The research of strategic management in China developed through introducing, assimilating and applying paradigm and methodology of western strategic theories. Given to the rapid development of economy and thereafter the increasing demand from Chinese firms, Chinese scholars, who concentrate on strategic management research, should confidently explore new research perspectives based on the unique Chinese context. Based on the characteristics of the process of the reform and openness in China, such as gradual, decentralized, “duelpricingsystem”based and experimentation-based characteristics, as well as in terms of the environment factors especially institutional factors in the transition process, this paper advances contextembedded perspective in researching Chinese firms' behavior in the transition context. Concentration on analyzing the institutional effects, co-evolution process and cases of abnormal and typical Chinese firms was highlighted, which would help Chinese scholars in knowledge innovation and practical implication.