Economic reforms, corporate governance and privatization method as determinants in performance changes of new privatized firms: the case of MENA countries

This paper aims to provide the determinants of how privatization works in some selected Middle East North Africa countries. Using a sample of 75 new privatized firms we examine the performance changes in countries namely Egypt, Morocco, Tunisia and Turkey. We document a significant increase in profitability, efficiency and output as well as a decrease in leverage. We also identify that these improvements vary with economic reforms and environment, effectiveness of corporate governance and the privatization method used. In particular, financial liberalization and control relinquishment by the government are associated with higher efficiency and output. Furthermore, foreign participation and the use of share issue privatization as divestment method appear to have a positive impact on efficiency and output changes. Additionally, the use of private sales is related to a significant decrease in leverage. Finally our results highlight the importance of economic reforms, corporate governance and the choice of privatization method in explaining the post privatization changes in performance.     

REGULATION AND INVESTMENT

We use newly assembled data on regulation in several sectors of many OECD countries to provide evidence that regulatory reform of product markets is associated with an increase in investment. A component of reform that plays a very important role is entry liberalization, but privatization also has a substantial effect on investment. Sensitivity analysis suggests that our results are robust. (JEL: E22, L5)     

Privatization and National Development: A Case Study of Ghana

Proponents of privatization claim that privatization can enhance efficiency, reduce public sector debt and consequently improve overall economic performance. However, in many developing countries, and Africa in particular, the evidence is mixed. An exploratory study is done from the perspective of citizens’ about the impact of privatization on the Ghanaian national economy. The findings of the study suggest that: 1) the privatization program is pro rich; it benefits the economic and political elites more than it benefits the nation as a whole; 2) there is a high level of corruption associated with the privatization process; and 3) Privatization is not considered as one of the most important tools needed for national development, though the survey finds that many respondents believe that there is the need for some reforms in the public sector to promote national development. The results of the study indicate that administrative and political problems cannot be overcome simply by reducing the size of the state bureaucracy, but rather making government more accountable in meeting the needs of its people.     

Politics,Public Opinion,and Privatization: A Test of Competing Theories in Great Britain

Reforms known collectively as the new public management (NPM) are sweeping governments worldwide. For a movement espousing customer-based service orientations, there is a curious paucity of research on citizens' attitudes toward these reforms. We know little about how citizens feel about them, how they arrive at their conclusions, and how durable their attitudes are likely to be. Using citizen attitudes culled from the 1987--1992 British General Election Panel Survey, we apply multiple regression analysis to begin exploring these issues in one critical area of NPM reform: privatization of state-owned enterprises. We find that the overall predictive power of the five theoretical perspectives culled from public opinion research and operationalized in our model is quite respectable, but that evaluations are too complex for any single explanation of public opinion formation to capture. We also find that British attitudes toward privatization were most associated with cue-taking from leaders and parties, ideological moorings associated with individualism, and income. From these findings we offer a set of hypotheses suitable for testing in future research—most especially, a disparate impact hypothesis—that have important implications for practice and theory-building regarding public opinion and market-based administrative reforms worldwide.     

UK Privatization: Its Impact on Procurement

This study is concerned with changes in procurement and supply chain management in UK privatized companies. In most cases, privatization requires the organization to develop a completely new approach. This is because of the change in ownership and the new competitive environment into which the company moves. Part of this reassessment of the business by senior management can be expected to include procurement. The paper focuses on the nature and direction of the changes in procurement associated with privatization, based on research into the privatized sector in Britain. The method adopted involves an extensive questionnaire completed by 28 major companies privatized in the UK, followed up by interviews with twelve of these companies. Questions centre on the following key areas: changes in the structure of procurement, procurement strategy, the role and profile of procurement within the company, attitudes to outsourcing and supplier performance and changes in approach to assessing the performance of the procurement function. Our results indicate extensive change. Although cost reduction is often a driver of these changes, as the companies strive to reduce costs to meet City expectations and best practice in the private sector, another consideration is the contribution that procurement can make to the overall strategy of the company, so as to gain and maintain competitive advantage.     

