International Journal of Public Sector Management

Xie, En; Redding, K.S.

2018 International Journal of Public Sector Management

doi: 10.1108/IJPSM-01-2018-0015

PurposeThe purpose of this paper is to introduce the special issue on state-owned enterprises (SOEs) in the contemporary global business scenario. Against the theoretical background of and the invited themes for the special issue, the paper presents a summary of key findings and practical implications of the accepted papers and suggests future research directions.Design/methodology/approachThe paper is conceptual, which organized through utilitarianism or legitimism; SOEs scenario 1 – hungry fox, hunting bears; SOEs scenario 2 – dancing elephant, flying bears; what do we know and what we wish to explore; what have been examined; what we need to study further; closing note by bears’ well-wishers; and protocol of the special issue.FindingsBy deeply looking into emerging economies (China, India), developed economies (Denmark, Italy, Sweden), transition economies (Tunisia) and diverse sectors (public transport, space), coupled with cross-country sample data, the nine accepted papers have discussed several interesting findings and recommended numerous implications for the policymakers and SOEs’ managers. Drawing upon the interdisciplinary literature, empirical and qualitative papers would deepen the understanding of the growth strategies and performance of SOEs, and the application of management theories such as institutional theory, agency theory, social exchange theory, managerial grid theory, incomplete contracts theory and public governance view, among others. The issue also brings a review-cum-citation analysis paper on the impact of privatization on the performance of SOEs.Originality/valueThe papers have made unique contributions to the public economics, new public management, international business and organizational development literature by critically analyzing the burgeoning phenomenon of the changing dynamics and globalization of SOEs.

Chhibber, Ajay; Gupta, Swati

2018 International Journal of Public Sector Management

doi: 10.1108/IJPSM-02-2017-0044

PurposeWhile national public policies such as performance contracts and disinvestment affect the dynamics of large- and medium-scale state-owned enterprises in emerging market economies, the purpose of this paper is to analyze the performance of India’s public sector undertakings (PSUs) and suggest options to improve their outcomes.Design/methodology/approachUsing firm-level data on India’s 235 PSUs with total assets of around $500 billion over the past two and half decades (1990-2015), the study empirically tests the effect of performance contracts, measured by memorandum of understanding (MOU) and disinvestment, measured by private equity share, on PSUs performance indicator such as return on capital (ROC). Data were collected from the Public Enterprises Survey Reports released by the Department of Public Enterprises under India’s Ministry of Heavy Industries and Public Enterprises, Department of Disinvestment, Bombay Stock Exchange and Capitaline database. By controlling firm-, industry- and macro-level factors in regression models, the results were presented in several aspects like service sector, non-service sector and individual and joint effects.FindingsEmpirical estimations indicate that performance contracts such as MOUs have had a positive impact on PSU performance by increasing their ROC by 8-9 percent. This result holds more strongly for the non-service sector (manufacturing, mining) but less so for service sector firms. In the case of service sector firms, partial privatization (share sales) has a significant impact on performance, making them ideal candidates for more aggressive disinvestment. Larger PSUs (Maharatnas) appear to perform better than smaller PSUs and even better than private firms of similar size. Smaller PSUs (Navratnas and Miniratnas) perform worse than private companies and should be good candidates for strategic disinvestment (privatization). PSUs that do not have Ratna status – and are loss makers – should be disposed of their asset value.Practical implicationsThe study recommends that India should change the public sector balance sheet by raising capital through strategic disinvestment (privatization), disinvestment and liquidation of PSUs and re-investing it, in public infrastructure through the National Infrastructure Investment Fund and not into the budget as a revenue-raising measure. It should also transform Maharatnas into world class companies with greater commercialization.Originality/valueThe paper makes significant contributions to the academic literature on the changing dynamics of state-owned enterprises in emerging economies by examining the effect of performance contracts and disinvestment on India’s PSUs performance. It is one of unique longitudinal-empirical studies on India’s PSU performance in several dimensions.

