Restructuring of firms in transition: ownership, institutions and openness to trade
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We develop a theoretical framework for defensive and strategic restructuring, and provide estimates of restructuring in privatized firms in an advanced transition economy: Slovenia. Our rich data point to both types of restructuring, as well credit rationing and bargaining with respect to investment. Privatized firms display profit-maximizing behavior, and a firm's export orientation and institutional features, such as insider vs outsider privatization, employee ownership, and employee control, do not affect the firm's employment and investment behavior. The results suggest that a major exposure to world competition induces similar economic behavior in firms with different structural and institutional characteristics.
Keywordstransition R&D investment firms in transition employee ownership and control institutions openness
Prašnikar's and Domadenik's research in this paper was in part supported by the Slovenian Research Agency's grant no. P5-0128, Behavior of Slovene Firms in Global Competition. Svejnar's research was in part supported by NSF grant no. SES 0111783. The authors are indebted to two referees and Bernard Yeung for useful comments, and to numerous Slovenian enterprises for providing them with the data used in this paper. The usual caveat applies.
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