A multitask theory of state enterprise reform

During transition, maintaining employment and providing a social safety net to the unemployed are important to social stability, which in turn is cruc ial for the productivity of the whole economy. Because independent institut ions for social safety are lacking and firms with strong profit incentives have little incentive to promote social stability due to its public good na ture, state-owned enterprises (SOEs) are needed to continue their role in p roviding social welfare. Charged with the multitasks of efficient productio n as well as social welfare provision, SOEs continue to be given low profit incentives, and consequently their financial performance continues to be p oor. (C) 2000 Academic Press.