2002 Volume 4 Pages 11-31
At present, the double-tier management system is promoted by the government in rural China to overcome agricultural stagnation. This system is a rural organization that has multifaceted characteristics of people's communes and the private farm household system. It is defined as the management assigned between individuals and the collective. We answer the following questions in this article. First we seek to clarify what the organizational rationality of this system is with respect to its coordination and motivation. Second we will clear up how jobs and ownership are assigned between individuals and the collective to motivate individuals according to this organizational rationality and the natural and economical features of each province. Organizational rationality is explained as follows. (1) Coordination: Decision making should be assigned to the individuals to use their personal information to maintain stimulating individual incentives. On the other hand, the collective is committed to use common information to effectively carry out coordination.The double-tier management system is an elaborative organization designed to use personal information to stimulate individual incentives and to simultaneously use common information to employ coordination under the collective. (2) Motivaton: The assignment of jobs and ownership are designed to motivate individuals according to risk-aversion or instability, input-effectiveness of technology, incentive for maintenance, and cultivation. Even though production is stimulated under the household responsibility system, contracted small lands do not afford households the ability to bear risk. Small contracted land brings about technological retrogression that reduces incentives to own and maintain machines. The double-tier management system is a system in which the collective absorbs the risk of jobs and maintains the machines, thus reliering the individuals. The designs of the double-tier management system are explained as follows. First we show the importance of the system's coordination by introducing two case studies. The order of land preparation by the village machine station creates strong conflicts that need to be closely coordinated. These conflicts are especially intensified by the heterogeneity of farm househoulds and coordinated by members of the villager's community. Second, we apply econometric analyses to the assignment of jobs and to ownership by using data from the Yearbook of China's Agriculture. We conclude that the assignment of jobs and ownership is designed according to the organizational rationalities, that is, risk-aversion, input-effectiveness, and maintenance-incentive. Farthermore, we find that the assignment is also determined by the natural and economic features of each province such as income taxation, differences of agricultural and nonagricultural provinces, differences of crops, degree of privatization, and collective leadership.