Perceptions of Civil Servants Toward Privatization and Development: A New Exploratory Study

This study examines the perceptions of civil servants towards privatization with respect to national development. Using case studies and official interview data, it also examines the efficacy and effectiveness of privatization programs in a developing country, Bangladesh. The study rejects the conventional beliefs about the role of bureaucracies as anti-privatization by revealing that civil servants of Bangladesh have positive perceptions towards privatization with respect to national development. The study, however, finds no significant differences in the perceptions of different levels of civil servants towards privatization with respect to national development; they all share a common goal. Research demonstrates that civil servants generally believe that privatization positively affects economic, social, political and administrative development, although it negatively affects equity, fairness and social justice issues by widening the gap between the rich and the poor. Additionally, the study demonstrates that privatization is not conducive to employee empowerment.

When labor representatives join supervisory boards: empirical evidence of the relationship between the change to parity codetermination and working capital and operating cash flows

We examine how the change to 50% labor representation on German supervisory boards is related to working capital and operating cash flows, since both are proxies for short-term financial policies. We expect the change to be associated with reduced working capital and increased operating cash flows. Using a difference-in-differences model, we compare a sample of listed and non-listed firms that changed to parity codetermination between 1987 and 2014 with two different groups of control firms that did not change their level of codetermination. In line with our hypotheses, the results suggest that a change to parity codetermination is related to lower working capital and higher operating cash flows compared to our control firms. We conclude that firms begin to engage in more efficient working capital management due to the change to parity codetermination on supervisory boards. We also conclude that the positive short-term effects on the firms’ operating performance imply that labor representatives do not bear just the interests of employees in mind, but also those of other stakeholders.     

Municipal Groundwater Management: Optimal Allocation and Control of a Renewable Natural Resource

We study a municipal groundwater management problem to determine optimal allocation and control policies in the presence of water transfer opportunities. We establish and characterize threshold polices governing export or import decisions of a given municipality. In the spirit of the Triple Bottom Line (3BL), we ascertain that exporting (importing) water through a water market defined by an exogenous export/import price is detrimental (beneficial) to both society and the environment within the municipality. In contrast, fixed quantity trading between two municipalities defined by an endogenously negotiated export/import price can have positive as well as negative impacts from a global 3BL perspective. In particular, typical trading scenarios that occur between municipalities can be detrimental to the environment. We also study the implications of privatization, and find that a privatized municipality would be more (less) likely to export (import) water as compared to its non‐privatized counterpart, resulting in negative implications for society within the municipality. However, if exports are banned, privatization can benefit the environment by mitigating the damage caused by the extraction differential, a phenomenon analogous to the green paradox. Moreover, careful and restricted privatization of municipalities can lead to positive global 3BL impacts from fixed quantity trading.     

Hazard Characteristics and Patterns of Environmental Injustice: Household‐Level Determinants of Environmental Risk in Miami,Florida

Limited systematic comparative knowledge exists about patterns of environmental injustices in exposure to varied natural and technological hazards. To address this gap, we examine how hazard characteristics (i.e., punctuated event/suddenness of onset, frequency/magnitude, and divisibility) influence relationships between race/ethnicity, nativity, socioeconomic status (SES), older age, housing tenure, and residential hazard exposure. Sociodemographic data come from a random sample survey of 602 residents of the tricounty Miami Metropolitan Statistical Area (Florida). Hazard exposure was measured using spatial data from the Federal Emergency Management Agency, the National Air Toxics Assessment, and the Emergency Response Notification System. We specified generalized estimating equations (GEEs)—which account for sociospatial clustering—predicting 100‐year flood risk, acute chemical accidental releases, and chronic cancer risk from air toxics from all and on‐road mobile sources. We found that for punctuated, sudden onset events, some socially advantaged people were significantly at risk. Racial/ethnic minority variables were significant predictors of greater exposure to the three technological hazards, while higher SES was associated with 100‐year flood risk exposure. Black and foreign‐born Hispanic residents, and white and U.S.‐born Hispanic residents, shared nearly identical risk profiles. Results demonstrate the complexities found in human‐hazard associations and the roles of hazard characteristics in shaping disparate risk patterns.     

Privatization and Public Opinion in Germany

Privatization has been a major issue around the world, but research on public opinion about it has been scarce. The German Social Survey provides an opportunity to compare citizen opinions from a formerly socialist-authoritarian regime with those from a democratic regime, in their opinions about privatizing banks, electrical power, and hospitals. As do citizens in surveys in other nations, Germans support privatization of the services in the order just given. Citizens from the east, where privatization led to sharp increases in unemployment, oppose privatization much more than do westerners. A LISREL analysis indicates that their opposition is not due to their concerns about its economic effects on themselves or the nation (economic pessimism), but more due to perception of the proper role of government (opposition to government spending), and sense of political efficacy. The analysis also reflects on the roles of other variables such as ideology, partisanship, gender, being unemployed, education, and preference for taxes versus public services. We discuss implications for theory and research on public opinion about government policies and services, such as the role of direct economic self-interest versus more symbolic and ideological orientations.     

