Change In Transition Economies Research Articles

What determines the institutional change in transition economies?

What determines the institutional change in transition economies?

Reexamining Critical Success Factors for Enterprise System Adoption in Transition Economies: Learning from Polish Adopters

This study's goal is to investigate and better understand critical success factors (CSFs) for enterprise system (ES) adoption in transition economies. The research setting embraces ES adoptions conducted in Poland, a transition economy from Central and Eastern Europe. On the basis of research conducted among 144 ES adopters, an analysis based on grounded theory revealed 20 CSFs grouped into 4 categories. Next, a stakeholder analysis of the discovered CSFs has been performed. The achieved results were compared with the findings of prior research conducted in developed and developing economies. The main results imply that the most important CSFs for ES adoption in Poland are connected with people playing varied roles in the implementation project. The findings also suggest that people-related considerations will replace finance- and IT-related issues in the future. Other hypothesized trends include a growing importance of tangible benefits and organizational changes in transition economies.

Structural Change in Transition Economies: Does Foreign Aid Matter?

This paper addresses whether the initial declines in the manufacturing and real wages in transition economies were anything unexpected to justify policy reversal, and whether the “often-recommended” foreign aid would have helped them curb these declines in any significant way. It answers these questions with the help of a two-sector three-factor small open economy model and simulation exercises. It concludes that, given the relative price distortions and the market disequilibria that transition economies inherited from their planning era, the initial declines in their manufacturing and real wages are to be mostly expected. Foreign aid, whose impact is noticeable only when it is in excess of 5% of GDP, does not curb the decline in their real wages in any measurable way and exacerbates the decline in their manufacturing by a few percent.

Entrepreneurship and institutional change in transition economies: The Commonwealth of Independent States, Central and Eastern Europe and China compared

This paper examines the interrelationships between institutional change and entrepreneurship development in countries that until recently were operating under the rules of central planning. The evidence presented in the paper shows important differences in state-entrepreneurship relationships between former Soviet republics, where the slow pace of institutional change and major institutional deficiencies has constrained the development of productive entrepreneurship; Central European countries that are now part of the European Union (EU), where institutional changes associated with accession to the EU are associated with the state becoming an important agent of formal and informal institutional change; and China which presents something of a conundrum, since entrepreneurship has developed rapidly despite major formal institutional deficiencies. Yang's concept of double entrepreneurship is used to explain the so-called Chinese puzzle, where enterprise takes on a socio-political as well as a purely economic dimension. The paper demonstrates the complexity of institutional-entrepreneurship relationships, illustrated with examples of how entrepreneurs can influence institutional change even in hostile institutional environments.

Natural gas regulation in transition: the effects of geopolitics and prerequisites for change in transition economies

Natural gas has become a geopolitical concern in Europe. Transition economies have embarked on very different paths in using and regulating natural gas. Some countries, like Russia, have undertaken few market-oriented reforms of their natural gas sectors. The new European Union member states have pursued broader reforms. These differences often lead to tension. Two factors seem particularly important as prerequisites for major natural gas reforms. The first is energy efficiency, since low energy efficiency can make energy reforms socially and economically difficult. The second is corruption: vested interests and a captive state can play powerful roles in inhibiting reform.

A Comparative Analysis of Productivity Growth, Catch-Up, and Convergence in Transition Economies

The paper examines the macroeconomic performance of 25 transition economies using a comparable dataset. In order to see whether the transition to the market based economy increased economic efficiency, technical progress, and total factor productivity, we estimate efficiency measures for the East European, Baltic, and other former Soviet Union Countries using the stochastic frontier analysis (SFA) and the data envelopment analysis (DEA) as a confirmatory analysis. According to the SFA estimates, the average annual efficiency level for the 25 transition economies is 0.548 and the average annual rate of growth in technical efficiency is 1.8 percent over the 1991-2000 period. The average annual technical change in transition economies is -4.3 percent over the period examined. That is, there is no technological progress, but over the whole period there has been a technological regress. The sum of the rate of change in technical efficiency and technical change implies a 2.5 percent decline in the average annual total factor productivity. These results suggest that, on average, chance in technical efficiency is outweighed by the technical regress.

