Ownership And Its Impact On Coping With Financial Crisis Differences In State, Mixed-, And

Description
Corporate turnarounds have been studied widely in Western contexts, but few empirical studies detail turnaround experience in non-western countries.

Asia Paci?c Journal of Management, 21, 49–74, 2004
c 2004 Kluwer Academic Publishers. Manufactured in The Netherlands.
Ownership and its Impact on Coping
with Financial Crisis: Differences in State-,
Mixed-, and Privately-Owned Enterprises
in Thailand
HUGH M. O’NEILL Hugh [email protected]
DENNIS A. RONDINELLI dennis [email protected]
The Kenan-Flagler Business School, The University of North Carolina at Chapel Hill, Campus Box 3490,
McColl Building, Chapel Hill, NC 27599-3490, USA
TIBORDEE WATTANAKUL Tibordee [email protected]
State Enterprise Policy Of?ce, Ministry of Finance, Royal Thai Government, Bangkok, Thailand
Abstract. Corporate turnarounds have been studied widely in Western contexts, but few empirical studies de-
tail turnaround experience in non-western countries, especially those undergoing or recovering from ?nancial
crisis. An assumption in recent privatization policies has been that change in ownership triggers a form of per-
formance reversal or turnaround. Here, we compare ?rms with three different forms of ownership two years after
the ?nancial crisis in Thailand. This study assesses the impact of ownership differences on the level of corporate
entrepreneurship, human resource management practices, and worker effort among state-, mixed- and privately-
owned enterprises in Thailand. The results suggest cautious optimism about changes in ownership as a potential
means for triggering organizational changes that lead to increased productivity for threatened economies. Mixed
ownership may be an effective substitute for private ownership or, alternately, an effective transitional form of
restructuring state enterprises in preparation for private ownership.
Keywords: privatization, corporate entrepreneurship, corporate turnaround
Introduction
The 1990s may justi?ably be remembered as a period when emerging market countries
in Asia underwent serious and sometimes unanticipated ?nancial and economic crisis. In-
ternational organizations such as the World Bank and the International Monetary Fund
prescribed privatization as a means of transforming centrally managed and state-dominated
economies into viable market systems and as a means by which countries in crisis could
regain economic stability. The use of privatization as an instrument of economic and orga-
nizational reform spread rapidly through Europe and Asia. (Ramamurti, 1992; Rondinelli
and Yurkiewicz, 1996). One observer described privatization as the opening of the ?ood-
gate (Ramamurti, 1992) that, like many faddish strategies, may have diffused the pro-
cess too widely (Abrahamson, 1996; O’Neill, Pouder and Buccholtz, 1998). One result
of the spread of privatization was the increased in?uence of international money ?ows
on Asian economies and increased turbulence in domestic markets. Asian miracles
50 O’NEILL, RONDINELLI AND WATTANAKUL
became Asian nightmares almost overnight, for example, as the Thai Baht collapsed in
1997.
In this study, we compare three different types of ?rms in the postcrisis period in
Thailand. Our interest is in ?nding whether privatized ?rms are more or less crisis re-
sponsive than state-owned ?rms or ?rms under mixed ownership. An implicit assumption
in IMF policies promoting privatization has been that privatized ?rms are more adapt-
able and crisis responsive than state-owned enterprises. While there is some support for
that assumption, the support is equivocal. Anderson et al. (1997) reviewed data on 6,000
privatized ?rms in Central and Eastern Europe and found that between 1992 and 1995
their average labor productivity grew by 7.3 percent while state owned ?rms had on av-
erage ?0.2 percent growth. Yet, Arens and Brouthers (2001) found that privatized ?rms
are not more adaptable than state-owned ?rms in Romania. Meggison and Netter (2001)
note that most studies of privatized ?rms—but not all studies—show an improvement
in performance. In reviewing the research, Meggison and Netter (2001) also note that
few studies identify the speci?c ?rm level behaviors that account for the improved
performance.
What is a “crisis responsive” ?rm? We use literature about organization decline, corporate
turnaround, and corporate transformation to describe the characteristics of adaptable, or
crisis responsive, ?rms. We argue that crisis responsive ?rms will have high levels of
corporate entrepreneurship, effective human resource policies, and high levels of work
effort. We demonstrate that ?rms under privatized forms of ownership are more crisis
responsive than state-owned enterprises.
We focus on the differences between state-owned enterprises (SOEs), mixed-ownership
enterprises (MEs) in which both government and private investors hold shares, and private
enterprises (PEs), in an attempt to understand the impact of crisis on these different forms
in Thailand. Thailand offers a good venue for the study because the economy has been
under pressure since late 1996 (Rondinelli and Priebjrivat, 2000). In mid-1997, ?nancial
panic caused severe capital out?ows from Thailand, and a free fall in currency and stock
markets. The International Monetary Fund pressured the Thai government to restructure
the country’s economy after the ?nancial crisis and, in response, the government committed
Thailand to a Master Plan for State Enterprise Sector Reform. The master plan provided
guidelines for increasing private sector participation in sectors previously under government
control, privatizing SOEs, and establishing regulatory and institutional reforms that would
improve the ef?ciency of the market. The master plan included an action program for the
reform and privatization of 59 SOEs primarily in the energy, telecommunications, water,
and transportation sectors.
We present the study in four sections. First, we discuss the potential differences ex-
pected in the response of state and private enterprises to crisis. Second, we describe a
study that investigates whether those differences actually exist among ?rms with differ-
ent forms of ownership in Thailand, a country with many years of experience with a
mixed economy. Third, we present the statistical results of the study. Fourth, we consider
the implications of the study for privatization and turnaround strategies in Thailand and
elsewhere, and we discuss the application of corporate turnaround theories in this Asian
context.
OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 51
Literature review and research hypotheses
In theory, organizations are goal-directed, boundary-maintaining, activity systems (Aldrich,
1979). At this level of abstraction, SOEs and PEs share similar functions. Yet these two
forms of organization are quite different in their speci?c goals, boundary issues, and activity
systems, and one would also expect differences among them in strategic and operational
behaviors.
The nature and characteristics of government, mixed-ownership, and privately-held
enterprises
Organizational theory points out many differences between government-owned enterprises
and private ?rms that can affect their ability to respond to crisis and turn around their
performance. SOEs and PEs differ, for example, in the clarity of their goal structure. SOEs
are directly embedded in government, and as a result, their goals are strongly in?uenced by
political objectives (Moore, 1992). Because many political groups in?uence government
organizations, their goals are diverse and frequently inconsistent. While the SOE seeks to
satis?ce on a number of ambiguous goals, a private ?rm clearly seeks to maximize pro?ts.
