Institutional Environment, Community Government, and Corporate Governance: Understanding China's Township-Village Enterprises

Journal of Law, Economics, and Organization, Vol. 14, No. 1, Spring 1998

Posted: 16 Apr 1998

See all articles by Jiahua Che

Jiahua Che

affiliation not provided to SSRN

Yingyi Qian

Tsinghua University - School of Economics & Management; Centre for Economic Policy Research (CEPR)

Abstract

We study China's township-village enterprises (TVEs) from an organizational perspective with a focus on governance. Unlike most previous studies, we interpret the firm boundaries of TVEs at the community level rather than the enterprise level. From this perspective, we analyze the central role that community governments play in TVE governance as an organizational response to the imperfect institutional environment of both state and market. Specifically, we show that the community government's involvement in TVEs helps overcome the problems of state predation and under-financing of private enterprises. We also explain why TVE governance leads to harder budget constraints than state-owned enterprises.

JEL Classification: P21

Suggested Citation

Che, Jiahua and Qian, Yingyi, Institutional Environment, Community Government, and Corporate Governance: Understanding China's Township-Village Enterprises. Journal of Law, Economics, and Organization, Vol. 14, No. 1, Spring 1998, Available at SSRN: https://ssrn.com/abstract=76600

Jiahua Che (Contact Author)

affiliation not provided to SSRN ( email )

Yingyi Qian

Tsinghua University - School of Economics & Management

Beijing, 100084
China

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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