Incentives and the Management of Enterprises in Economic Transition: Capital Markets Are Not Enough
AbstractThis article considers enterprise behavior during the process of restructuring in Eastern Europe. It is concerned with how to construct controls and incentives for efficient management behavior. By themselves, privatization and freely functioning capital markets (specifically markets for shares) will be inadequate to discipline inefficient management. Therefore the disciplines imposed by other stakeholders--creditors and the workforce--are also considered. After surveying the theoretical arguments underlying these issues, the article contrasts the progress of restructuring in Eastern Germany and Poland. It argues that the governments of former command economies will have to intervene actively to influence the future management of their enterprises. Meanwhile, whatever long-term outcomes emerge, in the short term failures of corporate control are in danger of resulting in highly perverse responses to orthodox macroeconomic policies. Copyright 1992 by Oxford University Press.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Review of Economic Policy.
Volume (Year): 8 (1992)
Issue (Month): 1 (Spring)
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Web page: http://oxrep.oupjournals.org/
Other versions of this item:
- Mayhew, Ken & Seabright, Paul, 1992. "Incentives and the Management of Enterprises in Economic Transition: Capital Markets Are Not Enough," CEPR Discussion Papers 640, C.E.P.R. Discussion Papers.
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
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- Nunnenkamp, Peter, 1995. "The German model of corporate governance: basic features, critical issues, and applicability to transition economies," Kiel Working Papers 713, Kiel Institute for the World Economy.
- Schröder, Philipp J.H., 2000. "On Privatisation and Restructuring," MPRA Paper 89, University Library of Munich, Germany, revised 2006.
- Irena Grosfeld, 1994. "Comparing Financial Systems. Problems of Information and Control in Economies in Transition," CASE Network Studies and Analyses 0026, CASE-Center for Social and Economic Research.
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