To be sure, SOEs face ?nancial constraints and PEs must frequently balance other goals
against pro?t maximization, but pro?ts clearly have a super-ordinate role in private ?rms,
especially in those that are publicly traded. Economic theory claims that market forces lead
to the removal of non-pro?table managers and the dissolution of non-pro?table ?rms. The
sources of discipline faced by SOE managers are more diffuse (when they operate at all)
and, as a result, their goal structures differ from managers of private ?rms.
SOEs and PEs also differ in boundary-maintaining systems. The organizational boundary
of private entities is quite clear, whereas for SOEs it can be quite vague. Cyert and March
(1998) argued that both business and government enterprises are complex decision-making
organizations, but they differ in the character of their relations with external control groups,
leading to differences in the process by which they make decisions. Rainey (1989) suggested
that public managers often face more constraints (rules and procedures), external political
contacts, and interruptions compared to business managers.
Finally, SOEs and PEs have different activity systems, that is, sets of interdependent
role behaviors and routines. Aldrich (1999) de?ned routines as the rules, procedures, and
strategies around which organizations are constructed and through which they operate.
SOEs are empowered through the law and (theoretically) are held accountable to the state
for administering the law in pursuing their goal of public service. As part of government,
state enterprises have different roles than private ?rms in a market economy. Compared
to business organizations, SOEs have more extensive procedures and more formal speci-
?cations and controls designed to insure public accountability. The strategic behavior of
SOEs is strongly in?uenced by constraints speci?c to their form. These constraints include
goal con?ict engendered by differing and shifting coalitions controlling the government
and lack of strategic ?exibility due to the limited domains and charters, politics, and bu-
reaucratization. Property rights theorists note the differences in behavior of managers of
SOEs and PEs stemming from ownership differences (Alchian and Demsetz, 1973). The
52 O’NEILL, RONDINELLI AND WATTANAKUL
non-transferability of ownership inhibits capitalization of SOEs and reduces the owners’
(i.e., the government’s) incentives to monitor managerial behavior in SOEs.
SOEs and private ?rms represent points on a continuum, with mixed enterprises at a
mid-point between the two anchors. MEs include various combinations of government and
private joint equity participation (Boardman, Eckel and Vining, 1986). The term “mixed-
enterprise” speci?cally excludes wholly state-owned enterprises, joint ventures between two
government-owned?rms, andcontractual joint ventures inwhichthe private partner does not
have equity. MEs enable the government to maintain control at less cost than is required for
complete ownership. As a result, MEs are less embedded in government and can avoid some
of the costly accountability procedures and other governmental restrictions and controls
found in SOEs. The ME potentially offers a cost-minimizing method for government to
satisfy both pro?tability objectives and social goals. In a ME, private shareholders monitor
pro?t making and ef?ciency and the government monitors social goal achievement.
Our interest is in undestanding howwell SOEs, MEs and PEs respond to crisis. One school
of thought holds that organizations are basically inert (DiMaggio and Powell, 1983; Hannan
and Freeman, 1984; Staw, Sandelands and Dutton, 1981). A second school of thought is
more optimistic about organizational adaptability. Proponents of this second school argue
that ?rms are capable of strategy change and organizational learning (Barker and Duhaime,
1997; Beer and Nohria, 2000; Hambrick and Schecter, 1983; Kelley and Amburgey, 1991;
Miles, 1997). Change capable organizations exhibit high levels of corporate entrepreneur-
ship (Stopford and Baden-Fuller, 1994), effective human resource management practices
(Pfeffer, 1998) and effective worker effort (O’Neill and Lenn, 1995). Given the differences
among SOEs, MEs, and PEs, one way to assess the adaptability of different ownership forms
is to observe and compare their level of corporate entrepreneurship, their human resource
practices, and the level of worker effort.
Organizational responses to crisis may be multi-facted across time. For example, in early
stages of a crisis, the response is often a reactive one, lacking comprehensive analysis of
the cause of the response. In this early stage, the response generally includes increased
rates of centralization, rigid forms of behavior, and scapegoating (Cameron, Whetten and
Kim, 1987). The organization’s focus, at this stage, is on cutting costs and working harder
(Barker and Duhaime, 1997; Hofer, 1980). These initial recovery efforts are a necessary, but
insuf?cient response to the crisis. Effective long term recovery may require more variety in
response, and a new strategy (Robbins and Pearce, 1992; Barker and Duhaime, 1997). As
March (1990) notes, processes re?ning exploitation (that is, cost cutting) are likely to be
effective in the short run but destructive in the long run.
High levels of worker effort are necessary at both stages of the response to crisis. Ef-
fective response, in the long term, also requires high levels of effective human resource
practices and high levels of corporate entrepreneurship. The effective human resource prac-
tices facilitate the ?rm’s transition through the varied cost cutting programs. These human
resource practices lessen the likelihood of ?rm members becoming excessively rigid, as
predicted by theories of inertia (Staw, Sandelands and Dutton, 1981). In turn, high levels
of corporate entrepreneurship foster the creation of new strategies. In sum, the presence
of human resource practices and corporate entrepreneurial behavior help ?rms respond to
environmental jolts and discontinuous change (Meyer, Brooks and Goes, 1990).
OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 53
Corporate entrepreneurial behavior
One measure of an organization’s adapatability and responsiveness to external crisis is
its ability to create new resources through corporate entrepreneurial behavior. Corporate
entrepreneurship is a dimension of strategic posture represented by a ?rm’s risk-taking
propensity; that is, its tendency to act in competitively aggressive, proactive ways and its
reliance on frequent and extensive product innovation (Covin and Slevin, 1991). Corpora-
tions practice entrepreneurship by entering new markets or by developing new goods and
services for established markets (Lumpkin and Dess, 1996). Autonomy, innovativeness,
risk-taking, proactiveness, and competitive aggressiveness are present when a ?rm enters
new markets.
Private ?rms can be expected to be entrepreneurial because three primary requisites of
entrepreneurship are freedom to put ideas into effect, freedom to enjoy the fruits of success
or the penalties of failure, and freedom from intervention by the government to encourage
or frustrate an enterprise (Livesay, 1982). Private ?rms generally have fewer restrictions
on behavior and afford their managers more freedom than SOEs to innovate and obtain
rewards for innovation (World Bank, 1995). Therefore, we expect PEs to have higher levels
of corporate entrepreneurship than SOEs.
Another reason to expect higher levels of corporate entrepreneurship in PEs is the in?u-
ence of property rights (Alchian and Demetz, 1973). Owners can act to replace managers
if a private ?rm’s value declines. This in?uences managers to anticipate the future value
of their current decisions and, more importantly, to consider the difference between the
present and future values of those decisions. At the point that the future value of current
decisions is presumed to be less than the current value of those decisions, the managers are
prompted to search for new alternatives based on their fear of the owners’ negative reaction
if returns decline. Theoretically, at least, the fear of job loss will induce PE managers to
search for new markets and new ways to maintain pro?ts. This search is the essence of
corporate entrepreneurship. Similar pressures are either not found, or are less pervasive, in
SOEs.
