Research On Organizational Dynamics, Environmental Constraints And Change Strategies Of The Transformation Of State-Owned Enterprise

Since 1990s, the transformation has become the theme of China's SOE reform. In anarrow point of view, the transformation is to reform an enterprise's property rightsystem. In a wider point of view, the transformation includes business mode reform(such as contracted operation, lease operation, etc.) and many other forms such asbankruptcy, reorganization, etc. Forieign researcher pointed out that the transformationwill be a trend of SOE reform, however, he didn't study the detailed problems about thetransformation. Currently, most research is studying transformation primarily from theperspective of performance, to test whether the performance of SOE is improvedthrough transformation. As a result, there is a lack of research from the organizationtheory perspective to analyze the transformation related issues. Based on this, this paperchooses to further study the transformation through three aspects: organizationaldynamics, environmental constraints and change strategies.Before entering the key research contents, the second chapter of this article makesa theoretical literature review on the three aspects: the environmental uncertainty facedby Chinese firms, the explanation of the mechanism of SOE and their governanceproblems, organizational change and top management team. Firstly, at present, China isin a transition situation from a planned economy to a market economy, called thetransition economy period. Therefore, the environment faced by the enterprises is ofgreat uncertainty. Secondly, the transformation of SOE is the change in enterprisesystem at a large extent because the previous traditional state-owned mechanism has alot of problems. This paper points out the shortcomings of the mechanism of SOEthrough the principal-agent relationship, then analyzes the governance problem of SOE.Thirdly, the transformation of SOE is an organizational change of great depth. Thecorporate executives play an important role in the initiation and implement of it. In thispaper, the literature review of organizational change and top management team aredone.The third chapter studies the organizational dynamics of the transformation of SOE.Firstly, according to some theoretical literature, this paper summarizes the advantages and disadvantages of SOE. The advantages are easy access to political resources, marketentry privilege, technology and talents superiority. The disadvantages are low operatingefficiency, heavy social burdens, soft budget constraint, lack of autonomy and imperfectmanager selection, incentive and restraint mechanisms. Then, with China's 2004economic census data, from access to political resources, heavy social burdens and lowoperating efficiency angel, this paper tests SOE's advantages and disadvantages throughthe comparision of borrowing costs, staff wages and welfares as well as the productivityamong enterprises of different ownership types. Finally, this paper summarizes theorganizational dynamics of SOE, such as improving operational efficiency, reducing theheavy social burdens, enhancing the budget constraints, strengthening the autonomy ofenterprises and perfecting manager selection, incentive and restraint mechanisms.Chapter four of this article analyzes the environmental constraints of thetransformation of SOE from the four aspects of transformation policies, socialenvironment, decentralization reform and the stakeholders. Firstly, the transformation ofSOE depends on relevant policies. The transformation policies are not completed in onestep, they move forward gradually with the process of SOE reform. This paper lists therelevant policies of SOE transformation according to the time order. Secondly, thetransformation of SOE is also bound by the social environment, such as the restraint ofcultural values, the inadequate social security system, the imperfect legal and financialsystem. Thirdly, some researchers thought that the SOE reform is a kind ofdecentralization reform. Different firms will have different strategies and results oftransformation under the decentralization reform. Fourthly, the transformation of SOE isalso influenced by the stakeholders, the success of which depends largely on the balanceof rights and interests between them. The important stakeholders during thetransformation include the central government, local government, parent company, topleaders, middle managers, and employees. Then, by using some results from the WorldBank research report, this paper analyzes the process of the transformation of SOE. Atlast, this paper uses the 2001-2006 Sichuan SOEs' data to analyze the economic andsocial effect of transformation through the comparison of transformed andnon-transformed firms. The results show that transformation brings out positive changeto both of them.Chapter five uses multiple cases study method to illustrate the change strategies during the transformation process. At first, this paper introduces the basic conditions ofthe case enterprises. Then, from the theoretical points of view this paper puts forwardthat the target of transformation is obtained through the relation adjustment of severalaspects. And then, this paper describes the transformation process of each firm andcompares the transformation processes and results of the three firms through differentaspects, such as extemal interest, internal interest, force field, leadership, transformationresults and so on. And then, with these enterprises' transformation materials, this papersummarizes the change strategies during transformation process on the basis of relevanttheoretical literature. At last, this paper sums up a theoretical framework for top leaders,and proposes some measures and suggestions for the success of transformation.