Situating regional advantage in geographical political economy: a case study of the adaptive capacities of state-owned enterprises in post-reform Guangzhou, China

Abstract

Drawing on the insights from geographical political economy, this study examines the nature and dynamics of regional advantage in a different political, economic and organizational context that goes beyond the arena so far occupied by the prevailing literature on new regionalism. Based on a detailed examination of the adaptation practices and strategies of state-owned enterprises in mechanical and electrical sectors (SOMEEs) in post-reform Guangzhou, it reveals that the geographical specific and historical contingent political economy confronting them before economic reforms is the fundamental force underlying their more successful adaptation in the post-reform period. While inferior positionality in the political and economic agenda of Maoist regime was not favorable to the growth and survival of SOMEEs in Guangzhou, it had nevertheless conferred significant advantages on their adaptive capacities through enforcing both market competitive pressure and hardened budget constraints and compelling them to adopt flexible production and labor practices as well as malleable organizational networks. The 'scale up' in the reconceptualization of regional advantage offers a new perspective to overcome the teleological tenor implicit in the extant literature on new regionalism. It argues for a place-dependent treatment of soft budget constraint in future studies on state-owned enterprises in China and other transitional economies.