The Institutional Logic of Collusion among Local Governments in China

Abstract

A salient organizational phenomenon in the Chinese bureaucracy is collusion among local governments in response to policies and directives from higher authorities; local governments often form alliances to compromise the original intention behind state policies. There are thus significant and persistent deviations and goal displacement in policy implementation. This article develops an organizational analysis and theoretical explanation of this phenomenon. It argues as follows: Collusion among local governments, though informal, is generated and perpetuated by the institutional logic of the Chinese bureaucracy, results from organizational adaptation to its environment, and hence acquires legitimacy and becomes highly institutionalized. In particular, the institutional logic of the Chinese bureaucracy has generated three organizational paradoxes—uniformity in policy making and flexibility in implementation, incentive intensity and goal displacement, bureaucratic impersonality and the personalization of administrative ties—which provide legitimate bases for collusion among local governments. Bureaucratic collusion has been greatly exacerbated in recent years because of the unintended consequences of the centralization of authority and the enforcement of incentive mechanisms in the bureaucracy.