Leadership, administrative heritage and absorptive capacity

PurposeThe purpose of this paper is to identify critical success factors for the management of change in transition economies.Design/methodology/approachFour longitudinal case studies of Russian oil companies covering a ten‐year period from 1995, based on 71 in‐depth interviews. Examines organisational change from a resource‐based and organisational learning perspective.FindingsExplains how top managers firstly, break with administrative heritage to increase absorptive capacity and secondly, leverage administrative heritage for rapid implementation of change. Intra‐ and cross‐case analyses demonstrate that absorptive capacity increases and organisational change occurs where the top management team has radically different skills and mindsets from the dominant logic of the post‐Soviet organisation, an entrepreneurial orientation and the capability to drive through change due to a top‐down management style.Research limitations/implicationsThe research is restricted to four case studies. However, the critical success factors identified could apply to any large, conservative and bureaucratic organisation undergoing change. This represents an interesting avenue for research on organisational turnaround in the West.Practical implicationsAn understanding of the critical success factors for dealing with administrative heritage will assist managers in transition economies and in turnaround situations in the West.Originality/valueThe speed of change in the Russian oil industry provided a unique setting for research into organisational change in transition economies. On the basis of cross‐case analyses, a new theoretical framework was developed to explain the change process.

Managing organizational change in transition economies

PurposeThe purpose of this paper is to offer a personal reflection on the Romanian post‐communist transition, using an organization theory‐based analytic framework combined with the author's personal experience.Design/methodology/approachThe paper is based on the authors' experience in Romania during the transition (policy implementation, evaluation projects, and research). The experience is captured using concepts from institutional, organizational change, and critical theories.FindingsTransition economies offer unique settings for building theory that describes the dynamic events situated at the boundary between institutions and organizations. Although this potential has yet to be realized, knowledge can be captured by using less conventional research designs, a critical perspective, and creative concepts and approaches.Research limitations/implicationsThe paper has potential implications for researchers conducting studies in transition economies, or in otherwise dynamic environments. The author provides several examples that are not well explained by existing frameworks and models, and offers suggestions for possible designs that might be more appropriate in transition settings.Practical implicationsBoth autochthonous and foreign practitioners might find the examples and the analytic framework informative and applicable to the problems they are faced with in transition economies.Originality/valueThe paper combines conventional and critical theory‐based approaches to the study of the Romanian transition. Authors interested in research at the institution – organization boundary can consider some of the suggested for formalizing their research.

Extracting Leading Indicators of Bank Fragility from Market Prices - Estonia Focus

Banking reform has proved to be one of the most problematic elements of economic transition in central and Eastern Europe. Therefore the paper considers the development of the Estonian banking sector and derives individual banks' fragility scores during transition. To this end we use option-based tools and equity prices to estimate distance-to-default measures of banks' distress probabilities. Overall, the results suggest that market indicators are moderately useful for anticipating future financial distress and rating changes in transition economies. The implication for an effective supervisory framework is to use a plurality of risk scores when assessing bank vulnerability.

It is Important to Organise the Disorganised

The article examines the significance of institutional quality for economic performance during transition. Institutions are the rules of the game. In any economy the most important institutions are the legal system, the state, the structure of the financial system and the system of international relations. The process of economic transition in Central and Eastern Europe was mainly a process of massive institutional changes which were spurred by economic causes and also themselves had significant economic consequences. The article examines the institutional changes in transition economies and shows that institutions matter. The first decade of transition gave the impression that it is important to build as good institutional framework as possible and as fast as possible. But today, with the quick growth of some South Eastern European economies, it seems not to hold that the better the institutions the better the economic performance, but rather to (at least) establish some satisfactory level of institutional quality is important to resume growth, which can also be assisted by foreign capital.

Modeling institutional change in transition economies

A particular aspect of path dependence and change is discussed here. To understand institutional change in transition economies, a game theoretic model that combines economic changes with changes in the social values system is proposed, in a mechanism where the two changes are interdependent and influence one another in a repeated game. The speed of change in this dynamic model is the result of two rates, the “learning rate”, how fast agents are learning to play the new “capitalist” game and the so-called “going-over rate”, the mix in every time period of economic agents playing according to the “old” communist values and those playing according to the “new” capitalist values.