Christensen, Lene Tolstrup

2018 International Journal of Public Sector Management

doi: 10.1108/IJPSM-03-2017-0062

PurposeThe purpose of this paper is to make an empirical-based conceptualization of the contemporary domestic state-owned enterprises (SOEs) as domestic institutional market actors (IMAs) in the marketization of public service delivery.Design/methodology/approachThe paper is based on a qualitative comparative case study of the SOEs in passenger rail in Denmark and Sweden from 1990 to 2015.FindingsThe paper shows how marketization results in a layered institutional set-up of public service delivery based on both competition and monopoly where the SOE becomes what we call an IMA bridging sectorial challenges. In Sweden, this role has a new public governance form as the monopoly over time is fully dismantled. In Denmark, over time marketization is put on hold due to problems with the SOE as a market actor, but the SOE is nevertheless safeguarded in a new Weberian model as a sector coordinator.Originality/valueThe paper contributes to the recent literature on SOEs and marketization with an original and novel conceptualization of contemporary SOEs in public governance.

Florio, Massimo; Ferraris, Matteo; Vandone, Daniela

2018 International Journal of Public Sector Management

doi: 10.1108/IJPSM-02-2017-0050

PurposeThis paper looks at state-owned enterprises (SOEs) from the angle of the market for corporate control and analyzes in detail the reported rationales of a sample of 355 mergers and acquisition (M&A) deals performed by SOEs as acquirers over the period 2002-2012. The purpose of this paper, after having created a taxonomy of deal motivations, is to empirically test two alternative hypotheses: deviation vs convergence of M&A deal rationales between state-owned and private enterprises.Design/methodology/approachThe data set is obtained by combining firm-level information from two sources, Zephyr and Orbis (Bureau Van Dijk). A recursive algorithm is developed to infer the ownership nature of the enterprises at the time the deal took place and then the authors double-checked the identity of the global ultimate owner by visual inspection of all the available information. Motivations are analyzed through a case-by-case analysis and classified into several categories, thereby providing a taxonomy of rationales behind SOE M&As and discussing their differences and similarities relative to private firms.FindingsMore than 60 percent of the deals performed by SOEs as acquirers are driven by “shareholder value maximization” motives, similarly to private enterprise acquirers. The other 40 percent of deals are almost equally spread among three rationales that specifically relate to the role of modern state capitalism in the economy. “Financial distress” motivation, which is the only one clearly deviating from the objectives of profit maximization typical of private ownership, is far less important than the others.Research limitations/implicationsThe paper does not analyze the case studies in detail. Neither does it correlate the evidence with the quality of corporate governance or the quality of institutions in the country. This would be interesting in order to discover whether the alignment of objectives between public and private enterprises is enhanced by certain features of public sector management, as suggested by the OECD (2015) Guidelines.Practical implicationsThe paper suggests some policy implications in terms of reforms of the corporate governance of the SOEs and accountability of their management against clearly stated public missions. It also calls for the need for citizens to be informed in a transparent way about the rationales of major M&A deals when a SOE is on the acquirer side, and the consistency of such rationales with the mission assigned by governments to the enterprises they own. Finally, it underlines that regulatory concerns raised in many countries by the rise of cross-border SOE M&As are in most of the cases unfounded.Originality/valueExisting literature has mainly focused on private corporate M&A deals or has just disregarded the ownership status of the acquiring firm. This paper focuses on the motivations for SOE deals in order to elaborate a taxonomy of SOE deal rationales and to identify the differences and similarities between private corporate firms.

Ben Rejeb Attia, Mouna; Lassoued, Naima; Chouikha, Mohamed

2018 International Journal of Public Sector Management

doi: 10.1108/IJPSM-09-2016-0155

PurposeThe purpose of this paper is to examine the relationship between state ownership and firm profitability in developing countries by considering the endogenous nature of state ownership and firm profitability.Design/methodology/approachA simultaneous equation analysis is applied to study 232 Tunisian firms over the 2001-2013 period. This analysis is compared with OLS estimates to show its power in terms of an endogenous setting and its potential to improve estimation.FindingsUnlike the OLS estimates that show a non-significant relationship between state ownership and firm profitability, the simultaneous equation analysis reveals a non-symmetrical concave relationship. Specifically, state ownership affects positively firm profitability when it is relatively small and negatively when state ownership dominates. Specification test indicates that both state ownership and firm profitability are endogenous. Furthermore, the simultaneous model’s explanatory power exceeds that of OLS estimates and proves to be a suitable estimation technique.Practical implicationsTaking into account public firms’ categorization, the authors implicitly examine the effect of privatization and corporatization on firm profitability. The findings imply that privatization is not the only solution to the operational problems of public firms, but an internal governance system restructuring can also be favorable for these firms.Originality/valueIn addition to focusing on a new database of developing countries, the case of Tunisian firms, the main empirical analysis is conducted by considering the endogeneity issue. Thus, the findings improve understanding of the role played by state ownership and suggest that a partial state control appears to be beneficial to firm profitability.

