Showing papers on "Restructuring published in 2007"

Business Groups in Emerging Markets: Paragons or Parasites?

Abstract: Diversified business groups, consisting of legally independent firms operating across diverse industries, are ubiquitous in emerging markets. Groups around the world share certain attributes but also vary substantially in structure, ownership, and other dimensions. This paper proposes a business group taxonomy, which is used to formulate hypotheses and present evidence about the reasons for the formation, prevalence, and evolution of groups in different environments. In interpreting the evidence, the authors pay particular attention to two aspects neglected in much of the literature: the circumstances under which groups emerge and the historical evidence on some of the questions addressed by recent studies. They argue that business groups are responses to different economic conditions and that, from a welfare standpoint, they can sometimes be "paragons" and, at other times, "parasites." The authors conclude with an agenda for future research.

4. Industrial Policy for the Twenty-first Century

Abstract: Unlike what is commonly believed, the last two decades have not witnessed the twilight of industrial policy. Instead, incentives and subsidies have been refocused on exports and direct foreign investment, in the belief that these activities are the source of significant positive spillovers. The challenge in most developing countries is not to rediscover industrial policy, but to redeploy it in a more effective manner. This paper lays out an institutional framework for accomplishing this objective. A central argument is that the task of industrial policy is as much about eliciting information from the private sector on significant externalities and their remedies as it is about implementing appropriate policies. The right model for industrial policy is not that of an autonomous government applying Pigovian taxes or subsidies, but of strategic collaboration between the private sector and the government with the aim of uncovering where the most significant obstacles to restructuring lie and what type of interventions are most likely to remove them.

Debt Defaults and Lessons from a Decade of Crises

Abstract: Detailed case studies of debt defaults by Russia, Ukraine, Pakistan, Ecuador, Moldova, and Uruguay, framed by a comprehensive discussion of the history, economic theory, legal issues, and policy lessons of sovereign debt crises. The debt crises in emerging market countries over the past decade have given rise to renewed debate about crisis prevention and resolution. In Debt Defaults and Lessons from a Decade of Crises, Federico Sturzenegger and Jeromin Zettelmeyer examine the facts, the economic theory, and the policy implications of sovereign debt crises. They present detailed case histories of the default and debt crises in seven emerging market countries between 1998 and 2005: Russia, Ukraine, Pakistan, Ecuador, Argentina, Moldova, and Uruguay. These accounts are framed with a comprehensive overview of the history, economics, and legal issues involved and a discussion from both domestic and international perspectives of the policy lessons that can be derived from these experiences. Sturzenegger and Zettelmeyer examine how each crisis developed, what the subsequent restructuring encompassed, and how investors and the defaulting country fared. They discuss the new theoretical thinking on sovereign debt and the ultimate costs entailed, for both debtor countries and private creditors. The policy debate is considered first from the perspective of policymakers in emerging market countries and then in terms of international financial architecture. The authors' surveys of legal and economic issues associated with debt crises, and of the crises themselves, are the most comprehensive to be found in the literature on sovereign debt and default, and their theoretical analysis is detailed and nuanced. The book will be a valuable resource for investors as well as for scholars and policymakers.

Banking Deregulation and Industry Structure: Evidence from the French Banking Reforms of 1985

Abstract: We investigate how the deregulation of the French banking industry in the 1980s affected the real behavior of firms and the structure and dynamics of product markets. Following deregulation, banks are less willing to bail out poorly performing firms and firms in the more bank-dependent sectors are more likely to undertake restructuring activities. At the industry level, we observe an increase in asset and job reallocation, an improvement in allocative efficiency across firms, and a decline in concentration. Overall, these findings support the view that a more efficient banking sector helps foster a Schumpeterian process of “creative destruction.” MANY ECONOMIES AROUND THE WORLD are characterized by heavily regulated bank

Firm structure, multinationals, and manufacturing plant deaths

Abstract: Plant shutdowns shape industry productivity, the dynamics of employment, and industrial restructuring. Plant closures account for more than half of gross job destruction in U.S. manufacturing. This paper examines the effects of firm structure on U.S. manufacturing plant closures. Plants belonging to multiplant firms and those owned by U.S. multinationals are less likely to exit. However, the superior survival chances are due to the characteristics of the plants rather than the nature of the firms. Controlling for plant and industry attributes, we find that plants owned by multiunit firms and U.S. multinationals are much more likely to close.