March (1991) notes that ?rms can develop two styles of learning: exploration and ex-
ploitation. Exploration is a search for new alternatives, while exploitation is learning to
engage in historical alternatives more skillfully. Under pressures of job loss, especially in
the early crisis stages, it is possible that, propelled by fear of job loss, the managers will
try to exploit previous skills. The tendency to do this lessens the learning ability of organi-
zations in turbulent environments. In the presence of turbulence, learning is better served
by exploration and the creation of options. The owners of PE will monitor the progress of
learning, and act more quicky to replace the managers who do not exhibit adaptive behav-
iors. March (1991) shows that turnover increases the ability of organizations to respond to
turbulence.
In addition to the motivation provided by fear of loss, PE managers are frequently moti-
vated by opportunity for gain. The opportunity for gain exists because the interests of the
manager and the owner are aligned through speci?c payment systems, which include salary
at risk and options for ownership. In contrast, payment systems in SOEs are frequently
based on civil service rules, which traditionally limit the amount of pay at risk (if any)
54 O’NEILL, RONDINELLI AND WATTANAKUL
to levels much lower than that found in PEs. SOEs generally maintain similar pay levels
across similar ranks in different units of the organization, with less regard to the strategic
importance or recent performance of those units. In addition, there are no options for own-
ership in SOEs, so it is more dif?cult to reward risk-taking behavior. Indeed, risk-taking in
SOEs may be punished rather than rewarded (Downs, 1967). Risk-taking is an important
component of corporate entrepreneurship and, therefore, given their advantage in aligning
owner and manager incentives, PEs should have higher levels of corporate entrepreneurship
than SOEs.
Knowledge of the environment and opportunities for change may be more important than
incentives in encouraging change in organizations (Kanter, 1983). Once again, private ?rms
should have advantages over SOEs. The PE competes for resources within a de?ned group
of suppliers, competitors, funders, and customers. By comparison, the SOE’s competitors
for resources are more diffuse—a wide variety of government agencies and political interest
groups—and more dif?cult to monitor. To the extent that the environment provides clues
about opportunities to change, it must be scanned and monitored. The PEs’ environment
may be easier to scan because relationships with suppliers, funders and the like are more
direct.
In sum then, the PE appears more suited to the requirements of corporate entrepreneur-
ship than SOEs. However, not all PEs display higher levels of corporate entrepreneurship.
Consider, for example, Schumpeter’s (1934) description of entrepreneurship as “creative de-
struction,” a term that contains a potential attraction-aversion paradox. Most rational actors
might be attracted to creative behavior, while at the same time avoiding destructive behav-
ior. Cyert and March (1992) argue that organizations tend to evince norms of rationality.
It would appear, then, that the balance between the two forces depends on the risk pro?les
of decision makers in organizations. Risk-averse decision makers would avoid destructive
behavior, while risk-neutral or risk-seeking individuals would be more inclined to engage
in it. Comparing PEs and SOEs with respect to levels of corporate entrepreneurship, then,
requires estimating the risk pro?les of managers in private ?rms. Compared to incentives
and environmental in?uences discussed earlier, predictions based on risk pro?les are more
equivocal.
Schumpeter’s de?nition can be applied to either individuals starting new businesses
or to corporations starting new ventures. But once established, all organizations develop
some degree of inertia that favors past activities over new ventures. In reality, corporate
entrepreneurship may be more an anamoly than a norm even for PEs (Burgelman, 1988;
Kanter, 1983).
Other processes alsocontribute tothe conservatismof PEs. Stinchcombe (1965) described
the early stages of an organization’s existence as one of “imprinting.” The individuals who
form an organization seek solutions to problems. As the organization succeeds and grows,
the tasks become sub-divided and differentiated, and ?rm members become more and more
specialized in unique and highly differentiated tasks. Knowledge about the tasks is passed
across cohorts or generations of workers, and as the organization grows and ages, the
routines of the organization gain an institutional character.
The forces described by Stinchombe contribute to a high level of inertia in all organi-
zations (DiMaggio and Powell, 1983; Hannan and Freeman, 1984). Hannan and Freeman
OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 55
de?ne organizational inertia as a rate of change less than that occuring in the environment.
To the extent that inertia exists, organizational forms will change slower than the environ-
ments around them, and eventually be supplanted by other forms. This process suggests
that higher levels of entrepreneurship can be expected in newer organizations than in older
ones, and that the incidence of corporate entrepreneurial behavior is a function of the cor-
poration’s age. Older PEs, then, may not have higher levels of corporate entrepreneurship
than younger SOEs.
The evidence about the presence of inertia in organizations is mixed (Kelly and Amburgy,
1992). Two different streams of work suggest that forces do produce what appear to be in-
ertial reactions in organizations. Meyer and Zucker (1989) describe “permanently failing
organizations”—marginally pro?table or marginally successful organizations that persist
despite low levels of performance. These organizations “yield bene?ts that motivate invest-
ment in and maintenance of them, but these bene?ts often accrue to those who are in one
way or another dependent on organizations rather than to those who legally own or control
them” (1989: 45). This concept explains why SOEs survive for so long even as loss-makers.
Where dependent actors have power, organizations persist even in the presence of poor per-
formance. But the same concept also explains inertia in private ?rms. We argued earlier that
poor performance would cause managers to search for new opportunities in private ?rms.
That suggestion implicitly presumed that these managers served the interests of the owners,
and had power over the organization. Each assumption can be questioned. For example,
agency theory studies of implementation (Guth and MacMillan, 1986; Jensen and Meckling,
1976) contain many illustrations of misalignment between manager and owner interests.
Studies of technological change alsosupport the inertial perspective. Cooper andSchendel
(1976) found that, frequently, technological change fails to attract the interest of industries
most directly in?uenced by those changes. Christensen (1997) describes how innovators,
once successful, will ?nd that marginal returns to investments in their successful prod-
ucts will surpass the returns to investments in potential substitute products. The substitute
products, in turn, are then developed by new entrants. These new entrants become well
established and may eventually surpass the incumbents. The Christensen thesis suggests
that the ability of managers to anticipate the success of new products is ?awed. This abil-
ity, though, is at the foundation of predictions that private ?rms would be inherently more
entrepreneurial then SOEs.
Clearly, then, the relationship between ownership or governance (PE versus SOE) and
corporate entrepreneurship is not absolute. Private ?rms sometimes exhibit inertial forces
that may be stronger than incentives for entrepreneurship. Similarly, it is possible to identify
conditions that might lead to higher than expected levels of entrepreneurship in SOEs. In-
deed, Kornai (1992) points out that SOEmanagers incommunist andsocialist countries often
displayed a great deal of entrepreneurship in bartering, negotiating, and evading rules in or-
der to meet state planning targets. Similarly, Kale and Mulherin (1997) found that formerly
private state-owned ?rms maintain their historic patterns of behavior. However, notwith-
standing the forces for conservatism in PEs, the incentives for corporate entrepreneurship
and the observed rate of corporate entrepreneurship should be higher in private ?rms. In
turn, the inertial institutional forces and the constraints of nested networks and rules should
be higher in SOEs. Therefore,
56 O’NEILL, RONDINELLI AND WATTANAKUL
Hypothesis 1. PEs have higher levels of corporate entrepreneurship than SOEs.
