POLICY ARENA: Can Large Firms Be Run Efficiently Without Being Bureaucratic?

The article is a critical commentary on the World Bank's analysis of state-owned enterprises (SOEs), as exemplified in its recently-published Report, Bureaucrats in Business. While noting the positive contributions made by the Report, the article criticises the World Bank's understanding of the issues involved in the management of large-scale enterprises, by applying modern theories of the firm. It then critically examines a number of policy issues emphasised in the Report, including the political economy of SOE reform, macroeconomic consequences of SOE reform, the relationship between SOE reform and the financial sector reform, and finally the interpretation of the recent Chinese experience. © 1997 John Wiley & Sons, Ltd.