Corporate Governance Reforms in Continental Europe

Abstract: to alleviate the conflict of interest between dispersed small shareowners and powerful controlling managers. Classic works like Berle and Means (1932) andJensen and Meckling (1976) discussed this separation of ownership and control and its consequences. Although some companies in the United States are controlled by large blockholders-for instance, Microsoft, Ford, and Wal-Martsuch firms are relatively few and have thus drawn less attention in the corporate governance debate (Anderson and Reeb, 2003). In contrast, the fundamental problem of corporate governance in continental Europe and in most of the world is different. There, few listed companies are widely held. Instead, the typical firm in stock exchanges around the world has a dominant shareholder, usually an individual or a family, who controls the majority of votes. Often, the controlling shareholder exercises control without owning a large fraction of the cash flow rights by using pyramidal ownership, shareholder agreements, and dual classes of shares (La Porta, Lopez-de-Silanes, and Shleifer, 1999).

Public management reform in the uk and its consequences for professional organization: a comparative analysis

Abstract: It is often assumed in the literature on public management reforms that radical changes in values, work and organization have occurred or are under way. In this paper our aim is to raise questions about this account. Focusing on three services in the UK, each dominated by organized professions – health care, housing, and social services – significant variations in the effectiveness of reforms are noted. The available research also suggests that these outcomes have been inversely proportional to the efforts expended on introducing new management practices. The most radical changes have been in housing, where, paradoxically, successive UK governments focused least attention. By contrast, in health and social services, management restructuring has been less effective, despite the greater resources devoted to it. This variation is attributed to professional values and institutions, against which reforms were directed, and the extent to which different groups became locked either into strategies of resistance or accommodation.

Performing and Reforming Leaders: Gender, Educational Restructuring, and Organizational Change

Abstract: Performing and Reforming Leaders critically analyzes how women negotiate the dilemmas they face in leadership and managerial roles in Australian schools, universities, and continuing education. The authors examine how new managerialism and markets in education transformed how academics and teachers did their work, and in turn changed the nature of educational leadership in ways that were dissonant with the leadership practices and values women brought to the job.

Systems that Should Have Failed: Critical Infrastructure Protection in an Institutionally Fragmented Environment

Abstract: Recent years have witnessed major governmental initiatives regarding Critical Infrastructure Protection (CIP) At the same time, critical infrastructures have undergone massive institutional restructuring under the headings of privatization, deregulation and liberalization Little research has gone into understanding the interactions between these two developments In this article, we outline the consequences of institutional restructuring for the changing ways in which critical infrastructures ensure the reliability and security of their networks and services Neither Normal Accident Theory nor High-Reliability Theory can account for reliability under these conditions We then investigate the implications of these findings for Critical Infrastructure Protection (CIP)

Restructuring, consolidation and competition in Latin American banking markets☆

Abstract: This study examines the competitive conditions in the banking industries of eleven Latin American countries for the period 1993–2000. For these countries, the time interval under examination corresponds to an era characterized by substantial reforms to restructure their banking systems, increased consolidation and foreign bank penetration. The banks in our sample are found to be earning their revenues as if operating under monopolistic competition, as in many other developed and emerging financial systems. The results indicate that, overall, market concentration is not significantly related with competitive conduct. At the country level, however, we do observe a decline in competition for Brazil, Chile, and Venezuela in late 1990s which may be attributable to increased consolidation. Further, we observe that deregulation and opening up of the financial markets for foreign participation serves as an important catalyst to increase the competitiveness of banking markets. Higher degree of competition in the sector, in return, is associated with reduced bank margins and profitability but improved cost efficiency.

