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This book is a seminal contribution to decision making theory through its study of management decision making in six Beijing state enterprises during the period 1985 to 1989, when the government adopted decentralization as the key to reforming state industries. Through interviews, document surveys and analysis, the author provides a unique insight into not only the changes, but also the complex relations among managers, the Communist Party organization and planning authorities. Readers will gain a richer understanding of Chinese management issues and society.

The paper examines the process of investment decision making in six Chinese state enterprises during the economic reform which combined moves towards a market system with a continuing role for the state in industrial governance. This placed investment at the boundary between bureaucratic control and market forces, the theory being that enterprise managers would advance investment proposals in response to the market while government authorities retained the right of final approval in the light of broader-based priorities. This mixed "market socialism" model has been treated with considerable scepticism by the so-called "reform economists" in Eastern Europe who doubt that enterprises can pursue policies which are rational in terms of market forces so long as they remain subject to significant administrative influence. Resource dependence and institutional perspectives, in drawing attention to higher administrative agencies as providers respectively of critical resources and of legitimacy for the state enterprises under their purview, also predict that institutional constraints will continue to operate on enterprise decision making. North's discussion of informal institutional arrangements and incremental change gives rise to similar expectations. Detailed examination of the investment decision process at the three major stages of initiation, design and detailing, and final authorization does in fact indicate that it remains heavily dependent upon higher authorities. The reasons for this continuing dependence are discussed and comparisons are drawn with the investment decision process in western countries.