TY - JOUR
T1 - Governance, organizational capabilities, and restructuring in transition economies
AU - Filatotchev, Igor
AU - Wright, Mike
AU - Uhlenbruck, Klaus
AU - Tihanyi, Laszlo
AU - Hoskisson, Robert E.
PY - 2003/11
Y1 - 2003/11
N2 - This paper focuses on the links between governance, firm capabilities and restructuring following the large-scale privatization process in Central and Eastern European transition economies using an integrative approach. Restructuring in these countries has been motivated by political and institutional changes and less so by market forces. Accordingly, political processes have produced political solutions such as "give-away" privatizations to insiders. These privatizations, in contrast to divestitures to outside owners, have realized less substantive restructuring because non-market incentives, such as too much managerial equity ownership, have created managerial entrenchment. In addition, we propose a connection between governance and organizational learning suggesting that learning is inhibited by excessive managerial ownership and lack of board knowledge regarding its oversight function. Furthermore, this entrenchment and poor board functioning may be perpetuated in financial-industrial groups, which have emerged as substitutes for market intermediaries in emerging economies. Thus, we propose that outside ownership involvement and the development of organizational capabilities may facilitate restructuring in the Central and Eastern European context. Our theoretical arguments are supported by case study evidence from transition economies.
AB - This paper focuses on the links between governance, firm capabilities and restructuring following the large-scale privatization process in Central and Eastern European transition economies using an integrative approach. Restructuring in these countries has been motivated by political and institutional changes and less so by market forces. Accordingly, political processes have produced political solutions such as "give-away" privatizations to insiders. These privatizations, in contrast to divestitures to outside owners, have realized less substantive restructuring because non-market incentives, such as too much managerial equity ownership, have created managerial entrenchment. In addition, we propose a connection between governance and organizational learning suggesting that learning is inhibited by excessive managerial ownership and lack of board knowledge regarding its oversight function. Furthermore, this entrenchment and poor board functioning may be perpetuated in financial-industrial groups, which have emerged as substitutes for market intermediaries in emerging economies. Thus, we propose that outside ownership involvement and the development of organizational capabilities may facilitate restructuring in the Central and Eastern European context. Our theoretical arguments are supported by case study evidence from transition economies.
UR - http://www.scopus.com/inward/record.url?scp=0242267604&partnerID=8YFLogxK
U2 - 10.1016/j.jwb.2003.08.019
DO - 10.1016/j.jwb.2003.08.019
M3 - Article
AN - SCOPUS:0242267604
SN - 1090-9516
VL - 38
SP - 331
EP - 347
JO - Journal of World Business
JF - Journal of World Business
IS - 4
ER -