Property System And The Economic Analysis Of Organizational Performance

Economic Reform has been forwarded for more than twenty years not only in rural area but in cities in China. It's manifestations in countryside are (1) the establishment of family contractingoutsystem with the disintegration of People's Commune;(2) the emergence and quick development of Villages and Towns Enterprises. In cities, one of the manifestations is that we have been working for the Reform of State-owned Enterprises, but with little satisfaction for its efficiency level. In the Economic Reform, rural contracting out systems and villages and towns enterprises has been paragons of successful reform. The reason put in this paper lies in the higher efficiency level due to the "quasi-distinct " property systems. Comparing to it, the fundamental reason of lack of satisfactory efficiency level in State-owned Enterprises is that they have been failing to build up distinct property systems. The paper points out explicitly that the "hard core" of property systems is the owner ship systems and the first prerequisite of distinct property systems is clear ownership systems; the second, internalization of externalities. Only with the two perquisites together can distinct property systems be established. In the process of action of economic organizations, the shortage of incentives and constraints of participants, particularly managers, will be directly resulted from the unclear ownership, which will make certain the lowerefficiency level. In other words, no clear ownership, no real drives for owners to make profit from their ownership. If externalities can not be internalized, there will exist problems of lack or deviation in incentives for managers. In the context of entry to WTO, to stick to "efficiency priority " is our inevitable choice. From the view of history and reality, by the property theory, this paper exposits that the prerequisite of heightening the efficiency level is the "distinct property rights"; that to employ strategic "rapid progress step by step" to reform all-round economic organizations (for example, the State -owned Enterprises) with lower efficiency level in order to achieve "distinct property " is our inevitable and feasible choice at present.