The Study In Institutional Legitimacy And Optional Activity Of Corporate Governance Of State-dominated Corporation

It is commonplace that state-dominated corporations have set up the structure of corporation governance. However, practically these corporations usually don't go in agreement with the structure, causing great inconsistency between structure and activity, to which the academe has paid enough attention, by realizing that the corporate governance is the key to the development of state-dominated corporations in China and performing a detailed examination about it. Nevertheless, the present study on the governance of state-dominated corporations mainly focuses on the fields of economics and law, apparently limited by the subject view. The study is always centered on the relations of governance bodies, neglecting the environment and external governance system of the corporations. There exists a lack of deep exploration of the practical logic and immanent mechanism of those state-dominated corporations, which catch structure but lose substance.The study in the article examines the relation between governance structure and practical activity, and the immanent mechanism of state-dominated corporations in China, based on the arrangement of the documents on state-dominated corporation governance, taking a state-dominated corporation in Shijiazhuang for case, starting from the imstitutional legitimacy of the structure along the route of the New Imstitutionalism in Organizational Sociology. The findings of my study are mainly:(1) State-dominated corporations have mostly set up governance structure mainly suffering from the pressure of system, reaching after legitimacy of their corporations. They adopt the generally accepted type of organization and practice, trying to conform to the regulations enjoyed by society without considering whether these regulations are fit for corporations. The pressure facing state-dominated corporations comes from being imposed by law, control of government, expectance of the public and exemplary effects of other corporations.(2) State-dominated corporations show preference basically because of the obvious disagreement of the practical power and their nominal authority of the bodies in these corporations and breaking the principle of checks and balances of power. The government controls the conference of all shareholders of these state-dominated corporations, obtaining the power of appointment and removal of the leaders of the corporations while the final control power based on the investors disappears gradually. Power of the board is eroded by both government and manager ship, and the power of personnel decision is restrained. Not only does the manager ship holds the access to information of the relation between entrusting and deputizing, but also enjoys the personal influence coming from long term management, with which their practical power easily exceeds the limits of their functions and powers because of the lack of competition from the market. The power of the board of supervisors, without basis of reality, only exists theoretically, conditioned by such factors as system defect and dependence.(3) Seeing from the theory of organization, the separation of structure and activity of institutionalized organization is not necessarily the result of contradiction between legal demand of institutional environment and efficiency demand of technical environment. The lack of coordination or even collision between demands of institutional environment and internal relations in organization can also cause disagreement of the organization structure and practical activity in the corporation in institutionalized environment, in which cases, the demands between system environment and technical environment may be consistent and unity. To further analyze the informal activity of institutionalized organization, this article puts forward the concept of optional activity. Optional activity, whose deep logic is the limitation of organization reason, is closely related to interaction of the organization members.(4) Seeing from the theory of governance, option of the governance structure in corporations may be the consequence of pursuing organization legitimacy under the pressure of institutional environment. In this case, the real power of governance bodies in corporations rests with many factors, such as their social status, standing, values, needs and ability etc. Part of the bodies, whose real power obviously exceeds their position, strengthens their personal influence by forming a one-way relation of dependence. Accordingly, other governance bodies lose power and their authority is becoming nominal, which leads to unbalance of power among governance bodies in corporations, and distortion of governance behavior. Therefore, the external governance of corporations is crucial, even the key point of governance.