Saha, Shilpi; Kumar, Saraf Pavan

2018 International Journal of Public Sector Management

doi: 10.1108/IJPSM-03-2017-0078

PurposeThe purpose of this paper is to investigate the moderating role of organizational culture in affective commitment and job satisfaction relationship.Design/methodology/approachResponses were collected from 712 employees working in nine different Indian central public sector enterprises /state-owned enterprises (SOEs) by using a questionnaire-based survey. Theoretical analysis is based on social exchange theory and managerial grid theory. Data were analyzed by using partial least squares structural equation modeling.FindingsThe establishment of organizational culture as a moderator in Indian organizations is unique. This study has utilized data from employees working in different departments of organizations to provide unbiased responses. The results demonstrate that impact of affective commitment on employees’ job satisfaction is moderated by supportive and innovative cultures. Additionally, this research also proves that bureaucratic culture does not play a crucial role in moderating the relationship between organizational commitment and employees’ job satisfaction.Research limitations/implicationsResults are relevant to top-level and middle-level management in which people are involved in the governance of the organization, both directly and indirectly. There should be fixed working hours and optimum time management. Due to growing pressure, few employees who have personal obligations toward their families, such as nursing mothers and stressed individuals, should be provided with flexible working hours. In this way, culture can become supportive to cater to different needs of employees.Originality/valueTill date, organizational culture as moderator has received very less attention in India. The establishment of organizational culture as a moderator in Indian SOEs is unique. The results add to the growing literature of commitment from non-western context as this study is based on Indian samples. This study has utilized data from employees working in different departments of organizations to provide unbiased responses.

Rygh, Asmund

2018 International Journal of Public Sector Management

doi: 10.1108/IJPSM-03-2017-0110

PurposeThe purpose of this paper is to theoretically investigate the potential welfare effects of state-owned enterprises’ (SOEs) international operations.Design/methodology/approachThe paper is conceptual, applying standard economics state ownership theory based on agency theory and incomplete contracts theory to different forms of SOE cross-border operations.FindingsWhen private firms are risk averse or financially constrained, or when writing complete contracts and making credible commitments are not possible, state ownership can achieve objectives such as international operations supporting domestic industrial policy, addressing social objectives in another government’s territory and addressing transnational market failures. Welfare effects may, however, also depend on home-host country relationships.Originality/valueThis is the first application of standard economics state ownership theory to state-owned multinationals. The analysis shows that key conclusions from the state ownership literature in a domestic setting can be extended to international operations, and highlights new theoretical issues arising from SOEs going beyond their home jurisdiction to that of another government.

Landoni, Matteo

2018 International Journal of Public Sector Management

doi: 10.1108/IJPSM-03-2017-0076

PurposeThe purpose of this paper is to provide a conceptual framework for the intermediation of state-owned enterprises (SOEs). Governments may apply different form of support with the aim of increasing corporatization and internationalization of SOEs. The paper suggests a strategy based on institutional intermediation as the more efficient to drive corporatization and internationalization.Design/methodology/approachThe research selected cases concerning SOEs in different industries in Europe in search of recurrences from a novel theoretical perspective. Among them, a case study concerning the Italian Space Agency explores the development of an institutional intermediary.FindingsGovernment supports to SOEs appear in different forms and contribute to different results. A typology of the most recurrent forms shows three different types of actions governments have taken to support internationalization of firms. Intermediation seems the most suitable to trigger corporatization and internationalization.Research limitations/implicationsThe study explores institutional intermediaries as a novel supporting strategy for governments. It proposes a novel concept based upon a single case study. Further research needs to test and verify the institutional intermediaries’ impact drawing on a larger sample and different contexts.Originality/valueSo far, few attempts have linked corporatization to globalization. The paper tries to fill this gap between corporatization and internationalization of SOEs. Its value is the provision of a novel view that includes institutional intermediaries as instrumental to governments’ strategy that aims to bridge the two components.