MEs have less government controls and managerial constraints than SOEs but are not as
?exible as private ?rms. The freedom in MEs can create an entrepreneurial climate. Com-
pared to SOEs, MEs seek to attain more pro?ts and place less emphasis on political con-
siderations, allowing them to develop more innovative and proactive strategies. Therefore:
Hypothesis 2. MEs have higher levels of corporate entrepreneurship than SOEs.
Hypothesis 3. PEs have higher levels of corporate entrepreneurship than MEs.
Human resource management practices effectiveness
Strategic contingency theory suggests the importance of role positions—the roles that in-
dividuals ?ll in an organization should be de?ned by its strategy (Gupta and Govindarajan,
1984). The importance of role positions should determine the quality of the incumbent,
the salary structure, and the incentive system. Therefore, one measure of effective human
resource administration is the ability of an organization to match its human capital needs
to its strategy. Clear strategic direction should facilitate this task and ambiguities in strate-
gic direction should complicate it. Given the differences in the clarity of strategy between
SOEs and private ?rms, the latter should be more effective in assessing their human capital
needs. Human resource management practices, in turn, in?uence the competitive posture
of organizations (Pffefer, 1998) through their effects on the human capital (Huselid, 1995;
Huselid and Jackson, 1997).
As noted earlier, Pfeffer (1998) identi?ed seven HRM practices of successful organiza-
tions: employment security, selective hiring, self-managed teams, incentive pay, extensive
training, extensive information sharing, and reduced status barriers. Each of these practices
can be an important source of competitive success (Schuler and MacMillan, 1984; Schuler,
1992; Pfeffer, 1994, 1998). To the extent that an ownership form is consistently more ef-
fective at one or more of these roles, that form should then have an enduring performance
advantage. PEs may have an advantage over SOEs in several of these areas.
Human resources are generally managed in SOEs through government civil service sys-
tems. These systems foster high levels of formalization and standardization, which re?ect
strong norms for equitable treatment. Those norms ?nd expression in programs like stan-
dardized testing, standardized pay rates for speci?c jobs, and system-wide rules for promo-
tion and removal. This institutionally-driven standardization limits the ?exibility that SOE
managers can employ in responding to the speci?c needs of their organizations. Changes
in personnel rules or policies tend to cover all government agencies rather than speci?c
SOEs. As a result, an SOE has limited ability to reward unique roles or unique perform-
ers. Also, SOE managers have limited incentives to use technology to make labor more
productive because managers will not share in the gain derived from reducing the number
of workers. They may even suffer some loss of prestige or rank (and pay) as a unit gets
smaller or incur criticismfrompolitical leaders or politically in?uential labor unions fearful
of unemployment. Put differently, rational behavior is de?ned in terms of the rules imposed
by the civil service rather than by the strategic needs of the SOE. Because the rules of the
OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 57
civil service system must ?t a large number of different types of units, the chances of mis?t
with any single unit are high. In addition, single units are limited in their responsiveness to
changes that are not perceived by a large number of other units.
In contrast, human resource management (HRM) practices in business ?rms are more
malleable than those found in SOEs, and can be more easily matched to the demands of
business. The CEO of the private ?rm is the prime determinant (within the limits of law
and past contracts) of HRM, with no oversight by a civil service department and no need
to match programs to those found in other organizations. The CEO and the management
team have some chance to share in any gains that accrue from good HRM practices. Gain-
sharing opportunities encourage the adoption of labor-saving or labor- substituting devices.
Importantly, managers in these ?rms have some freedom to share these gains with workers,
further improving the chances for successful change.
The differences between SOEs and PEs give advantages to the latter on ?ve of the seven
HRM practices identi?ed by Pfeffer. First, PEs are more capable of providing selective
hiring, as they are less bound by civil service and political constraints and can quickly
respond to speci?c market needs. Second, PEs are suf?ciently ?exible to engage in the
de?nition of speci?c assignments and reward structures necessary for self-managed teams.
Third, PEs can use incentive pay more easily. Fourth, PEs can re-assign workers more
frequently as they substitute labor-saving technology, and provide technological training
for workers. Fifth, PEs driven by the chance to gain from information-induced changes, are
more motivated to engage in information sharing about required changes.
A ?rm’s level of human resource effectiveness is one predictor of how the ?rm will re-
spond to crisis. HRM practices in?uence ?rm member behaviors around such crisis related
issues as downsizing (McKinley, Zhao and Rust, 2000), survivor guilt, restriction of infor-
mation (Cameron, Whetten and Kim, 1987), and employee learning (Sutton and D’Aunno,
1992). An organization engaged in effective human resource management will have well
formed protections around the issues that create ineffective responses to decline. For ex-
ample, norms of security would decrease the possibility of excessive downsizing, while
norms around hiring and incentive pay would assure some form of performance link in the
selection of downsized personnel.
For two of Pfeffer’s HRM practices, SOE’s may have some advantage. Given the norms
of equity and the employment goals of government, protected (and subsidized) SOEs may
offer more employment security. In addition, given their focus on stand ardization in selec-
tion, reward, and promotion routines, SOEs may be more capable of reducing status barriers
than PEs.
Given the overall pattern of HRM advantages, PEs should have more effective HRM
systems than SOEs. As in the case of corporate entrepreneurship, we expect that the
use of mixed forms of ownership will facilitate the use of better HRM practices for the
ME, although it may still be bound by some of the ties associated with state ownership.
Therefore:
Hypothesis 4. PEs have more effective HRM practices than SOEs.
Hypothesis 5. MEs have more effective HRM practices than SOEs.
Hypothesis 6. PEs have more effective HRM practices than MEs.
58 O’NEILL, RONDINELLI AND WATTANAKUL
Work effort
Motivation is de?ned as the psychological process that energizes, directs and sustains be-
havior (Mitchell, 1982; Perry and Porter, 1982). With respect to work-related behaviors,
motivated employees work harder. The issue of work effort is related to crisis response be-
cause crisis can induce rigidity (Staw, Sundelands and Dutton, 1981) and withdrawal from
work related efforts (O’Neill and Lenn, 1995). If one organizational form has an advantage
over another with respect to its ability to in?uence worker motivations, then that formshould
evince higher levels of work effort, and more consistent work effort in response to crisis.
In order to understand differences in work effort between SOEs and other forms, we will
review two basic models of motivation.