The East Asian Development Experience: The Miracle, the Crisis and the Future

Abstract: CONTENTS PART 1: OVERVIEW OF THE DEBATE ON EAST ASIAN DEVELOPMENT EXPERIENCE 1 The East Asian Model of Economic Policy PART 2: INTERPRETATION OF THE EAST ASIAN MIRACLE 2 The Political Economy of Industrial Policy in Korea 3 Explaining 'Flexible Rigidities' in East Asia 4 The "Initial Conditions" of Economic Development - Comparing the East Asian and the Sub-Saharan Experiences PART 3: 1997 ASIAN FINANCIAL CRISIS AND ITS IMPLICATIONS 5 The Hazard of Moral Hazard - Untangling the Asian Crisis 6 Interpreting the Korean Crisis: Financial Liberalisation, Industrial Policy and Corporate Governance PART 4: LOOKING INTO THE FUTURE OF EAST ASIA 7 Industrial Policy and East Asia - The Miracle, the Crisis, and the Future 8 The Triumph of the Rentiers? 9 Evaluating the Post-Crisis Corporate Restructuring in Korea

Making Sense of COMPSTAT: A Theory-Based Analysis of Organizational Change in Three Police Departments

Abstract: COMPSTAT, the latest innovation in American policing, has been widely heralded as a management and technological system whose elements work together to transform police organizations radically. Skeptical observers suggest that COMPSTAT merely reinforces existing structures and practices. However, in trying to assess how much COMPSTAT has altered police organizations, research has failed to provide a broader theoretical basis for explaining how COMPSTAT operates and for understanding the implications of this reform. This article compares two different perspectives on organizations—technical/rational and institutional—to COMPSTAT's adoption and operation in three municipal police departments. Based on fieldwork, our analysis suggests that relative to technical considerations for changing each organization to improve its effectiveness, all three sites adopted COMPSTAT in response to strong institutional pressures to appear progressive and successful. Furthermore, institutional theory better explained the nature of the changes we observed under COMPSTAT than the technical/rational model. The greatest collective emphasis was on those COMPSTAT elements that were most likely to confer legitimacy, and on implementing them in ways that would minimize disruption to existing organizational routines. COMPSTAT was less successful when trying to provide a basis for rigorously assessing organizational performance, and when trying to change those structures and routines widely accepted as being “appropriate.” We posit that it will take profound changes in the technical and institutional environments of American police agencies for police departments to restructure in the ways anticipated by a technically efficient COMPSTAT.

Demand for Higher Education Programs: The Impact of the Bologna Process

Abstract: The Bologna process aims at creating a European Higher Education Area where inter-country mobility of students and staff, as well as workers holding a degree, is facilitated. While several aspects of the process deserve wide public support, the reduction of the length of the first cycle of studies to three years, in several continental European countries where it used to last for four or five years, is less consensual. The paper checks the extent of public confidence in the restructuring of higher education currently underway, by looking at its implications on the demand for academic programs. It exploits the fact that some programs have restructured under the Bologna process and others have not, in Portugal. Precise quantification of the demand for each academic program is facilitated by the rules of access to higher education, in a nation-wide competition, where candidates must list up to six preferences of institution and program. We use regression analysis applied to count data, estimating negative binomial models. Results indicate that the programs that restructured to follow the Bologna principles were subject to higher demand than comparable programs that did not restructure, as if Bologna were understood as a quality stamp. This positive impact was reinforced if the institution was a leader, i.e. the single one in the country that restructured the program. Still an additional increase in demand was experienced by large programs that restructured to offer an integrated master degree, thus conforming to Bologna principles while not reducing the program duration.

The New Economic Geography of Old Industrial Regions: Universities as Global — Local Pipelines

Abstract: The knowledge economy appears to be problematic for old industrial regions, as lock-in and restructuring remove assets for innovation from their territories, as well as for the kinds of policy which can stimulate their economies. In this paper we explore whether universities can provide points of stability within which such locked-in regions can strengthen their innovation systems and attract external investment in knowledge capital. Using the case study of Twente in the eastern Netherlands, we explore whether universities can strengthen their regional innovation systems. We distinguish local networking from external-investment attraction to show that universities can become temporary venues for ‘local buzz’, building networks which become attractive to outside investors and promoting regional innovation. This suggests that an alternative approach to regional innovation policy, which we term ‘promoting smart hybridity’, may be useful in stimulating growth-based restructuring in such regions.