Redding, K.S.; Xie, En; Tang, Qingqing

2018 International Journal of Public Sector Management

doi: 10.1108/IJPSM-02-2017-0040

PurposeThe purpose of this paper is to examine the most interesting research question of the past decade – What Lures the Bears? Leveraging the public sector management and international business strategy literature, the paper first presents an overview of the transformational dynamics of state-owned enterprises (SOEs) in three major phases – institutionalization, privatization, and corporatization, and internationalization. Then, it analyzes geographic patterns and industry trends of the outward foreign direct investment (FDI) projects announced by SOEs over an eight-year period.Design/methodology/approachGrounded in the exploratory research such as inductive and deductive logic, the study proposes theoretical constructs, and discusses several findings based on the data accessed from highly cited archival sources, such as the UNCTAD FDI stat/WIRs, the World Development Indicators, Doing Business Report, Global Competitiveness Report, the Index of Economic Freedom, the Academic Ranking of World Universities, and the Fortune Global 500.FindingsBased on an analysis of global market trends (a sample of over 20 countries and five industries), the study highlights that SOEs from Asia and Europe have been greatly expanded into developed markets, thus to secure natural resources, to acquire strategic assets like technology, and to leverage the developed financial markets and better investment environment. Therefore, SOEs’ outward FDI strategy and overseas performance was driven by institutional transitions, resource security, home market development and government legitimacy may contribute to the competitive advantage of their home country.Practical implicationsThe study offers several implications for the policymakers of the governments in emerging economies and bureaucratic management of SOEs. It recommends that state ownership pattern and bureaucratic system of SOEs need to be reexamined, revised, and corporatized in the changing dynamics of the multinational business environment, thus to secure resources, acquire technological know-how, and compete in home and global markets.Originality/valueAs a response to academic calls on the globalization, performance and governance mechanisms of SOEs in and out of emerging economies, this paper draws a unique presentation of the transformational dynamics of SOEs – establishment to internationalization.

Gakhar, Divya Verma; Phukon, Abhijit

2018 International Journal of Public Sector Management

doi: 10.1108/IJPSM-03-2017-0096

PurposeThe purpose of this paper is to review several influential empirical studies that examine the performance of state-owned enterprises (SOEs). The paper undertakes a citation analysis of journals, authors and titles in the area of privatization and firm performance in general, and assesses the impact of privatization on the performance of SOEs in particular.Design/methodology/approachThe methodology is based on a systematic and structured review of over 100 papers published in economics, public management, business strategy and related social sciences. The systematic review is based on citation analysis of journals, authors and titles. The journal and author citation counts were tabulated by leveraging the databases of SCImago Journal Rankings and Google Scholar and filtered it to find out the most highly cited journals and authors. The structured review is based on the framing opinion with respect to major findings, variables selected, measurement techniques and statistical tools applied by different researchers. The impact is measured through coding a value “P” in case of positive effects, “N” in case of negative effects and “NT” in case the study found both positive and negative effects.FindingsThe citation analysis reveals that American Economic Review, Journal of Financial Economics, Review of Financial Studies and Journal of Finance as the top-cited journals, and Megginson and Netter (3,468), Megginson et al. (1,737), Djankov and Murrell (1,356), Boardman and Vining (1,320), Balsam et al. (1,094) and DeWenter and Malatesta (1,018) as the top-cited authors in this particular research field. While majority research studies have revealed a significant improvement in the performance of SOEs in the post-privatization period, few studies have reserved their impact as neutral or even negative in some respects.Originality/valueGiven that economic transitions, corporate governance, and performance of SOEs have attracted a great attention from public management and business strategy scholars in recent years, this paper aims to summarize a large number of empirical studies that examine the performance of SOEs. The paper would be useful to future researchers especially the beginners and early career researchers in terms of its current trends, selection of variables, measurement techniques and statistical tools applied.