Hierarchy of governance institutions and the pecking order of privatisation: Central–Eastern Europe and Central Asia reconsidered

Mickiewicz, Tomasz

doi:10.1080/14631370903339823

Cited by 23 publications

(10 citation statements)

References 60 publications

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“…In contrast, private entrepreneurs need to create relational capital with administrators and politicians in order to gain access to resources. This pattern is characteristic of all partly privatised, partly reformed economies, where entrepreneurs need to engage in rent seeking to match the state sector advantages (Mickiewicz, 2009). The less transparent the government is, the more likely it is that the influence costs of the private companies will be higher compared with those incurred by state companies.…”

Section: Weak Institutions and Firms' Profitabilitymentioning

confidence: 97%

Subsidies, rent seeking and performance: Being young, small or private in China

Mickiewicz

2016

Journal of Business Venturing

106

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Entrepreneurs in emerging market economies operate in weak institutional contexts, which can imply different types of government. In some countries (e.g. Russia), the government is predatory, and the main risk faced by (successful) entrepreneurs relates to expropriation. In other countries (like China) this kind of risk is lower; nevertheless the government is intrusive, and the rules of the game remain fluid. The implication of the latter for entrepreneurs is that they are more likely to spend time and resources on influence (rent seeking) activities rather than on productive activities. We illustrate this type of government by focusing on the distribution of subsidies in China. We present a simple formal model that explores not only the direct effects of rent seeking for a company but also externalities under a situation of policygenerated uncertainty in the distribution of subsidies. We explore how these effects differ for the entrepreneurial sector (young, private and small companies) compared with other sectors. We posit that while the performance of private companies is more affected than the performance of state firms, the impact of government-induced uncertainty on young and small companies is actually less pronounced. Our empirical analysis, based on a unique large dataset of 2.4 million observations on Chinese companies, takes advantage of the regional and sectoral heterogeneity of China for empirical tests.

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Section: Weak Institutions and Firms' Profitabilitymentioning

confidence: 97%

Subsidies, rent seeking and performance: Being young, small or private in China

Mickiewicz

2016

Journal of Business Venturing

106

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“…Further, government intervention may be rather uneven in the presence of weak institutions, which may lead some firms to succeed not via efficiency or good strategy, but by special, politically-generated gains. Higher profitability may result from political rents and state capture by specific categories of owners (Hellman 1998;Hellman et al 2002Hellman et al , 2003Slinko et al 2005;Havrylyshyn, 2006;Mickiewicz, 2009). We expect therefore that the impact of institutional reform on profitability is more varied compared with its impact on productivity, depending on the nature of the reform and the type of firm concerned.…”

Section: Institutional Reformsmentioning

confidence: 98%

Institutional reforms, productivity and profitability: From rents to competition?

Driffield

Mickiewicz

Temouri

2013

Journal of Comparative Economics

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This paper explores the divergent effects of institutional reforms on firm's productivity and profits, conditional on firm's ownership. To assess this empirically, we investigate the impact of various components of institutional reforms on the performance of individual firms from Central and Eastern European countries from 1998 to 2006. The impact of reforms on profitability vis-à-vis productivity differs, which we interpret as an indication that profitability is an ambiguous measure of performance: one needs to distinguish between unproductive rents and productivity-based quasi-rents. We find that liberalization measures have more impact on state-owned firms as compared with domestic and foreign owned firms.

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“…The replacement of local practices as well as the emphasis on continuous improving of financial performance can have positive impact not only on a respective subsidiary, but on the whole economy (Albu et al, 2014). However, the results can differ significantly across countries, depending for example on the approach to privatisation selected by particular transition country (Mickiewicz, 2009).…”

Section: Introductionmentioning

confidence: 89%

The impact of ownership and other corporate characteristics on performance of V4 companies

Procházka¹

2017

Journal of International Studies

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Abstract. The objective of this paper is to assess financial performance of Czech, Hungarian, Polish, and Slovak unlisted companies. The sample retrieved from the Amadeus database contains 171,095 firm-year observations for the period of 2010-2014. A linear regression model (weighted least squares with robust correction for standard errors) is run to regress Return on Assets (ROA) as the dependent variable against selected entity-specific factors, including ownership characteristics. Empirical evidence uncovers several findings. Firstly, the performance of V4 companies is comparable except for Hungary, where companies report lower ROA on average. Secondly, firms established after the failure of communist regimes outperform the privatised companies. Thirdly, the ownership characteristics do matter. Having domestic owners is not a disadvantage, as only the companies with controlling shareholders from the Anglo-Saxon countries perform better. Other jurisdictions of parents lead either to comparable (e.g., old EU members, developed Asian countries) or even worse (e.g., new EU members, post-Soviet bloc) performance as compared to domestic ownership. Similarly, family firms perform significantly better than the companies controlled by institutional owners or by public sector, but worse than the firms controlled by financial institutions. The listing status of a parent is not an influential factor of performance. Fourthly, the size of a company also matters, as small enterprises report better performance in their financial statements than medium and large undertakings. Fifthly, higher leverage undermines performance. Finally, there is a wide dispersion in average performance across the industries. The study results might be relevant for policy makers while choosing between direct and indirect support for diverse types of businesses.

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Hierarchy of governance institutions and the pecking order of privatisation: Central–Eastern Europe and Central Asia reconsidered

Cited by 23 publications

References 60 publications

Subsidies, rent seeking and performance: Being young, small or private in China

Subsidies, rent seeking and performance: Being young, small or private in China

Institutional reforms, productivity and profitability: From rents to competition?

The impact of ownership and other corporate characteristics on performance of V4 companies

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