An Urban Regeneration Regime in China: A Case Study of Urban Redevelopment in Shanghai's Taipingqiao Area

Abstract: This article investigates Taipingqiao urban redevelopment projects in Shanghai that have conserved the traditional 'Shikumen' architectural form with the goal of exploring the driving-forces behind Shanghai's spatial restructuring and to shed light on the new mechanisms for public-private partnership evolving in China. A model called a 'rent gap seeking regime' (RGSR) is proposed to explain the mechanisms behind China's urban redevelopment. It is found that the logic of capital accumulation has dominated the reshaping of Shikumen's spatial forms and has been transformed into symbolic real estate values. It is argued that a pro-growth coalition between district government and foreign capital emerged during this process of urban restructuring; the paper analyses the features of how this coalition exercises power. Finally, based on empirical research, the paper engages Western regime analysis in a theoretical dialogue.

Strategic Actions and Credit Spreads: An Empirical Investigation

Abstract: Do strategic actions of borrowers and lenders affect corporate debt values? We find higher bond spreads for firms that can renegotiate debt contracts relatively easily. Consistent with theories of strategic debt service, the threat of strategic default depresses bond values ex ante, even though there may be efficiency gains from renegotiation ex post. However, the economic significance of the net effect is small, suggesting that bondholders have considerable bargaining power. The effect of strategic actions is higher when creditors are particularly vulnerable to strategic threats, including risky firms with high managerial shareholding, simple debt structures, and high liquidation costs. THIS PAPER EXPLORES THE EMPIRICAL RELATIONSHIP between corporate debt prices and firm characteristics that influence strategic decisions concerning default and distressed renegotiations. A large body of corporate finance literature documents the effects of firm-specific factors on the outcome of distressed restructuring. We investigate whether such factors are reflected ex ante in the prices of nondistressed firms’ bonds. We find that, on average, the possibility of strategic default increases corporate debt spreads, even though ex post there may be efficiency gains from renegotiation. The impact of strategic actions on spreads is larger for firms whose creditors are more vulnerable to the threat of strategic default, including low-rated firms with few tangible assets, high managerial equity ownership, and simple debt structures. However, despite robust statistical significance of our strategic proxies, their quantitative contribution to both the average level and the cross-sectional variation of spreads for the whole sample is small. The evidence suggests that, contrary to the extreme assumptions of some models, bond investors are likely to have significant bargaining power that allows them to extract surplus in renegotiations. As a result, strategic default

The internationalization of retailing: Factors influencing the choice of franchising as a market entry strategy

Abstract: Purpose – The purpose of this paper is to examine the factors that motivate international retail companies to choose franchising as a method for entering international markets.Design/methodology/approach – Employs a qualitative methodology and a multiple case study design. Six major UK‐based international fashion retailers form the empirical basis for the work.Findings – Finds the motivating influences to be a combination of both organisational and environmental factors. International retailing experience, availability of financial resources, presence of a franchisable retail brand, company restructuring and influence of key managers emerge as the organisational factors while environmental influences are revealed as opportunistic approaches, local market complexities, domestic competitive pressures and availability of potential franchise partners.Practical implications – Provides a useful source of information for those retail firms considering internationalization via the franchising method. Research is ...

Changing state feminism

Abstract: The second wave of feminism challenged the state in post-industrial democracies with its demands; in response, states set up women’s policy agencies to improve women’s status. Studies from the 1980s and 1990s have shown that ‘state feminism’ exists: many agencies are important in realizing women’s movements’ demands in policy-making and in gaining access for women to decision-making arenas. The starting point for this book is the restructuring of the political context, where state feminism is situated, over the last decade. As a result, both ‘the state’ and ‘feminism’ have changed in significant ways. On the one hand, there have been major developments, such as globalization, regionalization, welfare state restructuring, privatization and the rise of multilevel governance. On the other hand, state feminists have to deal with new gender equality policies that include a focus on diversity and gender mainstreaming. Both developments demand rethinking state feminism and new empirical research and comparative analysis on the topic.

