Privatization, organizational change and performance: evidence from Indonesia

Abstract

Purpose-The purpose of this paper is to examine the relationship between privatization of state-owned enterprises (SOEs), organizational change and performance. It explores the processes by which privatization affects corporate performance through the internal changes within organizations in a developing country context. Design/methodology/approach-The methodology involved the use of a survey questionnaire. Responses were obtained from 86 managers in 86 organizations, comprised of SOEs, privatized firms and private enterprises in Indonesia. Findings-Cross-sectional analysis shows that there had been a statistical significant difference across the types of ownership pertaining to organizational elements that were expected to change. The evidence suggested that privatization brought about important alignments among the organization's goals, design elements and resources and between the organization and its competitive environment. Practical implications-The implications of the study are discussed in relation to the organizational changes that take place in the transition from public to private sector ownership. The study contributes to our understanding about the relationship between ownership-performance by providing an organizational change perspective on the examination of privatization-performance effect. Originality/value-The paper provides insights into how privatization processes alter the behavior, incentives and performance of formerly SOEs in Indonesia.

Impact of Privatization on Health Sector in Kingdom of Saudi Arabia

“…Moreover, he concludes that the maximum level of privatization is the one that maximizes the social economic situation, reduces the spending and doesn't eliminate the nation's wealth. Another study that conducts by Yonnedi (2009) aims to examine the relationship between the privatization of State-Owned Enterprises and their organizational change, management and performance improvement in developing country context. The researcher utilizes the analytical descriptive analysis in which he distributes a survey questionnaire to 86 managers of 86 privatized firms and private companies.…”

NPM in Indonesia: Budget Restructuring, Privatisation and Civil Service Reform

“…However, privatisation on public enterprises has been relatively cautious. Only 6 of 125 public enterprises had been partially privatized through initial public offerings by 2003 (Yonnedi, 2010). Latest data from Ministry of State-Owned Enterprises, from total 142, only 14 public enterprises were privatized in 2012.…”

Privatization and Firm Performance: a Study of Indonesia’s State-owned Enterprises

“…Ho et al (2016) and Ghulam (2017) states that go public mechanism is more transparent and fairer than a strategic sale, which is full of negotiation. Yonnedi (2010) states that Initial Public Offering (IPO) can improve the quality of Good Corporate Governance (GCG). Korteweg and Sorensen (2017) also indicates that regarding the implementation of GCG in SOE management, SOE privatization can be performed through the capital market.…”

“…Go public mechanism is more transparent and fairer than a strategic sale, which is full of negotiation. Yonnedi (2010) states that Initial Public Offering (IPO) can improve the quality of Good Corporate Governance (GCG) but the implementation should still involve political decision of the House of Representative (DPR,) as long as time lack problem of political decision can be solved and IPO of SOEs hark back to the spirit of the Constitution of 1945, so that SOE privatization isn't always controversial and considered selling state assets to foreign parties. Korteweg and Sorensen (2017) also states that regarding the implementation of GCG in SOE management, SOE privatization can be performed through the capital market.…”