Emergence of Unorthodox Ownership and Governance Structures in East Asia
An Alternative Transition Path
This paper examines the nature of the unorthodox ownership and governance structures that are emerging among firms and the way these structures are supporting the remarkable economic growth in the transition economies of East Asia, as represented in particular by China and Vietnam. These economies are embarked on a distinctive process of property rights reform that resists widespread privatization in favour of evolutionary transformation. From the perspective that organizational innovation is an adaptive recombination and ownership is a bundle of rights, this paper focuses on an evaluation of the extent and consistency of property rights reform in the state-owned enterprise sector of these economies. It reveals the features of the ownership and governance structures of Chinese township-village-enterprises and their consequences for liability and incentives and justifies the fact that private entrepreneurs are typically willing to include community authority as an ambiguous owner or shelter within the embrace of state-owned enterprises. The paper also explores the conditions which have motivated the reform, the impact of property rights structure and reform on enterprise performance, and the relationship between adaptability and accountability.