Over the two and a half decades of economic reform in China, two types of Chinese firms have consistently outperformed their peers. In the 1980s, it was the firms at the lower levels of the industrial hierarchy, the township and village enterprises that were closely monitored by local governments. In the 1990s and beyond, the top performers have been those Chinese firms that have formal relationships with foreign investors. While many studies on the economic reforms in China have focused on the hardening of budget constraints and the transfer of technology from foreign to Chinese firms, I focus here on the stability created by relationships with local government offices and with powerful foreign investors. Where advocates of shock therapy have argued that a rapid transition to market institutions was the best path to building a market economy, I argue that the successful practices of the market are learned gradually over time, and the Chinese firms that are stabilized by attention from local government offices and relationships with foreign investors are well-positioned to successfully navigate China's emerging markets. A quantitative analysis of 81 firms in industrial Shanghai and three case studies help illuminate the mechanisms behind these relationships.

This paper seeks to reconcile and synthesize the diverse views about the township–village enterprises (TVEs) and local corporatism in the context of ongoing institutional changes in China as a transition economy. Specifically, I attempt to integrate the economic, political, cultural, and social explanations for TVEs, especially the two competing views of market competition and political corruption. I focus on the puzzle of TVE efficiency as well as the paradox of local corporatism as a government–business partnership with both a positive function of public alliance for wealth creation and a negative function of private collusion for wealth transfer. I argue that the key to both the puzzle of TVEs and the paradox of local corporatism lies in China's dual-track reform paradigm (i.e. a market-for-mass track and a state-for-élite track). Lastly, I discuss the critical implications for theory building and policymaking regarding economic transition in general.

In this study, we examine culture-specific relationships between individual differences and distributive negotiations. We measured individual characteristics and their effects on distributive negotiations in both American and Chinese cultures, using a Western-based scale (the ‘Big Five’) and a Chinese-based scale (CPAI). We found that agreeableness and extraversion (from the ‘Big Five’) affected negotiations for Americans, but not for Chinese. We found that harmony, face and Ren Qing (from the Chinese-based scales) affected negotiations for Chinese, but not for Americans. Specifically, we found that in the American culture, those higher in extraversion and agreeableness achieved lower economic gain, whereas in the Chinese context that those high in harmony, face, and Ren Qing were more likely to be influenced by opening offers and achieve lower economic gain in distributive negotiations. Our study highlights the need to examine negotiations using culturally sensitive constructs and measures.

Everyone knows about China's huge population and the fast-growing economy. Although macro-level sociological and economic analyses have given some attention to the linkage between the two, at the micro level, the relationship between human resources and, more specifically, psychological capital of Chinese workers and their performance has been largely ignored. Within the context of three factories (two private and one state-owned) in the People's Republic of China, this exploratory study examined the relationship of a sample (n = 422) of Chinese workers’ positive psychological capital states and their performance. Results indicated the workers’ positive states of hope, optimism, and resiliency, separately and when the three were combined into a core construct of psychological capital, significantly correlated with their performance, as rated by their supervisors. An analysis of workers in one of the factories (n = 272) also found a significant relationship between the workers’ positive psychological capital and the performance outcome of relative merit-based salary. Limitations, future research, and practical implications conclude the article.

Group citizenship behaviour (GCB) is conceptualized as a distinct group-level phenomenon concerning the extent to which work groups engage in behaviours that support other work groups and the organization as a whole. These behaviours are different from task performance; they enhance and maintain the social and psychological environment in which task performance occurs. Based on the referent-shift consensus model (Chan, 1998), we developed a GCB scale and examined its nomological network. In a sample of 148 work groups in the Hong Kong office of a multinational bank (a total of 743 employees), between-group differences in GCB were greater than within-group differences. GCB was positively associated with procedural justice climate and work group leadership support. Work group cohesiveness and group-organizational goal congruence interactively predicted GCB, as did the negative affective tone of the group and the group's negative affectivity homogeneity. In addition, GCB was positively related to group performance, and negatively related to employee turnover intentions. The theoretical and empirical implications of this study are discussed in the context of Chinese organizations.

Yasheng Huang's Selling China: Foreign Direct Investment during the Reform Era is the first book to be reviewed in Management and Organization Review. Other books bearing on Chinese management that the editors judge to be significant and provocative will be reviewed on an ad hoc basis. Selling China, to be sure, is not about the practice of management in China. Rather, it is about the policies that have created two economies and two managerial systems in China, one domestic and one foreign-invested, and the consequences of these policies. The existence of these two economies and managerial systems lurks in the background of virtually all management research in the Chinese context.

One of the objectives of Yasheng Huang's book Selling China: Foreign Direct Investment in the Reform Era is ‘to gain a better understanding of the operations of the Chinese economy in the 1990s as well as its FDI patterns’ (p. 69). We have no disagreement with Huang's general argument that for much of the 1990s domestic Chinese firms were less competitive than they would have been if the Chinese government had not favoured state-owned enterprises (SOEs).

Similarly, while acknowledging the positive impact of FDI on China's development, Huang has real concern with FDI's disproportionately large role in the economy. He further feels that ‘some of China's FDI patterns may reflect institutional inefficiencies and weaknesses’ (p. 67). Again, we have no real disagreement that this was the case in the 1990s.

Yasheng Huang presents a detailed and meticulous analysis of foreign direct investment (FDI) in China during the reform period. The author should be commended for collecting and analysing descriptive information on China-based FDI that is useful to practitioners as much as to researchers, and for arguing a seemingly intriguing thesis about China's economic ascent. He also presents a number of industry cases, some of which, like that on the Chinese handicraft industry, are particularly captivating. Yet, at the end of the day, what this book does best in my mind is illustrate the confines of traditional academic paradigms when faced with real-life phenomena that are too broad and complex to be captured by a single lens. This is, it itself, an important service.

Yasheng Huang is a thoughtful, articulate observer of China's political economy, who has gained international respect. Many high-level conferences benefit from his insights, and this reviewer is indebted on a variety of issues.

Selling China is essentially two books. One is a very impressive, very carefully documented review of the negative consequences for the Chinese economy of laws and policies that advantage state enterprises at the expense of private enterprises – particularly of a financial system that allocates financial resources overwhelmingly to relatively inefficient state enterprises, and proportionately disadvantages private enterprises. As Huang details, the current Chinese system allocates advantages and disadvantages to firms according to a political pecking order rather than by credit quality. China's markets are highly fragmented and locally protected. China's banks allocate capital disproportionately to state enterprises. Its stock and bond markets are largely restricted by policy, although not by law, to state enterprises. Implicit government guarantees of loans to the biggest state enterprises (SOEs), together with weak private-sector accounting standards, make it irrational for the banks to lend to private firms rather than to big SOEs.

Beamish and Delios write an eminently reasonable review. I agree that the environment for private sector has improved. Selling China describes some of these developments (pp. 202-204) and predicts that the overall role of FDI will decline, which is exacdy what happened. The FDI/domestic private investment ratio has fallen. This decline is the other side of the mirror as the rising ratio: suppressing the domestic private sector, everything else being equal, can raise this ratio; supporting it can reduce this ratio. There are no logical or empirical inconsistencies. I believe that I overstated the ideological rigidity of the Chinese state and that I was vague in specifying the ideological constraints. In the 1990s, the ideology was of an industrial policy kind, rather than Communism.