Evans (1986) described four factors that have an in?uence on motivation: feedback on
performance, the design of jobs, organizational norms, and group norms. An organization
manipulates these factors to increase the level of motivation, and hence work effort. And if
an organization faces constraints in its efforts to employ these factors, its level of motivation
and work effort should be lower than that found in other forms.
SOE’s, when compared to MEs or PEs, may have dif?culties in providing feedback on
performance. The dif?culties arise from the ambiguities that exist in the goal structure of
these governmental organizations and to the fact that many SOEs were required to employ as
many workers as possible to keep unemployment rates low in centrally planned economies.
To the extent that there are different goals to pursue and the need to maintain surplus
employees, work efforts can become fractionated. To the extent that the goals pursued
represent political or social goals, rather than those deemed strategic for the SOE, important
work efforts are diluted. In addition, it is possible that the social goals and preferred SOE
goals are incompatible. Agovernment owner, for example, may insist on a goal of increased
employment when a more effective strategy for the SOE would be to maintain stable levels
or to shed surplus workers.
Similarly, when compared to PEs, SOEs may have less freedom to design jobs. As noted
earlier, SOEs generally submit to civil service regulations, which de?ne the conditions of
work, and through those de?nitions, in?uence the design of jobs. Continuing the same
theme, SOE’s compared to PEs have less direct control over organization and group norms.
The norms are in?uenced, at least in part, by the political and social goals of the governing
body and historically, in many countries, were ?xed by strong and politically-in?uential
workers unions. Wages were set at lowlevels and supplemented by expensive social welfare
bene?t payments over which SOEs had little or no control. Employees knewthat they would
receive a standardized pay increase and could not easily be ?red, no matter how much or
how little they worked.
In an approach similar to Evan’s work on motivation, Porter, Hackman and Lawler
(1974) identi?ed four categories of motivational variables: individual characteristics, job
characteristics, work environment characteristics, and external environment characteristics.
To the extent that an organization can manage the ?t across these sets of characteristics,
that organization should enjoy increased levels of motivation and hence, increased levels
of work. Once again, compared to private ?rms SOEs may be at a disadvantage because
they face more constraints in hiring, job design, and the design of the work environment.
OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 59
Moreover, SOEs are generally buffered from the external environment and constrained in
their ability to manage their external environments strategically.
In reaching conclusions similar to ours, Perry and Porter (1982) argued that the dif?cul-
ties of setting goals in government organizations appear substantial. The dif?culties arise
because government organizations have more exposure to external government in?uences
and lack job clarity. As a result, Perry and Porter (1982) noted that government managers
have dif?culties in designating performance standards and evaluating performance.
Therefore:
Hypothesis 7. PEs have higher work efforts than SOEs.
Hypothesis 8. MEs have higher work efforts than SOEs.
Hypothesis 9. PEs have higher work efforts than MEs.
The importance of the three variables may differ based on the stage or type of crisis, with
higher levels of work effort ranking ?rst in importance in early stages and in less dramatic
crisis. For long-term discontinuous changes the three forms of response are necessary for
adaptation (March, 1990; Meyer, Brooks and Goes, 1990). The ?nancial crisis in Thailand
did introduce discontinuous change, as evidenced by the dissolution of large numbers of
?nancial ?rms, the high rates of corporate bankruptcy, the creation of a new stock market,
and the adoption of new rules for investment monitoring.
Research methods
To test the hypotheses we surveyed 469 employees in 28 Thai ?rms, including 9 PEs,
11 SOEs, and 8 MEs. The survey was administered in mid-1999, well after the collapse of
the Thai Baht and the subsequent ?nancial crisis. Table 1 describes the surveyed ?rms. The
sample includes a mix of industrial and service ?rms. We did not expect industry induced
variance in the dependent variables, as previous studies of strategic turnarounds have found
similarities in the ways industrial and service ?rms approach major attempts to reverse
performance. The literature on turnaround studies has been reviewed elsewhere (Barker
and Duhaime, 1997; Robbins and Pearce, 1992). The ?rms are a representative sample
of large Thai ?rms, drawn from industries subject to the forces of privatization. As such,
these ?rms share similarities with ?rms privatized in other countries (Ramamurti, 1992;
Rondinelli, 1998).
The characteristics of the respondents are summarized in Table 2. Respondents had a
mean work experience of 8.54 years. Of 700 questionnaires distributed, 469 were returned
and usable, yielding a response rate of 67 percent. We used Thai language questionnaires
and applied a double translation approach to reduce interpretation errors. Scoring keys and
questionnaire details and format are found at Appendix 1.
Measures
Three measures of internal organizational indicators of adaptiveness were used in the study:
corporate entrepreneurship, human resources management, and worker motivation.
60 O’NEILL, RONDINELLI AND WATTANAKUL
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OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 61
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62 O’NEILL, RONDINELLI AND WATTANAKUL
Table 2. Results of con?rmatory factor analysis.
Item Factor 1 Factor 2 Factor 3 Factor 4
Innovativeness
Your ?rm has marketed many 0.52
new products or services within two years.
Your ?rm has changed its products or 0.76
services dramatically.
Your ?rm’s top managers favor a strong 0.70
emphasis on R&D and technological leadership.
Your ?rm is very often the ?rst business 0.77
to introduce new products/services,
administrative techniques, operating
technologies, etc.
Proactiveness
Your ?rm typically adopts a very 0.71
competitive posture in dealing with competitors.
Your ?rm’s top managers have a strong 0.56
proclivity for high-risk projects with
chances of very high returns.
Your ?rm’s top managers believe that 0.61
bold and wide-ranging acts are necessary
to achieve the ?rm’s objectives due to
the nature of the environment.
Your ?rm typically adopts a bold and 0.51
aggressive posture in order to maximize
the probability of exploiting potential
opportunities when confronted with
decision-making situations involving uncertainty.
Human Resource Management Effectiveness
Your ?rm’s employee participation and 0.75
empowerment are very effective.
Your ?rm’s employee and manager 0.74
communications are very effective.
Your ?rm’s employee training is very 0.66
effective.
Your ?rm’s performance appraisal is 0.80
very effective.
Your ?rm’s compensation is very suitable. 0.63
Motivation
Your ?rm’s people often do some extra jobs 0.54
which are not really required of them.
Your ?rm’s people keep working harder 0.78
than the other competitors.
Your ?rm’s people keep working for the 0.82
whole day without time concerns.
OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 63
The levels of corporate entrepreneurship used for each ownership type were items de-
veloped by Knight (1997). The scale (ENTRESCALE) assesses two factors: (1) innova-
tiveness, comprising four items, is de?ned as the extent to which an organization pursues
creative or novel solutions to challenges, including the development of products and ser-
vices and new administrative techniques; and (2) proactiveness, a four-item scale, mea-
suring the extent to which an organization acts in anticipation of future problems, needs
or changes. The alpha coef?cients for the scales were 0.78 (innovativeness) and 0.69
(proactiveness).
