructuring of enterprise to the classified reformation based on functional location of government. The classified reformation means different innovations in accordance with characteristics of product structure and different organization forms in military industry, that is:First and foremost, for institution innovations in war-industry, this paper believes that the government should manage directly for a few critical and nuclear enterprises. Marketization company restructuring can not be implemented and sole responsibility for its own profits or losses not be compelled. There is no problem in reform of property rights for this kind of enterprises. The important enterprises should resort to indirect method, such as absolute controlling or relative holding. The enterprises can execute shareholding system reform, but should be treated as special corporations and formulate the corresponding legal policy. The ordinary enterprise should also use indirect method like joint stock. These enterprises belong to ordinary legal entities and can operate in modern corporate system. There are two defined points in reform of property rights:Firstly, the present《company law》does not fit all state-owned enterprises (SOE) in our country. The government should further perfect the institution of special corporations founded on《company law》, and take a clear cut stand that the military industrial enterprise should be regarded as an independent economic sector; Secondly, in the enterprises run by indirect method, the government can promulgate a decree if shareholding diversification may result in investment subject diversification and shareholding decentralization, that is to say the military industry share can be stipulated as "Gold Share". The government can have the casting vote for momentous decisions.The Prompting Mechanism in the majority of defence military industry enterprise (except direct control by the government) can take three measures: Firstly, perfect capital market and restrain the management level by the market for corporate control; Secondly, the ratio of organization appointment shall be reduced greatly when selecting the manager in order to put the role of executive market into great effect. Selecting way should be combined with organization and market in dual directions. The government can choose managers and administrators by appraising reputation mechanism. Thirdly, increase incitement to stakeholders. We suggest Employee Stock Ownership Plans (ESOP) may be an attempt in joint-stock companies operated by indirect method.Next, for the innovation of market institution, this paper puts forward a plan that military industry enterprises should build a market structure which is monopolistic in high-end and competitive in low-end. Namely, the market structure shall be like this:the key enterprise—absolute monopoly, important enterprise—oligarchic monopoly, and general enterprise—adequate competition.Finally, for the innovation of governance system, this article thinks that remoulding sound relationship between the government and the enterprises should take different measures according to organization forms and the distinction of products. The government should strictly control for the high-end of defence production and relax the control in the low-end of defence production. At the same time, private enterprises may be loosen in military market. It should be such a pattern:"Privatization Production+Industry Regulation"On the basis of the study mentioned above, this paper can be altogether divided into seven chapters to elaborate. Chapter 1 is introductory remarks that concentrate on the background and reference of subject choosing, and study significance,logic frame,content arrangement research method and innovation point. It also simply introduces the current development of military industry enterprises, the controversy over reform difference and the tendency with other SOE, including facing problems to achieve reform goals and need researching. All of these are the foundation for the paper.Chapter 2 is the theoretical background and literature review, it first puts forward key concepts related to this article closely, then expounds relative theories of SOE'system, finally presents institution reform research of domestic and foreign SOE. It will provide reference for monopoly military industry enterprises in our country.Chapter 3 is the theoretical framework of this paper. The part tries to construct an integral analysis based on enterprise—market—overnment. It is a theory tool and a support point for studying system reform of SOE. This chapter analyses dual properties,goals and maximized behavior of enterprises in market economy from the aspect of the corporation. This part points out due administrative structure and principle for SOE, then analyses market structure and market mechanism which will have the different influence on enterprise' behaviors from the angle of the market, finally analyses orientated model of enterprises linking with the government from the point of view of the government and comes up with a new relationship between enterprises and the government under the condition of market economy. This chapter offers the reform approach of SOE by means of analysing relations among enterprise—market—overnment.Chapter 4 also studies conditions and problems of system reform in SOE from three aspects of the enterprise—market—overnment respectively so as to provide research basis for the following.Chapter 5 comparatively studies circumstances of system construction of military industry enterprises abroad and presents its development trends. This chapter use the experience from developed countries for reference and gives enlightenment to our war-enterprises about how to construct systems.Chapter 6 focuses on looking into overall innovation from three aspects:First, discusses property rights reform,administrative structure and prompting mechanism from the aspect of the corporation; continuously, advances a proposal about how to build one market structure fit for military industry from the aspect of the market; then offers the view on how to rebuild sound relationship between the government and the enterprises and carry out regulation reform from the aspect of the government.Chapter 7 is a study on the actual application of China Aviation Industry Corporation (AVIC). This part clearly shows the importance of institutional innovation, significance and the new trend, it also tells that government regulation and industrial policies are very important to enterprise development by practice of AVIC. In the end, the paper gives the conclusion.