Mathematical modeling of China's state-owned enterprises' contract system

Mathematical modeling of China's state-owned enterprises' contract system

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Article ID: iaor20011400
Country: Netherlands
Volume: 124
Issue: 2
Start Page Number: 235
End Page Number: 242
Publication Date: Jul 2000
Journal: European Journal of Operational Research
Authors: ,
Keywords: developing countries, optimization
Abstract:

The Chinese government has adopted a policy to separate the management and ownership of the state-owned enterprises as a key step to move them towards modern-type enterprises. State-owned Enterprises' Contract System (SECS) is a major enterprise management system in China today. In this paper, mathematical models are employed to examine some macro aspects of SECS. First, the behavior of SECS is analyzed through introducing two measurement indices; second, two incentive models of SECS are developed using audit as a tool for acquiring information for decision making; third, from a mathematical analysis, a general rule which determines optimal incentive strategy under perfect information is presented.

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