The effectiveness of human resource management practices was measured with a ?ve-
itemscale. These ?ve items were based on Pfeffer’s (1998) and Shuler’s (1994) descriptions
of effective human resource management practices. The alpha coef?cient for the HRMscale
was 0.84.
The study used three items to assess the level of worker effort: (1) extent to which workers
took on jobs not formally mandated by their job descriptions; (2) perception of how hard
employees work compared to those in competitor organizations; and (3) willingness of
employees to work throughout the day without concern for formal time requirements. For
the work effort scale, the alpha coef?cient was 0.75.
Analysis
Acon?rmatory factor analysis (CFA) was performed for the 16 items measuring innovative-
ness-proactiveness, HRMeffectiveness, and work motivation. Overall, results of this analy-
sis indicated that the four-factor structure was a good ?t to the data (RMSEA=0.05, CFI =
0.958, GFI = 0.94, AGFI = 0.92, and RMSR = 0.04). All 16 item loadings are signi?cant
at the 0.05 level (see Table 2).
The hypotheses were tested using standard regression analysis. We used dummy cod-
ing for categorizing the three kinds of organizations (state-owned, privately-owned, and
mixed-ownership). We performed two sets of regression analysis: one adopting the mixed-
ownership group as the reference and the other using state-owned enterprises as the ref-
erence. In the ?rst regression, represented by models 1 to 4 on Table 5, privately held
businesses and state-owned enterprises are compared to mixed-ownership companies. In
the second regression, models 5 to 8, privately held and mixed-ownership organizations are
compared to state-owned enterprises. In effect, then, the formof ownership is used to predict
the level of innovativeness, proactiveness, human resource management effectiveness, and
work effort existing in these enterprises.
Results
The descriptive statistics and correlations are reported in Table 3. All correlations between
any two dependent variables are signi?cant. Table 4 reports means of all four dependent
measures across three types of organizations and Table 5 presents the results of standard
regression analysis. Recall that Hypothesis 1 suggests that private ?rms’ corporate en-
trepreneurship is higher than that of SOEs. Signi?cant positive signs of business-dummy
64 O’NEILL, RONDINELLI AND WATTANAKUL
Table 3. Descriptive statistic and correlations.
Variable Mean s.d. 1 2 3 4 5 6
1. Innovativeness 16.76 5.05
2. Proactiveness 14.49 4.64 0.66
??
3. HRM effectiveness 9.89 5.73 0.62
??
0.58
??
4. Motivation 12.69 3.69 0.52
??
0.48
??
0.47
??
5. Private dummy 0.35 0.48 0.08 0.10
?
?0.03 0.23
??
6. SOE dummy 0.39 0.49 ?0.08 ?0.04 ?0.02 ?0.31
??
?0.59
??
7. ME dummy 0.26 0.44 0.02 ?0.02 0.07 0.09 ?0.43
??
?0.48
??
?
p < .05;
??
p < .01.
Table 4. Means of all four dependent variables.
Type Innovativeness Proactiveness HRM effectiveness Work effort
PEs Mean 17.33 15.10 19.70 13.85
Number 163 162 162 163
Std. Deviation 4.92 4.37 5.86 3.31
SOEs Mean 16.13 14.05 19.63 11.24
Number 179 177 178 177
Std. Deviation 5.33 5.08 5.60 3.76
MEs Mean 16.80 14.42 20.18 12.50
Number 89 90 90 90
Std. Deviation 4.43 4.18 5.02 3.21
variable’s regression coef?cients in model 5 and 6 support this hypothesis. Speci?cally, the
mean level of innovative (17.33 vs. 16.13) and proactive behavior (15.10 versus 14.05) is
higher for PEs than for SOEs.
Hypothesis 2 predicts that ME’s corporate entrepreneurship is higher than that of govern-
ment organizations. Results show that the mixed-dummy variable’s regression coef?cients
in model 5 and 6 are not signi?cant. Consequently, Hypothesis 2 was not supported; how-
ever, positive signs of both regression coef?cients are consistent with the proposed direction
in Hypothesis 2.
Hypothesis 3 states that private ?rms’ corporate entrepreneurship is higher than that of
MEs. The private ?rm dummy variable’s regression coef?cients in models 1 and 2 are not
signi?cant. Thus, the results were not consistent with Hypothesis 3. However, the positive
signs of these two regression coef?cients present do position the MEs between the PEs
and the SOEs, as expected. For each of the measures “innovativeness” and “proactiveness,”
SOE’s have the lowest levels, and MEs fall in the middle. This pattern of results is consistent
with the idea that changes in private ownership are associated with increases in these
entrepreneurial activities.
OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 65
Table 5. Results of standard regression analysis.
Dependent variables
Innovativeness Proactiveness HRM effectiveness Work effort
Independent variables F-ratio ? F-ratio ? F-ratio ? F-ratio ?
Model 1 Model 2 Model 3 Model 4
1. MEs as the reference 2.55 2.26 1.06 25.41
??
R-Square .10
Constant 16.93
??
14.34
??
20.54
??
13.23
??
Private dummy 0.40 0.76 ?0.84 0.62
SOE dummy ?0.81 ?0.29 ?0.91 ?1.99
??
Model 5 Model 6 Model 7 Model 8
2. SOEs as the reference 2.55 2.26 1.06 25.41
??
R-Square .10
Constant 16.13
??
14.05
??
19.64
??
11.24
??
Private dummy 1.21
?
1.05
?
0.06 2.60
??
ME dummy 0.81 0.29 0.91 1.99
??
?
p < .05.
??
p < .01.
Hypothesis 4 suggests that private ?rms’ HRM effectiveness is higher than that of SOEs.
As seen in model 7, the private ?rm’s regression coef?cient is not signi?cant. It is close
to zero. The PEs do not differ from the SOEs in terms of HRM effectiveness. Similarly,
the ME’s regression coef?cient in model 7 is not signi?cant. Consequently, Hypothesis 5,
stating that ME’s HRM effectiveness is higher than that of government organizations is not
supported. Hypothesis 6 states that private ?rms’ HRM effectiveness is higher than that of
MEs. The private’s regression coef?cient in model 3 is not signi?cant. Thus, the results
were not consistent with Hypothesis 3. Also, the negative sign of this regression coef?cient
is inconsistent with the hypothesized direction.