Innovation in food firms: contribution of regional networks within the international business context

Abstract: This paper explores the role of regional networks in processes of innovation within an international business context. It is hypothesized that firms participating in regional networks demonstrate a stronger innovation competence. Data are drawn from a survey among food firms in the region of Meetjesland, Belgium, and reflect the relation between the firm and a number of regional characteristics. After restructuring the data through factor analysis and cluster analysis, the important role of regional networking is revealed using discriminant analysis. The analysis marks out two factors having the strongest power to discriminate between the clusters: firms are classified as having a stronger innovation competence when networking within the region, and when orienting towards the international market. Results demonstrate that internationally operating firms benefit from regional networking. Further, it is argued that regional networking is not contradictory to an international market orientation, and that fir...

Urban Governance and the Transition of Energy Systems: Institutional Change and Shifting Energy and Climate Policies in Berlin

Abstract: Energy systems in Germany and in all western OECD countries are currently undergoing transformations that have profound implications for their urban and regional governance, as well as for regional development in general. New technologies, regulatory regimes, management styles, marketing strategies and environmental priorities have emerged, dramatically reconfiguring patterns of governance within cities and regions. This is particularly obvious in the city region of Berlin, where utility restructuring coincides with a dramatic fiscal crisis in the city. The privatization of the energy utilities and of many public services, the opening of the regional energy markets, public and private climate protection initiatives and the emergence of new market participants are radically changing the conditions of regional governance and energy planning. However, although substantial recasting of policy issues and traditional forms of governance in the energy sector is underway in Berlin, energy management is confronted with severe institutional problems of interpolicy coordination and regional cooperation, entrepreneurial governance and contract management. Thus, this article argues in favour of new policy approaches and institutional reforms to shape the development of energy networks according to local and regional sustainability needs.

Upstream Competition and Vertical Integration in Electricity Markets

Abstract: Many studies have found substantial market failures in electricity markets that have been restructured to allow wholesalers to set prices. Vertical integration of firms may partially mitigate market power since integrated firms have a reduced interest in setting high prices. These producers sell electricity and also are required to buy power, which they provide to their retail customers at set rates. This paper examines the importance of vertical integration in explaining firm behavior during the first summer following the restructuring of the Pennsylvania, New Jersey, and Maryland wholesale market. I compare the behavior of other firms with that of two producers that, owing to variation in state policy, had relatively few retail customers. I conclude that restructuring led to an increase in anticompetitive behavior by large net sellers but that overall vertical integration both mitigates market power and diminishes its distributional impacts.

Working for themselves? Capital market intermediaries and present day capitalism

Abstract: This article uses earlier debates on managerial capitalism to set up and explore questions about the role and possible effects of fee-earning capital market intermediaries in present day capitalism. The question then becomes whether a new group of actors (the capital market intermediaries) have taken a new leading role in the economy, in part by constraining the discretionary power of an old group of actors, the salaried corporate managers. A broader analysis of the new group of intermediaries makes two key points: first, business models in activities such as investment banking, corporate law and private equity all generate substantial rewards for senior intermediaries; second, the different agendas of these different groups have the net effect of encouraging an economy of permanent restructuring. The conclusion highlights differences between the managerial revolution and the rise of new intermediaries, while noting the role of this new group in an economy of permanent restructuring.

Competency management in support of organisational change

Abstract: Purpose – Competitive advantage depends largely on the ability to activate and use organisational resources. As a result, the focus in the strategic management, organisational behaviour and human resource management literature has turned to the internal capabilities of organisations including a particular focus on employees' competencies. This paper seeks to analyse and discuss a forward‐looking, dynamic and proactive approach to competency modelling explicitly aligned with strategic business needs and oriented to long‐term future success.Design/methodology/approach – This paper is based on a longitudinal research project sponsored by a leading Greek bank, currently undergoing fundamental corporate restructuring. This paper describes how the competency model was developed and how it facilitated strategy implementation and change by supporting communication, employee understanding of business goals, and the incorporation of new behaviours, roles and competencies in operations.Findings – A forward‐looking a...

Who Pays China's Bank Restructuring Bill?

