Despite the interruptions of the civil war and slow completion of prospected lines, Chinese railroads had a strong influence on the development of economy and society during the Republican period, offering a faster, more convenient and safer way of transportation of goods and people. The economic impact of railroads was most significantly felt in the agricultural sector and the linkages they established with new regional economic hubs and coastal port cities.

To what extent did railroads create, contribute to or expand "the market" in terms of economic exchange, production, and consumption? This paper looks at the economic impact of some Chinese railroads in northern and eastern China through the institutional prism of their business operations and strategic responses, be it as a catalyst for complementary businesses, adoption of new business practices or initiating the strategic growth of transfer hubs. I argue that the institutional structure of railroad lines via the departmental system created a decentralized organization which influenced the strategic framework for their interaction with local and regional markets. As this paper demonstrates, the railroads' decentralized structure reinforced their strategic approach to local and regional markets and simultaneously reconfirmed the geographical constraints of the localized economies they operated in.