Am I a leader? Examining leader identity development over time

The extent to which someone thinks of him- or herself as a leader (i.e., leader identity) is subject to change in a dynamic manner because of experience and structured intervention, but is rarely studied as such. In this study, we map the trajectories of leader identity development over a course of a seven-week leader development program. Drawing upon identity theory (Kegan, 1983) and self-perception theory (Bem, 1972), we propose that changes in self-perceived leadership skills are associated with changes in leader identity. Using latent growth curve modeling and latent change score analyses as our primary analytical approaches, we analyzed longitudinal data across seven measurement points (N = 98). We find leader identity to develop in a J-shaped pattern. As hypothesized, we find that these changes in leader identity are associated with, and potentially shaped by, changes in leadership skills across time.     

The Effectiveness of Management‐By‐Walking‐Around: A Randomized Field Study

Management‐by‐walking‐around (MBWA) is a widely adopted technique in hospitals that involves senior managers directly observing frontline work. However, few studies have rigorously examined its impact on organizational outcomes. This study examines an improvement program based on MBWA in which senior managers observe frontline employees, solicit ideas about improvement opportunities, and work with staff to resolve the issues. We randomly selected hospitals to implement the 18‐month‐long, MBWA‐based improvement program; 56 work areas participated. We find that the program, on average, had a negative impact on performance. To explain this surprising finding, we use mixed methods to examine the impact of the work area's problem‐solving approach. Results suggest that prioritizing easy‐to‐solve problems was associated with improved performance. We believe this was because it resulted in greater action‐taking. A different approach was characterized by prioritizing high‐value problems, which was not successful in our study. We also find that assigning to senior managers responsibility for ensuring that identified problems get resolved resulted in better performance. Overall, our study suggests that senior managers' physical presence in their organizations' front lines was not helpful unless it enabled active problem solving.     

The Relationship Between the Board of Directors and the Performance/Value Creation in a Context of Privatization: The Case of French Companies

The aim of this paper is to shed light on the cognitive as well as the disciplinary role of one important governance mechanism that is the board of directors in a privatization context. Using a sample of privatized French companies, we examine the relationship between the size, component and structure of this mechanism to the performance and value creation on the post privatization period. Thus, the majority of our findings have support on the theory of cognitive governance, one aspect of governance that was ignored in previous research.     

Risk, Trust, and Safety Culture in U.K. Train Operating Companies

Organizational safety culture reflects the attitudes and behaviors that individuals share in considering and reacting to hazards and risks. We first argue that trust is an underdeveloped and important concept in relation to theories of safety culture and high-reliability organizations. The article then reports findings from a two-year qualitative study of train operating companies (TOCs) in the United Kingdom, which sought to explore in detail the linkages between safety culture and the postprivatized railway industry. In-depth interviews and focus groups were carried out with a sample of over 500 employees, from four organizations, and representing all key functional levels. Our analysis suggests that the 1993 privatization, and subsequent organizational restructuring of the U.K. railway industry, has had important repercussions for both safety culture and trust relationships. We explore our findings in relation to three key constructs within "safe organizations" theories (namely, flexibility, commitment, and learning), and discuss how the safe organization model might be usefully supplemented by a consideration of trust issues.     

Climate Change Beliefs and Perceptions of Weather‐Related Changes in the United Kingdom

Public perception research in different countries has suggested that real and perceived periods of high temperature strengthen people's climate change beliefs. Such findings raise questions about the climate change beliefs of people in regions with moderate climates. Relatively little is known about whether public concerns about climate change may also be associated with perceived changes in other weather‐related events, such as precipitation or flooding. We examine the relationship between perceived changes in weather‐related events and climate change beliefs among U.K. residents at a time of below‐average winter temperatures and recent flooding. National survey data (n = 1,848) revealed that heat waves and hot summers were perceived to have become less common during respondents’ lifetimes, while flooding, periods of heavy rainfall, coastal erosions, and mild winters were perceived to have increased in frequency and cold winters were perceived to be unchanged. Although perceived changes in hot‐weather‐related events were positively associated with climate change beliefs, perceived changes in wet‐weather‐related events were found to be an even stronger predictor. Self‐reported experience of “flooding in own area” and “heat‐wave discomfort” also significantly contributed to climate change beliefs. These findings highlight the importance of salient weather‐related events and experiences in the formation of beliefs about climate change. We link our findings to research in judgment and decision making, and propose that those wishing to engage with the public on the issue of climate change should not limit their focus to heat.     

