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AM Lecture 2The Sichuan experimentThe idea of the incentive scheme came from an experiment conducted in 1979, in the Sichuan Province. Managers in 84 industrial enterprises were given partial authority over equipment and materials purchase, labour hiring and assignment, and pricing (in order to understand the notion of price mechanism). They were given the same rights as commercial managers. They were allowed to keep part of the surplus as an incentive. The experiment was very successful, so the scheme was extended to generalised policy. It also galvanised the government into using it, as it was a good way of teaching managers to enter the competitive market, although the problem of lack of training remained.
Chinese management and tradition Other studies and remarks on Chinese management
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