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Managerial Autonomy, Contractual Incentives And Productivity In A Transition Economy: Some Evidence From China'S Town And Village Enterprises

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  • Harrison Cheng
  • Cheng Hsiao
  • Jeffrey B. Nugent
  • Jicheng Qiu

Abstract

. In advanced industrial economies it is accepted that efficiency requires aligning managerial autonomy in decision‐making with managerial incentives. Should this hold for economies like that of rural China where (at least until very recently) managers might abuse autonomy and government owners may have objectives other than profit maximization? This paper tests for the effects of managerial autonomy on efficiency with and without alignment with incentives in a panel of Chinese town and village enterprises (TVEs). The results show that managerial autonomy has had a positive and significant effect on productivity only when aligned with incentives.

Suggested Citation

  • Harrison Cheng & Cheng Hsiao & Jeffrey B. Nugent & Jicheng Qiu, 2006. "Managerial Autonomy, Contractual Incentives And Productivity In A Transition Economy: Some Evidence From China'S Town And Village Enterprises," Pacific Economic Review, Wiley Blackwell, vol. 11(3), pages 341-361, October.
    • Handle: RePEc:bla:pacecr:v:11:y:2006:i:3:p:341-361
    DOI: 10.1111/j.1468-0106.2006.00319.x
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    References listed on IDEAS

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    1. Gérard Roland, 2004. "Transition and Economics: Politics, Markets, and Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 026268148x, December.
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    Cited by:

    1. Sandeep Mohapatra & Rachael Goodhue & Scott Rozelle, 2008. "Incentive Complementarity in China’s Rural Enterprises," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 33(1), pages 63-79, August.
    2. Xincai Gao & Zhongyang Ji & Fayyaz Ahmad & Muhammad Umar Draz, 2019. "Financial Support and Growth of Township and Village Enterprises in China: Fresh Evidence From Regional Analyses," SAGE Open, , vol. 9(2), pages 21582440198, June.

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