Exploring the sources of privatization‐induced performance changes

Abstract

Purpose

The purpose of this paper is to study the variance of post‐privatization performance outcomes by three institutional arrangements taken place in the process of ownership transfer in Taiwan.

Design/methodology/approach

The logistic regression models were used for the study to link the likelihood of performance improvements after privatization with a set of explanatory variables.

Findings

The findings from the research suggest an indispensable role of supportive policy measures, including market openness, post‐privatization involvement of government and corporate reforms prior to privatization, in the performance effects of privatization.

Research limitations/implications

Both the sample size and time frame available for a quantitative analysis are constrained by the progress of Taiwan's privatization. A questionnaire survey, as part of a more integrated model, is suggested to follow this study and probe into organizational or strategic changes after privatization.

Practical implications

The study shows that performance improvement of privatized firms cannot be taken for granted merely by ownership change; instead, the performance gains of privatization could be realized only in concert with other institutional arrangements, including market openness, the modest and short‐term bureaucratic control after privatization, and corporate health prior to privatization.

Originality/value

The study aims to add to the body of literature by identifying sources of performance changes in privatized firms, based on Taiwan's experience in privatization. Taiwan represents an interesting example of a country in the process of catching up in terms of economic development, as well as one whose institutional environment stands between western and transition countries. As such, the use of Taiwan's data may lead to an assessment of the generalizability of conclusions drawn from prior research conducted in both kinds of countries.

Citation

Wu, H. (2007), "Exploring the sources of privatization‐induced performance changes", Journal of Organizational Change Management, Vol. 20 No. 1, pp. 44-59. https://doi.org/10.1108/09534810710715270