Institutional Change in Transition Economies by M. Cuddy R. Gekker (review)

126 SEER, 82, I, 2004 insights into the roots of rising conflicts in Central Asia offering democratic reforms as a solution, whilst calling for the further engagement of the internationalcommunity in the region. The Ferghana Valley was, for more than three hundred years, a single politicalunit of the Kokand Khanat, and is now home to an ethnic population often million, sharedbyUzbekistan,KyrgyzstanandTajikistan.The Ferghana Valley is also a heartland for Islam, and should be considered the most unstableregion in CentralAsia, severelyaffectedby poor social and economic conditions. The final three essaysof the volume examine the overallsituation of CentralAsia, the FerghanaValleyand Tajikistan,emphasizingthe need for democratic and economic expansion, along with regional and international cooperation in coping with poverty and Islamicmilitancyin the region. The symbols of personal rule and totalitarian domination across Central Asia are easy to distinguish.In such circumstancesthere is little opportunity for the creation of democratic civil society. Post-September i i, the complete eradication of conflict in this region is almost impossible, even with the commitment of domesticand internationalauthorities.Nevertheless,thevalue of a simultaneouseffortby these agencies should not be underestimated. Searchingfor PeaceinEurope andEurasiasuccessfullyoutlines the realitiesand experiences of conflict prevention and peacebuilding in Europe and Eurasia. The volume provides an interestingand comprehensive surveywhich is rich in detail. It is a usefulresourcefor anyone seekingto gain an understandingof the normsand processesof conflictresolutionin internationalrelations. lTniversity ofLeeds H. VAEZ Cuddy, M. and Gekker, R. (eds). Institutional Change in Transition Economies. Transition and Development. Ashgate, Aldershot and Burlington, VT, 2002. XXiX + 227 pp. Tables. Notes. Bibliography. Index. [42.50. THEanalysisof institutionsin transitioneconomies isproblematic.On the one hand, liberalization processes require the role of the state to be limited, particularly in former socialist countries, providing the basis for transition from state-controlled to market-driven economies. On the other hand, however, 'marketfailure'theorysuggeststhat economic development mustbe accompanied by properly regulated, active institutions, and thus should not be excluded from the process. The volume brings together ten papers originallygiven at a conference at the National University of Ireland in 2000. Its focus is primarilyon Russia, although there is some coverage of other transition economies. The book opens with an analysis of what Richard Ericson describes as 'industrial feudalism' in the former Soviet Union (p. 22). He argues that instead of moving forwardinto anlopen economy, Russiais in dangerof returningto the familiar,restrictivepracticesestablishedunder Communist rule, and that this presentsits most difficultchallenge. Leading on from this,Jim Leitzel looks at another limiting factor in Russia's economic development: corruption and organized crime. Leitzel comparesthe Russian and Italianmafias,but argues that Russia's problem is rooted in its former Communist institutions,rather REVIEWS 127 than being a by-product of transition. Essays by Clifford Gaddy and Barry Ickes, and Vladimir Mau examine Russia's 'virtual economy' and the economic impact of itsoil industryrespectively. The next section of the book concentrateson taxation, with interestingand ambitious essays by Michael Alexeev and Ruvin Gekker which attempt to apply differing models to Russia's tax system. A broader-ranging essay by Mark E. Schaffer and Gerard Turley measures the effectiveness of tax administrationin twenty-five ex-socialist countries between i99I and 1997. Their findings suggest a positive relationship between the effectiveness of value-addedtax collection and economic progress,althoughthisdidnot apply in the case of corporateincome tax. The book's final section includes two essays on the economic condition of Russia'sregions. Era Dabla-Norris and Shlomo Weber formulatea model to measure the extent of regional disparitieswhich they conclude are becoming greater and more resistantto the equalizing force of federal transferpolicies. Michael P. Cuddy and Sarah Callanan present a short overview of the basic conceptsofregionaldevelopmenttheoryandsuggestpolicyrecommendations, based on theirmethodological analysis. This is a useful and interesting book which highlights the importance of institutionsin Russia'seconomic transition,at the same time providinga basis for the examination of institutions in other, and not necessarily ex-socialist, countries. ItFarsaw School ofEconomics K. PIECH ...

