The Sino-Japanese War and the Formation of the State Enterprise System in China: A Case Study of the Dadukou Iron and Steel Works, 1938–1945

This article examines the formation of China's state enterprise system, using the case of the Dadukou Iron and Steel Works (DISW). I argue that the basic institutional arrangement of the DISW, and by extension other state-owned enterprises, consisted of a bureaucratic governance structure, distinctive management and incentive mechanisms, and the provision of social services and welfare. This arrangement took shape during the Sino-Japanese War, with the sustained systemic crisis and the nature and character of the institutional endowments leading to the formation of China's state enterprise system. In considering implications for understanding institutional change, I suggest that crisis shapes radical institutional change and that both path dependence and path independence characterize such change.