Hypothesis 7 suggests that private ?rms’ work effort is higher than that of SOE’s. In model
8, a highly signi?cant positive sign of the private ?rm dummy variable’s regression coef-
?cients provides strong support for this hypothesis. The ME dummy variable’s regression
coef?cient in model 8 is also highly signi?cant and positive. Consequently, Hypothesis 8,
stating that ME’s work-effort levels are higher than SOE work level efforts, was strongly
supported. Hypothesis 9 predicts that work motivation levels in private ?rms are higher than
in MEs. The relevant regression coef?cient in model 4 is not signi?cant. Thus, the results
were not consistent with Hypothesis 9. However, a positive sign of this regression coef?-
cient is consistent with the hypothesized pattern. Once again, as in the case of corporate
entrepreneurship levels, the PEs ranked ?rst and the SOEs last in work effort levels. The
MEs fell between the two extremes. This pattern is consistent with the idea that changing
ownership form from state-owned to private is associated with signi?cant changes in work
effort levels in ?rms.
66 O’NEILL, RONDINELLI AND WATTANAKUL
Discussion and conclusions
Taken together, our ?ndings support three conclusions about the impact of ownership struc-
ture on predictions of organizational adaptability and crisis response. In turn, these con-
clusions offer insight into some of the challenges involved in building more adaptable
organizations in economies populated with current and former SOEs. As in all cases of
empirical study, any discussion of the results needs to be tempered by an understanding of
the limitations of the study.
Conclusions of the study
First, this study of organizations with different ownership structures in Thailand shows
there are signi?cant differences between privately-held enterprises and state-owned enter-
prises. These differences occurred in each measure of corporate entrepreneurial behavior
(innovativeness and proactiveness) and in the measures of work efforts. For instance, the
innovativeness and proactiveness of Telecom Asia Company and Bangkok Bank, both of
which are PEs, are signi?cantly higher than those of SOE’s such as the Provincial Water-
works Authority (PWA) and the Communication Authority of Thailand (CAT).
Second, there are no signi?cant differences between privately-held businesses and those
of mixed ownership. The mixed ownership ?rms do have signi?cantly higher levels of work
effort than state-owned enterprises. As an illustration, the mixed enterprise ?rms Bangchak
Petroleum and Thai Airways have higher work effort than the state-owned Communication
Authority of Thailand (CAT) and the Telephone Organization of Thailand (TOT). With
respect to the measures of corporate entrepreneurship, the mixed ownership enterprises
place “in the middle.” Although they are not signi?cantly higher than the state-owned
enterprises in their levels of assessed entrepreneurial behavior, they are not signi?cantly
lower than the privately held ?rms in their scores on entrepreneurial behavior. Third, the
three ownership forms do not differ with respect their levels of HRM effectiveness.
The results concerning corporate entrepreneurship suggest cautious optimism about the
potential role of privatization in transforming economies and the advantage privatized ?rms
might have in responding to crisis. The results show that PEs indeed have higher levels of
corporate entrepreneurship in a country that has long had a mixed economy and that is in
the process of further macro-economic reform. Therefore, the expectation that privatizing
SOEs can increase their level of corporate entrepreneurship does make sense. Our study—
perhaps one of only a few empirical investigations in this area—is a direct test of this basic
assumption, and the results are encouraging. With this data, we can not predict which of the
three variables are more in?uential in helping an organization respond to crisis. We suspect
that the relative importance of work effort and corporate entrepreneurship may vary in the
short and long term, while human resource practices may have equal levels of importance
in both the short and long term.
At the organizational level the issue of evolution is also important. How does the state-
owned enterprise evolve into a more entrepreneurial form? We suspect that the change
occurs through the replacement of top management, and through changes in incentives that
come with ownership and governance changes. There have been few studies that directly
OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 67
assess the role of management during turnaround. In an early work, Hofer (1980) did
note that strategic turnaround would require the replacement of top management. Walsh’s
(1988) work on management turnover following acquisitions is one indicator that changes
in control would lead to replacement of management. In a studies on privatization in the
mature economies, Craggy and Dyck (1999) and Wolfrom (1998) found that compensation
levels and pay-performance sensitivity in?uenced levels of productivity. Changes in these
incentives likely in?uence the level of entrepreneurial behavior.
While at the macro level the organization changes could be perceived as evolutionary
changes, the managers undergoing replacement may see them differently. It is possible that
the changes could take place without displacing large numbers of managers. This could
occur if the SOEs already had effective management and some entrepreneurial traditions,
or if incumbent managers are able to learn to new routines quickly. Our results do offer
some evidence that the former condition is possible (because there was variance in the
entrepreneurship scores across SOEs), but can offer no evidence about the later issue. The
important implication here is that not all privatizations are the same. The path to increased
entrepreneurship will vary based on the SOE’s past experience and how the privatization is
carriedout. Outright sale of anSOEtoprivate investors, for example, is likelytobringgreater
change in entrepreneurship than employee-management buyouts, which tend to protect
the jobs of existing managers (Nellis, 1999). Given the potential damage to incumbent
management, it is possible that expected increases in entrepreneurship occur only after
some period of turbulence within the ?rm.
One interesting observation in our ?ndings is that the SOEs did vary in their levels of cor-
porate entrepreneurship, and some SOE’s could have had higher levels of entrepreneurship
than some private ?rms. For example, Petroleum Authority of Thailand (PPT) scored rela-
tively high on the corporate entrepreneurship measures. Apparently, factors other than own-
ership contribute to the level of entrepreneurship. Also, the requirements for entrepreneur-
ship may differ by industry sector. These points further support the idea that some SOEs
would be crisis responsive.
Mixed-ownership is an intriguing issue for two reasons. First, the pattern in the results
could infer that important organizational and behavioral changes occur as an evolutionary
process from state ownership to mixed ownership to private ownership. The cross-sectional
nature of the study cannot de?nitively support the idea of evolutionary stages. Most of
the mixed enterprises have existed in that form for only a relatively short period of time.
Some are still controlled by the government. However, to the extent that the “stage” of
mixed ownership facilitates learning and adjustment in the SOE, the costs of displaced and
disaffected personnel may be lower.
Second, even if the notion of evolutionary stages is fanciful, the results lend support to
the possibility that mixed ownership may be a reasonable substitute for full privatization
for a short period of time until the SOE can adjust to private ownership. In particular,
in those situations where neither the market nor government alone could provide suf?-
cient capital to transform SOEs, mixed ownership may be the best solution. In a study
of mixed ownership of former SOEs, Tain (2000) found that mixed ownership forms do
not perform as well as private ?rms. Our results imply that mixed ownership ?rms do
outperform SOEs on work effort, and appear to be moving closer to the performance of
68 O’NEILL, RONDINELLI AND WATTANAKUL
privately held ?rms. Consistent with the theme developed earlier, this observation im-
plies that there is no single answer to economic transformation. Effective privatization
strategies can take different shapes and forms in different countries and under different
conditions.