Book Reviews

Contents: A.P. Brief, J.P. Walsh, D. Denison, Managing Organizational Change in Transition Economies. Part I: Rethinking the Organizational Environment. L.A. Keister, Insider Lending and Economic Transition: The Structure, Function, and Performance Impact of Finance Companies in Chinese Business Groups. D. Guthrie, The Emergence of Market Practices in China's Economic Transition: Price Setting Practices by Shanghai's Industrial Firms. P.W. Beamish, A. Delios, Japanese Investment in Transitional Economies: Characteristics and Performance. D. Candea, R.M. Candea, Understanding and Managing Challenges to the Romanian Companies During Transition. L.P. King, Strategic Restructuring: Making Capitalism in Post-Communist Eastern Europe. C. Vlachoutsicos, Russian Communitarianism: An Invisible Fist in the Transformation Process of Russia. Part II: Creating New Organizational Systems and Structures. A. Yeung, K. DeWoskin, From Survival to Success: The Journey of Corporate Transformation at Haier. M. Dierkes, X. Zhang, Corporate Transformation and Organizational Learning--The People's Republic of China. K.L. Newman, Radical Versus Incremental Change: The Role of Capabilities, Competition, and Leaders. M. Weinstein, Emergent Compensation Strategies in Post-Socialist Poland: Understanding the Cognitive Underpinnings of Management Practices in a Transition Economy. I.L. Zinovieva, Why Do People Work If They Are Not Paid? An Example From Eastern Europe. J. Feher, M. Szigeti, The Application of Change Management Methods at Business Organizations Operating in Hungary: Challenges in the Business and Cultural Environment and First Practical Experiences. I.B. Gurkov, Organizational Changes in Russian Industrial Enterprises: Mutation of Decision-Making Structures and Transformations of Ownership. Part III: Integrating Organizational Cultures. N. Lynton, Human Resource Management in the Restructuring of Chinese Joint Ventures. M.D. Kennedy, A Cultural Analysis of Homosocial Reproduction and Contesting Claims to Competence in Transitional Firms. S. Ferencikova, Foreign Direct Investment as a Factor of Change: The Case of Slovakia. I. Perlaki, Building Successful Companies in Transition Economies. R.A. Roe, I.L. Zinovieva, E. Dienes, L.A. ten Horn, Firm Ownership and Work Motivation in Bulgaria and Hungary: An Empirical Study of the Transition in the Mid-1990s. Part IV: Conclusion. D. Denison, Summary: Building an Agenda for Research and Practice.

The role and impact of monetary policy in CEFTA countries

An effective monetary policy requires a stable relationship between the money stock and macroeconomic variables such as output, price level, interest rates, and exchange rates. A dynamism of structural changes in transition economies of eastern Europe makes such stability far from obvious. This is reflected in the fact that a stable demand for money function cannot be estimated even for the most advanced East European countries: Poland, Hungary, and the Czech Republic. Empirical analysis of the relationship between nominal variables indicates rather limited relationships as well. Therefore, all that can be expected from monetary policy in eastern Europe is not to be too tight so as to starve the economy of needed liquidity and not to be too loose so as to ignite inflation.

ORGANIZATIONAL ADAPTATION IN TRANSITION ECONOMIES: A STUDY OF THE CENTRAL EUROPEAN BANKING INDUSTRY.

This paper addresses how organizations adapt to environmental changes in transition economies. Drawing on institutional theory, we explore the organizational processes at ten banks in three Central European countries, the Czech Republic, Hungary, and Slovenia. We describe how bank executives perceived and dealt with institutional changes. We examine the particular effects of inherited problems and new market institutions on organizations. The study illustrates the role of various constituents in organizational adaptation. In discussing the conclusions of the study, our emphasis is placed on the changes in institutional environments in transition economies.

Leading radical change in transition economies

New managers in central and east European companies were faced with daunting challenges to manage their companies through the transition from central planning to competition and to change their companies radically so that their firms would be capable of competing effectively. Based on the analysis of six longitudinal company cases from the Czech Republic, I identify the key skills that new managers had to have and where they were able to obtain those skills. The seeds of current managerial expertise could often be found in experiences under central planning, despite the fact that central planning more generally rewarded behaviors that were counterproductive in market‐based competition. Results are discussed in the context of leading radical organizational change.

Foreign direct investment in Central and Eastern Europe

Foreign direct investment is an important catalyst for the economic changes in transition economies offering host countries external resources, technology, management, and access to foreign markets. It is therefore high on the public policy agenda in the transition economies of Central and Eastern Europe and the newly independent states of the former Soviet Union and figures prominently among assistance activities at the bilateral and multilateral level. This article analyses the legal and institutional framework and the economic performance of foreign direct investment in fourteen European economies in transition at the beginning of 1993.