MGT204 Management of Industrial Relations
Assignment one
Name: Sheemal Artika Nand
ID: s11097242
"The reform of the public sector has become a matter of public policy in developing countries,
World Bank and the Organization for Economic Cooperation and Development (OECD ) the
international transfer agents often observe in promoting reforms, the global reform network has
not been fully portrayed in the public sector.”
"State-owned enterprises (SOEs) play a significant part in the state’s economy as most of the
state’s major companies are in the public sector, major sectors of the economy, includes
fisheries, telecommunications, civil aviation, financial services, trade and power. Given that the
benefits of state-owned enterprises are an important revenue for the state, it is important that the
government generates sufficient returns by investing in SOE’s, although the results of some
SOE’s are satisfactory given the condition of market in which they function, there have been
many companies whose results have deteriorated over time, and the government has had to
provide monetarist support in the form of grants, subsidized loans, assurances, rent subsidies and
others to ensure the continuity of their services business activities."
“The restructuring of SOE has advantages and disadvantages. The transfer of public funds to the
private sector brings more efficiency and profits, especially as competition promotes innovation
and improvement. The disadvantages of restructuring are the reduction of rules and public
revenue. Direct revenue is not provided to state by those organizations that are not owned by the
government, and consumers are also negatively impacted as the restructure gives more freedom
to the private owned entities.
“Many public enterprises were founded, among other things, to create jobs for the masses to
benefit from the results of independence and often as a political movement to obtain the support
of the population. Until recently, public companies still had many employees, which protected
them from the term; High salaries paid, subsidies granted. The terms of employment generally
complied with constitutional and international conditions. Laws on labor that favored the
workers. Long-term and collective employment contracts. Negotiations have guaranteed the job
security of many state workers. These characteristics have led to high labor costs, which limited
employers (managers). The workers didn’t perform to the best to achieve poor performance and
losses in the public sector (Kikeri 1998, Privatization Department 2000). Privatization was
introduced to modify targets and ultimately lower wages and employment levels so that
companies can make profits, generate surpluses for social services financing and mobilize capital
to expand and modernize national economies (1998).”
"In the area of commercial governance, the affiliation amongst proprietorship and performance is
analyzed mainly in the context of conflicting interests between owners and managers and the
problems of" collective action "that arise when the ownership of the company is very disjointed
(Baumol, 1959, p. Berle and Means, 1932, Jensen, 1986, Jensen and Meckling, 1976, Rappaport,
1986) In addition to the structure and concentration of the owners, the identity of the owners can
play an important part in terms of performance. In controlled markets with few competitors,
owners have limited capacity to oversee their managers by comparing their company's
performance and management practices with those of other competing companies particularly
problematic in areas where state bottom have a control position. In the public sector, more
attention is paid to the issues that explain why results may vary between SEE and POE (Boycko
et al., 1996, Grout and Stevens, 2003, Stiglitz, 1988). The different arrangements of the main
agents affect the incentives to be implemented. Stiglitz (1988), distinguishes two types of reward
that effects public property rewards:”
"Individual Incentives: institutional rigidities exist in most countries, which has the capacity of
Public companies need to precise information irregularities between proprietors and directors
through rewarding methods. Structure that restricts the capability to link the salaries of the
administration and the salaries of the employees to the performance (efficiency salaries). Third,
job security has customarily been robust in most industrialized countries than in the private
sector. This may appeal to labors with a solid preference for safety at work. "With less chance of
being terminated, workers can spend less energy on their jobs and therefore have less benefits to
progress well.”
"Organizational Incentives: The marketplaces, and particularly the capital markets, are
continually monitoring the SOPs, and when POE managers use their incomes unproductively, the
market can react by withdrawing capital from the company, control of the company and using its
incomes (internal or external) outside), which replaces directors or definitively closes the
company As described in Megginson and Netter (2001), state-owned companies have weaker
balance sheets that is directly subject to the capital market's disciplinary laws. The question of
whether the closure of an SOE is not off the market but is decided by politics.”
Biblography

Andrews, W. A. and Dowling, M. J. (1998). ‘Explaining performance changes in newly
privatized firms’. Journal of Management Studies, 35, 601–17.

Arens, P. and Brouthers, K. D. (2001). ‘Key stakeholder theory and state owned versus
privatized firms’. Management International Review, 41, 377–94.

Greve, H. R. (2003). Organizational Learning from Performance Feedback: A
Behavioral Perspective on Innovation and Change. Cambridge: Cambridge University
Press.

Venkatraman, N. and Vasudevan, R. (1986). ‘Measurement of business performance in
strategic research. A comparison of approaches’. Academy of Management Review, 11,
801–14.

Vining, A. and Boardman, A. (1992). ‘Ownership versus competition: efficiency in
public enterprise’. Public Choice, 73, 205–39.