Modeling privatization as a firm strategy in transition economies

Shaomin Li (First Author), Dongsheng Zhou (Participant Author), Ming Ouyang (Participant Author)

Research output: Contribution to journalJournal

3 Citations (Web of Science)

Abstract

Worldwide, almost all state-owned enterprises (SOEs) face a critical choice: whether and when to privatize. An SOE's privatization choice is often complicated by the unique characteristics of transition economies. While market economies feature clearly defined and relatively stable rules of market competition and property rights, in transition economies these factors are evolving and uncertain. In this paper, we first distinguish between macro (economy-level) privatization and micro (firm-level) privatization, and then develop an optimal timing model for firm privatization, taking into consideration a number of important parameters, such as costs, pre- and postprivatization performance, uncertainty, risk considerations, and speed of postprivatization adjustment. We show that the choice of whether and when to privatize is a function of these parameters, which are in turn influenced by both external conditions and firm characteristics.
Original languageEnglish
Pages (from-to)37-44
JournalJournal of Business Research
Volume58
Issue number1
DOIs
Publication statusPublished - 2005

Corresponding author email

sli@odu.edu

Keywords

  • Mathematical models
  • Privatization strategies
  • Transition economies

Indexed by

  • Scopus
  • SSCI

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