The evolutionary and ecological perspectives on organizational form, strategy and performance: evidence from privatized firms in China

Purpose This study aims to examine how evolutionary and ecological forces shape the market strategy and performance of firms after their organizational form was changed by exogenous shock. Design/methodology/approach Hypotheses are developed based on both evolutionary and ecological perspectives and tested using fixed effect logistics models and a sample of 3,110 firms that were privatized during 1998–2007. Findings I find that once the organizational form of firms is changed, the market strategy of organizations is shaped by the population density of their old and new organizational forms in their existing market. Moreover, such a market strategy enhances the survival chance of firms. Originality/value This study contributes to organizational evolution literature by unpacking the evolution process when exogeneous shock to organizational form takes place. It advances both evolutionary economics and organization ecology theory through integrating them to understand the evolution process of organizations. This study also contributes to the privatization literature through examining the ecological forces that shape the restructuring strategy of firms after privatization and the performance implications of such restructuring.

The Financial and Operating Performance of Newly Privatized Firms: an International Empirical Analysis

This study compares the pre- and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990. Our results document strong performance improvements, achieved surprisingly without sacrificing employment security. Specifically, after being privatized, firms increase real sales, become more profitable, increase their capital investment spending, improve their operating efficiency, and increase their work forces. Furthermore, these companies significantly lower their debt levels and increase dividend payout. Finally, we document significant changes in the size and composition of corporate boards of directors after privatization.

Strategic agility orientation? The impact of CEO duality on corporate entrepreneurship in privatized Vietnamese firms

This study examines the impact of chief executive officer (CEO) duality (a chief executive operating chair of board and leader of a firm) of newly privatized Vietnamese firms on the level of corporate entrepreneurship; this understanding is used to throw light on the extent to which a position of strategic agility is achieved. Specifically, does CEO duality enable firms to keep consistent with their vision, while remaining flexible in their business model? Data from a survey of 114 CEOs of board and top management team members in privatized firms in Vietnam were collected and examined through a combination of agency theory and stewardship theory. The research finds that CEO duality does not necessarily lead to a higher degree of entrepreneurial activity in privatized Vietnamese firms. The results have policy implications for shaping corporate governance and management implications for firms striving to be competitive, in ways that advance corporate entrepreneurship in economies such as Vietnam that are both emerging and pursuing privatization.

The influence of privatization on financial performance of Vietnamese privatized state-owned enterprises

This research evaluates the differences in financial performance of enterprises before and after privatization aiming to find out the influence of privatization on the enterprises’ performance. The study is based on the audited financial statements of 105 Vietnamese privatized enterprises privatized in the period from 2005 to 2016. Applying the Wilcoxon signed-rank test, the obtained results prove that after privatization profitability and outputs of investigated firms are significantly higher than prior privatization. However, there is no significant change of leverage. Applying a regression model to evaluate the factors affecting financial performance of firms in the research model, it was found out that the proportion of state ownership, economic growth, operating period, enterprise`s size, and business risk have positive influence on the financial performance of research firms. However, the leverage of these firms has a negative impact on the financial performance. In accordance with the obtained results, this study suggests that the privatization process should be continued regardless of firm size or business type. The government should create fair competition environment, remove incentives and supports for State-Owned Enterprises (SOEs), manage changes in privatized firms, and enforce the legal system.

Using the fuzzy multicriteria decision making approach to evaluate brand equity: a study of privatized firms

Purpose The purpose of this paper is to present a multidimensional evaluation of brand equity performance incorporating dimensions adopted from the balance scorecard (BSC) approach to business performance. Design/methodology/approach In this study, text mining is used for automatic extraction of valuable information from textual data such as the financial reports of firms. Instead of expert opinions, linguistic scales built upon outcomes of text mining are used as inputs for decision-making. The proposed model combines fuzzy DEMATEL (FDEMATEL), fuzzy ANP (FANP), fuzzy TOPSIS (FTOPSIS) and fuzzy VIKOR (FVIKOR) methods for weighting criteria and ranking alternatives. Findings Using data from five privatized firms in Turkey, the study’s findings demonstrate that the customer is the most important dimension of brand equity performance evaluation. Cash flow and brand loyalty are identified as the most important criteria in the measurement of brand equity performance. Practical implications Findings highlight the importance of firms taking action to increase consumer perceptions, attitudes and behaviors in the privatization processes. For this purpose, privatized firms need to understand the expectations of customers to increase customer satisfaction and loyalty and therefore improve brand equity. Originality/value The paper contributes to literature in several important ways. First, by adopting the BSC approach, it proposes a holistic and a multidimensional model for measuring brand equity performance. Second, the study offers a novel methodology using a hybrid multi-criteria decision-making model designed for the fuzzy environment. Third, the study uses the knowledge extraction tool of text mining in the fuzzy decision-making process. Finally, the study evaluates the brand equity performance of privatized firms in an emerging country context.

RESIDUAL GOVERNMENT OWNERSHIP AND FIRM VALUE IN A TRANSITIONAL ECONOMY

There is a high level of residual government ownership after privatization processes of state-owned firms in many transitional economies. Accordingly, the role of residual government ownership in firms in these economies draws strong attention from researchers resulting in a huge volume of papers in the literature. This naturally motivates us to examine whether state ownership affects the firm value in Vietnam, a successful transitional economy. More specifically, this paper aims to provide further insights into the impact of residual government ownership on the value of privatized firms listed on the Ho Chi Minh City stock exchange covering the period from 2009 to 2014. Using panel data techniques of fixed effects estimator, our empirical results indicate that residual government ownership have a negative effect on value of Vietnamese firms. This finding provides important implications for different stakeholders in transitional countries.

State Capture in Ben Ali’s Tunisia

This chapter assesses state capture by former Tunisian president Ben Ali’s family. It documents evidence consistent with abuse of investment regulation and privatization as well as tax evasion by politically connected firms. Market share and profit premia on being Ben Ali owned are especially large and significant among firms at the top end of the market share and profits distributions in sectors subject to authorization and foreign direct investment (FDI) restrictions, where the potential for regulatory abuse is greatest. Firms privatized into the Ben Ali family were among the largest privatized firms, and exhibited supranormal profits growth post privatization. In addition, Ben Ali-owned firms were more likely to evade tariffs and other taxes.

Corporate governance in Slovenia: Working at last?

Because of deploying specific methods of privatization that favoured domestic over foreign owners and that enabled both internal owners and state-controlled funds to gain control over companies, corporate governance in Slovenia used to be a cumbersome issue over the last two decades. This led to an on-going battle for control over companies. On one side, in addition to management buy-outs, internal owners used peculiar methods, such as “shares parking” at related companies to gain control over companies of interest without having to engage in a takeover procedure. On the other side, the government used its state-controlled funds to gain control over strategic companies in specific sectors, such as finance, energy, transport and telecommunications. Combined with direct holdings of assets by the state, this gave the existing political coalition in power a mechanism to exert control over a large number of companies and to interfere with the management of privatized firms through an adverse selection of candidates for supervisory boards and board of directors. The victims of these unsound corporate governance practices were usually small shareholders and suboptimal performance of companies. For a private sector, the “game-changer” was a financial crisis that deprived many management-owned companies of control over the companies, while government involved in some changes in the regulatory framework to fight peculiar corporate governance practices. However, while Slovenia has gradually established a modern framework for a transparent corporate governance system, regulating listed and non-listed private companies as well as SOEs, the practices deployed by the parties are still far from transparent, adequate and professional.