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Study On Impact Of Environmental Change On Selected Public Sector Enterprises In India

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  • Pradeep Kautish

    (Professor at the Faculty-Marketing Area, Jaipuria Institute of Management)

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    Abstract

    Government policy measures adopted by many developing countries to reform the public sector enterprise performances can be classified into two broad categories in terms of decision criteria taken into consideration. The first category of reform primarily focuses on distancing the government from ownership change and control issues of these enterprises. Partial privatization or divestment falls in this category of change reform mechanism. The second category aims at improving the environmental change aspects in which these enterprises operate and function. One such reform is delegation of operational and functional autonomy to managers of publicly owned enterprises through performance contracts and reviews. Empirical evidence on the gains of privatization versus benefits of autonomy delegation from the developing countries that have undertaken these reforms in the past are yet inconclusive. The present study of India spanning over two decades of panel data with a decade of data for evaluating the post reform performance of the centrally owned enterprises, provides evidence of significant positive impact of autonomy delegation to public enterprise management on firms profitability. The study, however, does not find any evidence of significant impact of partial privatization and divestment. Further the study also finds significant impact of environmental reforms of hard-budget constraint and deregulation of sectors earlier under government domain to private participants on the profitability performance of the public enterprises in India.

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    File URL: http://www.rebe.rau.ro/RePEc/rau/journl/SU10/REBE-SU10-A5.pdf
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    Bibliographic Info

    Article provided by Romanian-American University in its journal Romanian Economic and Business Review.

    Volume (Year): 5 (2010)
    Issue (Month): 2 (June)
    Pages: 68-88

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    Handle: RePEc:rau:journl:v:5:y:2010:i:2:p:68-88

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    Related research

    Keywords: environment; administration; change; public enterprises; India;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Jayati Sarkar & Subrata Sarkar, 2000. "Large Shareholder Activism in Corporate Governance in Developing Countries: Evidence from India," International Review of Finance, International Review of Finance Ltd., vol. 1(3), pages 161-194.
    2. Ann P. Bartel & Ann E. Harrison, 1999. "Ownership versus Environment: Why are Public Sector Firms Inefficient?," NBER Working Papers 7043, National Bureau of Economic Research, Inc.
    3. Vining, Aidan R & Boardman, Anthony E, 1992. " Ownership versus Competition: Efficiency in Public Enterprise," Public Choice, Springer, vol. 73(2), pages 205-39, March.
    4. Levy, Brian, 1987. "A theory of public enterprise behavior," Journal of Economic Behavior & Organization, Elsevier, vol. 8(1), pages 75-96, March.
    5. Ehrlich, Isaac & Georges Gallais-Hamonno & Zhiqiang Liu & Randall Lutter, 1994. "Productivity Growth and Firm Ownership: An Analytical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 1006-38, October.
    6. Chun Chang Yijiang Wang & Brian McCall & Yijiang Wang, 2000. "Incentive Contracting versus Ownership Reforms: Evidence from China's Township and Village Enterprises," William Davidson Institute Working Papers Series 365, William Davidson Institute at the University of Michigan.
    7. Sarkar, Jayati & Sarkar, Subrata & Bhaumik, Sumon K., 1998. "Does Ownership Always Matter?--Evidence from the Indian Banking Industry," Journal of Comparative Economics, Elsevier, vol. 26(2), pages 262-281, June.
    8. Winston, Clifford, 1993. "Economic Deregulation: Days of Reckoning for Microeconomists," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1263-89, September.
    9. Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
    10. Anna Bottasso & Alessandro Sembenelli, 2004. "Does ownership affect firms’ efficiency? Panel data evidence on Italy," Empirical Economics, Springer, vol. 29(4), pages 769-786, December.
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