Business groups prevail as an organizational form of industry throughout the world. Internationally, explanations about the behavior of business groups have been proposed from economic, social and political perspectives. Since China is experiencing a unique economic transition, business groups, especially state-owned business groups, abound and have been playing an unusual role.There are some limitations in existing studies on the behavior of China's state-owned business groups in the economic transition. First, they have paid more attention to general analysis from theories of economics than to research on the behavioral characteristics from a political perspective. Second, the macro-level evaluation and the micro-level explanation of the behavior of the state-owned business groups are disconnected in that business groups, group headquarters, affiliate firms are not well distinguished. Third, existing literature suggests that the research on the behavior of state-owned business groups has taken little quantitative approach, making the conclusions less convincing. Such being the case, this dissertation attempts to overcome the existing problems by using the theories of political science and the quantitative approach based on the characteristics of China's economic transition.The dissertation takes as samples 150 state-owned business groups and 684 of their affiliated firms, collects data by questionnaire surveys, and tests and analyzes the research hypotheses by SPSS. The empirical results indicate: First, in the course of economic transition, the government has exerted a remarkable influence on the behavior of the affiliate firms of the state-owned business groups. The conflicts between the government's goals and its policies have led to the behavior conflicts of the business groups, whose basic behavior tends to seek after employment size ratherthan market innovation. Second, group headquarters can affect the behavior of theiraffiliate firms, thereby strengthening or weakening the government's impact on the affiliate firms, but the effect is not significant. Third, although the reform of the state-owned business groups has already entered into a substantive stage, their ability to create the groups' advantage will depend on the reform in their property right arrangement and management mode. Therefore, it does not suffice to explain the behavior of state-owned business groups and evaluate its role from an economic or sociological perspective; additional analysis from a political perspective is also crucial. In political terms, the state-owned business groups as an organizational form of industry are a special political tool taken advantage by the government to achieve the two "conflicting" goals-stability and development at the specific stage of economic transition.The academic value of the dissertation lies in the fact that it starts with the mutual influence of the government, group headquarters, and their affiliate firms, studies quantitatively the behavior of China's state-owned business groups in the economic transition, verifies that the groups' behavior can be explained from a political perspective, and proposes that the state-owned business groups are a kind of political tool taken advantage by the government to attain stability and development at the specific stage of economic transition, thereby deepening the understanding of the behavior of China's state-owned business groups in transition economy.