Transforming Former State Enterprises in the Czech Republic

Abstract

The study of organizational transformation has emerged from the foundations established by contingency theory and research. While institutional approaches to organizational analysis have preferred to focus on the tendency towards organizational continuity and inertia, recent developments have begun to consider institutional pressures leading to change, and to provide clues about how contingency and institutional theories might complement each other in improving our understanding of organizational change. The evidence presented in this paper, drawn from a study of organizational transformation in the Czech Republic, allows exploration of the relationship between transforming state enterprises and the wider processes of social, economic and institutional change. The values, motives and actions of the key enterprise managers are shown to be essential factors in explaining both the process of transformation in state enterprises, and the role of institutional factors in that process.

Organization theory and the post-socialist transformation: Contributions to organizational knowledge

“…The SOE's simple functional hierarchy was arranged to administer production processes to meet given targets and supply products and services to partner enterprises. These bureaucratic structures, the ideological attachment of senior managers to the Communist Party via the nomenklatura system of political appointment and associated incentive structures strongly encouraged inertia and compliance (Clark & Soulsby, 1995;Kozminski, 1995;Soulsby, 2001). The particularities of socialist ideology, employment policy and labour law, and the practicalities of a shortage economy, which induced management to indulge the work force, systematically created one of the defining characteristics of the socialist enterprise and its successor organization: overstaffing (Kornai, 1980).…”

“…A good deal of organizational research in the early period of post-socialism supports this line of argument, as managers, caught between the pressures for continuity and change, continued to perceive structures through old lenses (Puffer & McCarthy, 1993), choosing to reproduce old practices (Clark & Soulsby, 1995;Pearce & Branyiczki, 1993). Moreover, contrary to western reasoning, this reproduction of values, structures and practices could be associated with some degree of organizational success (Taplin & Frege, 1999).…”

International Business Research on Transition Economies

“…The weaknesses of market institutions, and constraints on internalizing transactions, led to the widespread use of alternative, intermediate mechanisms of exchange through informal networks in CEE (Stark 1996, Clark and Soulsby 1995, Todeva 2000, and even more in Russia (Puffer et al 1996, Holden et al 1998, Salmi 1996. The post-socialist economies inherited systems of personal networks that served to overcome shortage under the central plan.…”

Unlocking the institutionalization process: insights for an institutionalizing approach

“…The importance of deepening the investigation resides in obtaining clarification on the motivating factors for breaking the legitimacy of practices and meanings, the intensity of the influence of environmental demands in the institution and the conditions that challenge the tendency for adapting to them. Although this has not been greatly explored in the specialized literature, Oliver (1992), for example, describes social, functional and political mechanisms located outside and within organizations as fundamental factors for the occurrence of processes of deinstitutionalization; Clark and Soulsby (1995) sought empirical evidence of their unchaining in the study of the transition from a centralized economy to a free market economy in the Czech Republic in the late 1980s; and Zilber (2002) revealed how feminist ideology that is predominant in a rape crisis center in Israel was altered by the dissemination of new meanings from the joined in the organization of therapeutically oriented members. The latter work is particularly interesting as it is based on the idea that institutionalization presupposes the examination of interplay between actions, meanings and actors, in a way that is similar to what we advocate in this paper.…”