Our ?ndings that human resource management practices are not signi?cantly different
across the ownership structures may be a bit surprising in that we expected changes in human
resource practices withhigher levels of entrepreneurshipandworkeffort. The lackof support
for this hypothesis could be traced to two causes. First, in a relatively small and culturally
homogeneous country like Thailand, HRM practices are often highly standardized and
vary little across ?rms. The practices have an institutional and cultural component (Lawler,
Atmiyanada and Zaidi, 1992). Second, our assessment of the HRM practices (training,
performance appraisal, compensation, etc.) may not capture how speci?c practices may be
used to achieve different goals in each type of organization. As noted earlier, the level of
compensation and the proportions of pay at risk may be a key determinant (Cragg and Dyck,
1999; Wolfrom, 1998) of post-privatization performance. Our measures of HRM did not
capture these speci?c forms of difference.
The study has four important limitations. First, it is a small sample study in a single
country. The economic conditions in Thailand and Southeast Asia are quite different from
those elsewhere, and patterns observed in one country or region may not hold for others.
In particular, the tradition of private enterprise in Thailand may have led to some cross-
fertilization of management practices between SOEs and PEs even before the government
began pursuing privatization. The second limitation is based on the nature of the sample.
While every effort was made to avoid respondent bias, and to obtain reliable respondents,
the possibility of some forms of bias still remains. The third limitation deals with the cross
sectional nature of the study, which makes it dif?cult to be certain about temporal dy-
namics. We infer here that the level of corporate entrepreneurship and work effort makes
the privatized ?rm more adaptable. That inference requires direct testing in a time series
study. We should see a higher rate of survival and growth within the PEs if our infer-
ences are true. Finally, it is possible that different industries will vary in their response to
privatization.
Western research on turnaround strategies has prompted a debate as to whether ?rms
can engage in strategic (major changes in strategy) rather than operating turnarounds (cost
cutting). Barker and Duhaime (1997) ?nd strategic turnarounds are possible, while Robbins
and Pearce (1992) ?nd evidence only for retrenchment-based strategies. Our results support
Barker and Duhaime (1992). Western-based research implies that top management must be
changed for turnaround to succeed. Our ?ndings are ambiguous in this regard, and imply that
further work is necessary. Finally, research on organizations in Western countries suggests
a form of rigidity and dysfunctional behavior in managers at the time of decline (Cameron,
Whetten and Kim, 1987). We expected systemic variance in HR practices, and would
have used that variance as indirect evidence of the dysfunctional behaviors. More direct
measures are necessary to con?rm or discon?rm the management behaviors at the time of
decline.
Clearly, more research on this topic is needed. More detailed analysis is required to con-
?rmthe speci?c changes that occur in ?rms facing crisis, and on howto ?ne-tune turnaround
OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 69
research into ?nely grained prescriptions for making all forms of ?rms: PEs, MEs and SOEs,
more adaptive. More controlled research on these issues will hold important implications
for theory and practice. Our exploratory ?ndings in Thai enterprises indicate signi?cant
adaptive differences between SOEs and PEs. Change in ownership—even mixed owner-
ship in which the government retains a controlling share—can be an effective instrument
for gradually transforming state enterprises into more innovative, responsive, and proactive
?rms.
Appendix: Questionnaire
Scoring key
Innovativeness
1. Your ?rm has marketed very many new products or services within two years.
4. Your ?rm has changed in products or services dramatically.
7. Your ?rm’s top managers favor a strong emphasis on R&D and technological
leadership.
11. Your ?rm is very often the ?rst business to introduce new products/services, adminis-
trative techniques, operating technologies, etc.
Proactiveness
2. Your ?rm typically adopts a very competitive posture in dealing with competitors.
5. Your ?rm’s top managers have a strong proclivity for high-risk projects with chances
of very high returns.
8. Your ?rm’s top managers believe that bold and wide-ranging acts are necessary to
achieve the ?rm’s objectives due to the nature of the environment.
12. Your ?rm typically adopts a bold and aggressive posture in order to maximize the
probability of exploiting potential opportunities when confronted with decision-making
situations involving uncertainty.
Human Resource Management Effectiveness
3. Your ?rm’s employee participation and empowerment are very effective.
6. Your ?rm’s employee and manager communications are very effective.
9. Your ?rm’s employee training is very effective.
13. Your ?rm’s performance appraisal is very effective.
15. Your ?rm’s compensation is very suitable.
Motivation
10. Your ?rm’s people often do some extra jobs which are not really required of them.
14. Your ?rm’s people keep working harder than the other competitors.
16. Your ?rm’s people keep working for the whole day without their time concerns.
70 O’NEILL, RONDINELLI AND WATTANAKUL
Questionnaire
All your responses to the following questions are strictly con?dential.
Company Name:
Personal Information:
Title Career ?eld (e.g. marketing)
Working years in this current company
Age Education Degree
Sex Male Female
The purpose of this questionnaire is to study organizational behaviors and at-
titudes of management practices. Please read each of the following statements
carefully and circle the number that most represents your opinions. All items
are measured on 7-point agree-disagree scale. It will only take you about 10–15
minutes to ?nish the questionnaire. Thank you for your cooperation.
Strongly Strongly
disagree agree
1. Your ?rm has marketed very many
new products or services within two
years.
1 2 3 4 5 6 7
2. Your ?rm typically adopts a very
competitive posture in dealing with
competitors.
1 2 3 4 5 6 7
3. Your ?rm’s employee participation
and empowerment are very
effective.
1 2 3 4 5 6 7
4. Your ?rm has changed in products or
services dramatically.
1 2 3 4 5 6 7
5. Your ?rm’s top managers have a
strong proclivity for high-risk projects
with chances of very high returns.
1 2 3 4 5 6 7
6. Your ?rm’s employee and manager
communications are very
effective.
1 2 3 4 5 6 7
7. Your ?rm’s top managers favor a
strong emphasis on R&D and
technological leadership.
1 2 3 4 5 6 7
8. Your ?rm’s top managers believe that
bold and wide-ranging acts are
necessary to achieve the ?rm’s
objectives due to the nature of the
business environment.
1 2 3 4 5 6 7
9. Your ?rm’s employee training is very
effective.
1 2 3 4 5 6 7
OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 71
10. Your ?rm’s people often do some extra
jobs which are not really required of
them.
1 2 3 4 5 6 7
11. Your ?rm is very often the ?rst business
to introduce new products/services,
administrative techniques, operating
technologies, etc.
1 2 3 4 5 6 7
12. Your ?rm typically adopts a bold and
aggressive posture in order to maximize
the probability of exploiting potential
opportunities when confronted with
decision-making situations involving
uncertainty.
1 2 3 4 5 6 7
13. Your ?rm’s performance appraisal is
very effective.
1 2 3 4 5 6 7
14. Your ?rm’s people keep working harder
than the other competitors.
1 2 3 4 5 6 7
15. Your ?rm’s compensation is very
suitable.
1 2 3 4 5 6 7
16. Your ?rm’s people keep working for the
whole day without their time concerns.
1 2 3 4 5 6 7
17. Other comments on management
practices that in your opinion are the key
determinants of your ?rm’s performance:
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