Comparative Organizational Performance After Economic Reforms: Evidence From Cuba's Tourist Restaurant Industry

Abstract

This paper examines the performance of Cuba’s private and state-run tourist restaurants following the economic reforms of 2011. The policy reforms made it easier to open private restaurants, and reduced constraints owners/managers faced in hiring workers, obtaining credit, and procuring supplies. Starting around 2013, some state restaurants were turned over to workers to manage, which had the effect of improving performance. State-owned restaurants continued to operate, and state-sector reforms sought to provide incentives for better performance. I compare the pre and post-reform performance of these organizational forms using online ratings and sentiments expressed in user text reviews and find that private restaurants are always rated more highly. I also extract sentiments about aspects of the restaurant experience, and find that where state restaurants lag most is in service quality. A thriving private sector had the effect that state-owned restaurants also improved after reforms, with the improvement coming primarily from better service.