Abstract
Abstract This article aims to analyze the current theory of managing the State-owned Enterprises (SOEs) with the use of Single Ownership Entity and to suggest alternative solution, particularly, managing SOEs with Corporate Social Responsibility (CSR). After a thorough review of the literature analyzing the connection between CSR and SOEs, the article states that there are important missing points in the previous research and academic debate: (1) no scholar directly emphasizes CSR as the answer to the problems of SOEs; (2) there is no research conducted on the comparison of Single Ownership Entity and CSR, evaluating their potential positive effects on SOEs; (3) accordingly, academic literature does not discuss the ways and tools of implementation of CSR in SOEs. The article aims to fill this gap and emphasize the links between CSR and SOEs. Due to the challenges, goals and ownership structure of SOEs, CSR is the most suitable corporate governance model for SOEs and its effective implementation is more vital than the execution of recommendations on creating the single ownership entity suggested by international organizations. The research question of the article is to compare managing the SOEs with the use of the CSR model (Alternative Theory) to single ownership mechanism established by OECD (Current Theory) and find out whether CSR is a better solution to the existing problems of SOEs. Finally, the article discusses the institutional context of SOEs based on the examples of the countries of Eastern and Central Europe where the problems regarding SOEs remain remarkable; presents the balance of interests of stakeholders’ in SOEs in connection to Alternative and Current Theories; and combines analysis, research and recommendations of international organizations and academia towards the problems of SOEs.
Highlights
State-owned Enterprises (SOEs) are an intensely debated issue in all countries
It can be concluded that in comparison to Single Ownership Entity (Current Theory), Corporate Social Responsibility (CSR) (Alternative Theory) has a number of superiorities, which—unlike the Current Theory—directly address the problems of SOEs: a) Violation of Labor Rights is a serious problem in SOEs; the Current Theory cannot address and solve the problem
That it is mostly used for PR purposes, still CSR remains probably the only corporate governance model that deals with environmental protection as a top goal for the corporation
Summary
State-owned Enterprises (SOEs) are an intensely debated issue in all countries. SOEs are present in various spheres of economy such as heavy industry, natural resources (Goldeng et al, 2008), public services, railway, airports, and even banking (OECD Guidelines, 2015). The 20th century was very rich in developing different trends of foundation, operation, and management of SOEs. SOEs emerged primarily as vehicles for state intervention in cases where markets were perceived to fail. Economists have long argued that state ownership can be justified when market failures are present, and when other regulatory devices are inefficient (Cuervo-Cazzura et al, 2014). State ownership in many countries was motivated by more than traditional market failures. Nationalization was undertaken to foster economic development through industrialization, to limit foreign ownership, and 2020 licensee Sciendo. This work is licensed under the Creative Commons BY 4.0 License
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