Interest-driven and Balancing Mechanisms in State-Owned Enterprise Governance

Author: Shan Fengru
Publisher:
Publish Date: 2006-12-01
Features: This book is the result of the key project "Research on Interest Motivation and Balancing Mechanisms in the Governance Structure of Large and Medium-Sized State-Owned Enterprises" under the "Fifteenth Five-Year Plan" of the Social Science Fund of Liaoning Province. The book addresses the shortcomings of China's state-owned enterprises, particularly the various misconceptions in the reform of state-owned enterprises, and firmly proposes that the governance structure of China's state-owned enterprises must be designed and constructed based on the principles of interest motivation and balancing. It conducts an in-depth and systematic study on how to construct the interest motivation and balancing mechanisms in the modern corporate governance structure of state-owned enterprises. The book focuses on the interest motivation and balancing mechanisms in corporate governance, grasps the core issues of the reform of state-owned enterprises and the establishment of modern enterprise systems, especially the interest structure and interest mechanisms in governance, and proposes a systematic model of corporate governance and mechanisms, which is innovative and has high academic and practical value.
Enterprises are economic organizations that pursue profit maximization as their primary goal. China's state-owned enterprises must design and construct their corporate governance structure based on the principles of interest motivation and balancing to establish an effective modern enterprise system. Currently, there are some misconceptions and blind spots in the process of establishing a modern enterprise system: (1) Establishing a modern enterprise system has become a call and policy from the Party and government, but lacks intrinsic motivation from the enterprises themselves; (2) The reform target model and mechanism design for establishing a modern enterprise system do not sufficiently highlight interest relationships; (3) There is insufficient research on the needs of stakeholders of the enterprise (especially individuals), and the expected benefits they can gain through reform are not clearly defined; (4) The means of organizing and operating reforms primarily rely on administrative methods rather than economic interest mechanisms.
The core issue in all these phenomena is the lack of attention to interest motivation. If reforms do not bring tangible benefits to stakeholders, they will lack enthusiasm and initiative for reform, and the reform will not succeed. If the mechanisms after reform cannot effectively guarantee the balancing and maximization of stakeholders' interests, the reform will not be successful. Therefore, it is essential to construct a modern enterprise system based on the principles of interest. When establishing a modern enterprise system, especially constructing the corporate governance structure, it is necessary to study the interests of various stakeholders and design a governance structure and system that can maximize the interests of all stakeholders while ensuring the fundamental interests of the state and fairness. This will maximize the enthusiasm and initiative of all parties to participate in reforms, achieve effective enterprise operations, and improve enterprise performance.
The content structure of the book is as follows: Chapter 1 is "State-Owned Enterprise Reform and Interest Mechanisms." It first reviews the history of state-owned enterprise reform; secondly, analyzes the general situation of establishing a modern enterprise system for state-owned enterprises; and finally, conducts an in-depth analysis of the research and current status of interest motivation and balancing mechanisms in enterprises. Chapter 2 is "Comparison of Interest Motivation and Balancing Mechanisms in Corporate Governance Abroad." It first compares the internal governance interest motivation and balancing mechanisms of foreign companies; secondly, conducts a comparative study of the external governance interest motivation and balancing mechanisms of foreign companies; and finally, examines the lessons from foreign experience for China's corporate governance. Chapter 3 is "Basic Theories and Models of Enterprise Interest Motivation and Balancing Mechanisms." It first discusses the necessity of constructing a state-owned enterprise system based on the principles of interest motivation and balancing, analyzes the principles of interest motivation and balancing, designs a systematic model of interest motivation and balancing, and proposes analytical and design ideas for constructing corporate governance systems based on the principles of interest motivation and balancing; secondly, focuses on studying the systematic model of modern corporate governance and its interest motivation and balancing mechanisms, proposing a systematic model of corporate governance; and finally, proposes recommendations for constructing interest motivation and balancing mechanisms in corporate governance for China's state-owned enterprises. Chapter 4 is "Enterprise Property Rights and Interest Motivation and Balancing Mechanisms." It first analyzes the relationship between enterprise property rights and interest motivation and balancing; secondly, analyzes the evolution and reform of the property rights system of state-owned enterprises; and finally, focuses on how to innovate the property rights system to provide a foundation for constructing interest and balancing mechanisms. Chapter 5 is "Interest Motivation and Balancing Mechanisms Between Owners and Managers." It first studies the interest motivation and principal-agent mechanisms between owners and managers; secondly, studies the selection and appointment mechanism of agents; thirdly, studies the performance appraisal and incentive mechanisms for managers; fourthly, studies the supervision and constraint mechanisms for managers; and finally, studies the corporate operation and decision-making mechanisms. Chapter 6 is "External Interest Motivation and Balancing Mechanisms of Enterprises." It first introduces the external interest motivation and balancing mechanisms in general; secondly, studies the interest motivation and balancing mechanisms between enterprises and the government; thirdly, studies the interest motivation and balancing mechanisms between enterprises and banks; and finally, studies the interest motivation and balancing mechanisms between enterprises and other stakeholders.