Through a review of the representative sociological studies on the ownership of town and township enterprises, this article uses the three classical theoretical concepts of possession, operation, and governance to analyze the formative and the operational mechanisms of town and township enterprises. In terms of possession, these enterprises compromise different elements of public, common, and private ownership. In terms of operation, they utilize land contracts, enterprise contracts, and the financial responsibility system in the institutional context of the two-track regime. In terms of governance, they fuse different mechanisms of institutions, knowledge, and other dimensions together and free up traditional familial, kinship linkage, and customary resources for practical reform and creativity. As they occupy a key position in the social process of multiple elements and moments, town and township enterprises not only provide opportunities for institutional innovation, but they also embody the institutional spirit of the reform period, which combines tradition, regime, and new market mechanisms. Enterprises also foster an enriched process of social development. This framework, which goes back to classical social science theories, may stimulate reflection on other phenomena of organizational and institutional change that are associated with social and economic reform.