基于差异产品的外资渗透、私有化程度与社会福利研究

考虑到企业产品差异性、企业的私有化程度、外国资金的渗透等因素,研究了伯川德竞争情形下私有化程度、外资渗透与社会福利之间的关系以及私有化程度、外资渗透对混合双寡头市场的影响。首先建立混合双寡头的伯川德竞争模型,得出伯川德均衡解,然后在社会福利最大化下分产品为替代产品和互补产品两种情形分别得出了最优私有化程度的解,进而分析了外资渗透（或国内控股）对私有化程度与混合双寡头市场的影响。研究表明,生产替代性产品的企业进行价格竞争时,部分私有化企业为纯公共企业时社会福利达到最大,企业国内控股比例的增加将增大最优社会福利;生产互补性产品的企业在价格竞争下,实行国有企业公司制股份制改革时社会福利达到最大,并且国内控股比例的增加将降低最佳私有化程度,社会福利最大化下政府要鼓励产品多样化和减少国外资金的渗透。从整个社会和企业角度看,国有企业股份制改革策略为最佳策略。     

Institutional Fleecing: The Slow Death of Dutch Provinces

Many theories on organizational change depart from the assumption of change for the better, that is, change in order to gain a stronger position in relation to its competitors, to become more effective or efficient, or at least to improve the organization. It is our idea that the theories developed on this basis are biased. Contrasting to this dominant approach, this article gives a longitudinal analysis of the development in an organization in decline. It is directed at explaining the downfall of a Dutch province. In the medieval empire of Charlemagne it was one of the most powerful duchies of Europe. Later it became one of the seven provinces in the powerful Dutch Republic, and nowadays it has lost nearly all its tasks and functions. Departing from neo-institutional theory this paper seeks the major causes for this downfall and specifies some of the relations in the theoretical model of punctuated equilibrium. It concludes that the historical institutional dynamics can be seen as a self-enforcing process in which punctuations can be explained by the increasing distance between individual preferences within the organization, and the pressures originating from developments in the environment.Dr. M.S. de Vries is professor in Public Administration at the Radboud University Nijmegen. Address: Thomas van Aquinostraat 5 (room 5.1.56). P.O. Box 9108, 6500 HK Nijmegen, The Netherlands, tel;++31 24 3615691.     

Bayesian Inventory Management with Potential Change‐Points in Demand

We consider the inventory management problem of a firm reacting to potential change points in demand, which we define as known epochs at which the demand distribution may (or may not) abruptly change. Motivating examples include global news events (e.g., the 9/11 terrorist attacks), local events (e.g., the opening of a nearby attraction), or internal events (e.g., a product redesign). In the periods following such a potential change point in demand, a manager is torn between using a possibly obsolete demand model estimated from a long data history and using a model estimated from a short, recent history. We formulate a Bayesian inventory problem just after a potential change point. We pursue heuristic policies coupled with cost lower bounds, including a new lower bounding approach to non‐perishable Bayesian inventory problems that relaxes the dependence between physical demand and demand signals and that can be applied for a broad set of belief and demand distributions. Our numerical studies reveal small gaps between the costs implied by our heuristic solutions and our lower bounds. We also provide analytical and numerical sensitivity results suggesting that a manager worried about downside profit risk should err on the side of underestimating demand at a potential change point.     

Making Privatization Work: Utilizing a Scorecard Model of Human Resource Strategy

Three-fourths of privatization efforts fail. Analyses of the other one-fourth have overlooked what is arguably the single most important element: successful management of human resources. In establishing the culture of change necessary to effect competitive initiatives and in motivating employees toward innovation and accountability, a scorecard-based human resource strategy is at the center of it all. A discussion of the strategic role of human resource management supporting privatization efforts in general, and of the remarkably successful Charlotte, North Carolina experience in particular, offers important lessons. Detailed here is a rubric of what works and why.