Formal and informal governance mechanisms in state-owned enterprises

Abstract

PurposeThe purpose of this paper is to shed light on the formal and informal governance mechanisms of state-owned enterprises operating in a post-transitional economy of Poland.Design/methodology/approachThe study combines legal analysis of Polish regulations in force, review of literature on the Poland’s institutional legacy, and a statistical analysis, based on a data set of 204 management board members, 180 external supervisory board members, and 114 state officials supervising Polish SOEs in 2011.FindingsLegally designed relationships among the management board, supervisory board, and the state treasury, represented by the minister and ministry officials, constitute the key formal governance mechanisms in Polish SOEs. They are, however, complemented by relationships between SOEs and their stakeholders and distorted by other informal phenomena, including informal noninstitutional behavior, mechanisms grounded in cognitive and normative institutions, and perception of the relationship structure by the actors themselves. As a result, key corporate governance actors differ in their perception of governance influences upon SOEs.Practical implicationsThis study contributes to policymaking by helping authorities gain a better understanding of the governance challenges in SOEs.Originality/valueThis paper is one of the first and few empirical studies investigating the issue of formal and informal governance mechanisms in SOEs in post-transitional economies of CEE.