Corporatization is the process of transforming and restructuring state assets, government agencies, public organizations, or municipal organizations into corporations. It involves the adoption and application of business management practices and the separation of ownership from management through the creation of a joint-stock or shareholding structure for the organization. The result of corporatization is the creation of state-owned corporations (or corporations at other government levels, such as municipally owned corporations) where the government retains a majority ownership of the corporation's stock. Corporatization is undertaken to improve efficiency of an organization, to commercialize its operations, to introduce corporate and business management techniques to public functions, or as a precursor to partial or full privatization. History The move towards neoliberal economic reform and New Public Management public service reform in the 1980s led to privatization of public functions in many countries. Corporatization was seen as a half-way house on the road to privatization. These state-owned enterprises are organized in the same manner as private corporations, with the difference that the company's shares remain in the ownership of the state and are not traded on the stock market. Corporatization is today often seen as an end in itself in order to introduce autonomy in organizations, hoping that this brings efficiency gains. The People's Republic of China implemented a large scale restructuring of state enterprises starting in the economic reforms initiated in 1978, where state enterprises were granted greater autonomy in their operations from economy-wide state planning. This culminated in a massive wave of corporatization between 1992 to 2002 with the adoption of a market economy and the opening of the Shenzhen and Shanghai stock exchanges. Corporatization involved restructuring state enterprises to operate as commercial and market entities while retaining state ownership or majority state ownership. Some argue that the trend towards corporatization has sped up due to the financial crisis, although there is evidence that there has been a trend towards corporatization since at least the start of the century. Reasons and effects Corporatization can be used to improve efficiency of public service delivery (with mixed successes), as a step towards (partial) privatization, or to alleviate fiscal stress. (Potentially) improving efficiency A key purpose of corporatization is externalization. The effect of corporatization has been to convert state departments (or municipal services) into public companies and interpose commercial boards of directors between the shareholding ministers / city council and the management of the enterprises. Such