Abstract: This paper addresses questions related to the cost of China's bank restructuring and financing. We first propose a framework for recognizing losses. Then, we examine the recent major moves by the Chinese government to repair the country's bank balance sheets. Finally, we explore the implications of the Chinese ways of funding the bank restructuring. We find that the Chinese government has been decisive in confronting the costly task of bank restructuring. Looking through the elaborate funding arrangements adopted so far, the Chinese taxpayers have paid most of the bill.

Measuring Welfare in Restructured Electricity Markets

Abstract: Restructuring electricity markets has enabled wholesalers to exercise market power. Using a common method of measuring competitive behavior in these markets, several studies have found substantial inefficiencies. This method overstates actual welfare loss by ignoring production constraints that result in non-convex costs. I develop an alternative method that accounts for these constraints and apply it to the Pennsylvania, New Jersey, and Maryland market. For the summer following restructuring, the common method implies that market imperfections resulted in considerable welfare loss, with actual production costs exceeding the competitive model's estimates by 13 to 21 percent. In contrast, my method finds that actual costs were only between three and eight percent above the competitive levels. In particular, it is the fringe firms whose costs increase, while strategic firms reduce production and costs.

The Politics of Institutional Renovation and Economic Upgrading: Recombining the Vines That Bind in Argentina

Abstract: Through a comparative, longitudinal analysis of the wine industry in two Argentine provinces, this article finds that different political approaches to reform and not simply socioeconomic endowments determine the ability of societies to build new institutions for economic upgrading. A “depoliticization” approach emphasizes the imposition of arm’s-length incentives by a powerful, insulated government but exacerbates social fragmentation and impedes upgrading. A “participatory restructuring” approach promotes the creation and maintenance of new public-private institutions for upgrading via rules of inclusive membership and multiparty, deliberative governance. This latter approach can facilitate collaboration and knowledge creation among the government and previously isolated, even antagonistic, stakeholder groups.

Origin and concentration

Abstract: We analyse the effects of different types and concentration of ownership on performance using a large population of firms in the Czech Republic after mass privatization. Specifications based on first-differences combined with instrumental variables show that the performance effects of different types and concentration of ownership are limited when compared to earlier studies. Often, concentrated ownership has a positive effect, a finding that supports the agency theory. The positive effect of foreign ownership is detected primarily for majority ownership and for ownership by foreign industrial firms. The state as a holder of the golden share has a positive effect on employment and sometimes, also on output and profitability. Overall, our results highlight the benefits of strategic restructuring accompanied by an inflow of new capital and managerial culture.

Specificity and the Macroeconomics of Restructuring

Abstract: A proposal that the notion of specificity-the idea that factors of production are not interchangeable-can provide a unified framework to analyze and understand a wide variety of macroeconomic phenomena stemming from the transactional environment and microeconomic restructuring. The core mechanism that drives economic growth in modern market economies is massive microeconomic restructuring and factor reallocation-the Schumpeterian "creative destruction" by which new technologies replace the old. At the microeconomic level, restructuring is characterized by countless decisions to create and destroy production arrangements. The efficiency of these decisions depends in large part on the existence of sound institutions that provide a proper transactional environment. In this groundbreaking book, Ricardo Caballero proposes a unified framework to analyze and understand a wide variety of macroeconomic phenomena stemming from limitations, especially institutional, that hinder these adjustments. Caballero argues that macroeconomic models need to be made more "structural" in a precise sense and can not be maintained on the assumption that decisions are fully flexible. What is needed, he proposes, is the notion of specificity-the idea that factors of production are not freely interchangeable. Many of the major macroeconomic developments of recent decades, he argues, fit naturally into this perspective, including the transition problems of Eastern Europe, the heavy weight of labor regulations in Western Europe, the emerging market crises of the 1990s, the prolonged expansion of the U.S. economy, and Japan's stagnation following the collapse of its real estate bubble. After describing the basic arguments of the book and developing models to illustrate two different kinds of specificity (relationship specificity and technological specificity), Caballero analyzes a variety of aspects of inefficient restructuring and revisits perennial business cycle patterns such as the cyclical behavior of unemployment, investment, and wages. Finally, he looks at the endogenous response of political institutions and technology to opportunistic exploitation of relationship specificity. Economists working on macroeconomics, development, growth, labor, and productivity issues will find Caballero's conceptual framework applicable to phenomena in their fields.