The state-initiated economic reform starting in 1978 in China has changed the operational environment of state-owned enterprises (SOEs) and exerted a great impact on employee ’s life at work.Research efforts devoted to this area since the reform have predominately been from the field of economics, management, or administrative science. They aim to understand and improve SOEs by analyzing and adjusting structures,management systems and labor policies. However, the implementations of reform policies and SOEs employee ’s feelings toward the changes have been less well explored.Linking management with underlying assumptions and beliefs is an important but often neglected step. This paper intends to further the understanding of the operations and problems of SOEs from an organizational communication and organizational culture perspective by exploring the relationship between organizational culture and effectiveness of SOEs in general. Denison ’s culture and effectiveness model is adopted to analyze the important issues related to the reform.Implications are drawn for improving SOE effectiveness from an organizational culture perspective.