Organisational status and efficiency: the case of the Spanish SOE “Paradores”

Abstract

PurposeThe aim of this paper is to provide new evidence on the effect of changes in public enterprises' (PEs) management on their economic performance.Design/methodology/approachThe approach is case study type and relies on comparative efficiency literature. The paper identifies relevant changes in the organisational status of a large state‐owned group during a period of 20 years; next it measures its annual efficiency indicators, and then evaluates to what extent the observed changes in economic performance can be attributable to the corresponding management reforms carried out.FindingsIt is found that the “corporatisation” (the public entity becoming a limited company) did not produce a significant improvement in its economic performance, even though the change involved a substantial increase in the company's autonomy. This is a finding which is contrary to what is expected from the reading of business economics literature, since corporatisation is considered to be one of the most relevant changes in organisational status of a PE. In contrast, the second relevant organisational change here analysed (1996) when both principal and agent (CEO) were replaced, appears to have really produced an improvement in efficiency indicators. Therefore, the change of both principal and agent seems to have been a determining element to put into effect the possibilities of more company autonomy which were established five years earlier, and including in these possibilities more freedom on output pricing policies.Research limitations/implicationsWhen analysing performance improvements brought about by a change in organisational status of a PE, a maturing period should be taken into account, for company efficiency to actually improve. Besides, for longitudinal assessment of company efficiency aimed at evaluating an “event's impact”, it would be convenient to rely more on economic efficiency indicators than on productive efficiency indicators if we are concerned with company competitiveness.Practical implicationsBetter knowledge of the conditions for a PE's organisational status change should actually be effective in order to improve its efficiency. As one relevant condition, we argue that a given time span should be allowed for some changes in the attitudes and practices of the public company managers as far as the ways of managing and running the company are concerned.Originality/valueThis paper adds to the comparatively scarce literature available of in‐depth longitudinal analysis of the impact of management reforms on PEs, and it is the first in‐depth study of the impact of organizational status changes on efficiency of a large Spanish PE which still pertains to the public sector.