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Governance, organizational capabilities, and restructuring in transition economies

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  • Filatotchev, Igor
  • Wright, Mike
  • Uhlenbruck, Klaus
  • Tihanyi, Laszlo
  • Hoskisson, Robert E.

Abstract

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.

Suggested Citation

  • Filatotchev, Igor & Wright, Mike & Uhlenbruck, Klaus & Tihanyi, Laszlo & Hoskisson, Robert E., 2003. "Governance, organizational capabilities, and restructuring in transition economies," Journal of World Business, Elsevier, vol. 38(4), pages 331-347, November.
  • Handle: RePEc:eee:worbus:v:38:y:2003:i:4:p:331-347
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    7. Li, Shaomin & Xia, Jun, 2008. "The Roles and Performance of State Firms and Non-State Firms in China's Economic Transition," World Development, Elsevier, vol. 36(1), pages 39-54, January.
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    10. Desislava I. Yordanova, 2016. "Differences between Bulgarian Family and Non-family Businesses: A Multivariate Logit Approach," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 779-789.
    11. McCarthy, Daniel J. & Puffer, Sheila M., 2003. "Corporate governance in Russia: a framework for analysis," Journal of World Business, Elsevier, vol. 38(4), pages 397-415, November.
    12. Ramaswamy, Kannan & Purkayastha, Saptarshi & Petitt, Barbara S., 2017. "How do institutional transitions impact the efficacy of related and unrelated diversification strategies used by business groups?," Journal of Business Research, Elsevier, vol. 72(C), pages 1-13.
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    21. Desislava I. Yordanova, 2016. "Differences between Bulgarian Family and Non-family Businesses: A Multivariate Logit Approach," International Review of Management and Marketing, Econjournals, vol. 6(4), pages 779-789.
    22. Wrona, Thomas & Trąpczyński, Piotr, 2012. "Re-explaining international entry modes – Interaction and moderating effects on entry modes of pharmaceutical companies into transition economies," European Management Journal, Elsevier, vol. 30(4), pages 295-315.
    23. Mazhikeyev, Arman & Edwards, T. Huw & Rizov, Marian, 2015. "Openness and isolation: The trade performance of the former Soviet Central Asian countries," International Business Review, Elsevier, vol. 24(6), pages 935-947.
    24. Shirokova, Galina V. & Knatko, Dmitri M. & Vega, Gina, 2013. "Separation of Management and Control in SMES from Emerging Markets: the Role of Institutions," Working Papers 788, Graduate School of Management, St. Petersburg State University.

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