engleski

Enterprise Defensive Restructuring: Cross - Country Evidence within Transitional Settings

Firms' restructuring and market adjustment are core issues in both transition and developed countries. However, they are more important for the former countries because they have to make up for delays in development originating in the previous socio-economic system. In countries with emerging markets, a significant number of firms have to be restructured and adjust to the new business environment. Discussion of the possible reasons for underachievement in this regard is of interest to policy-makers, firms' decision-makers, and researchers. This study significantly contributes to the literature comparing the different outcomes of enterprise restructuring (efficient in Slovenia and inefficient in Croatia although both countries started from similar initial conditions). In the early 1990s Slovenia and Croatia successfully implemented macroeconomic reforms. Then, in the second part of 1990s, the establishment and enforcement of a market-oriented legal system with its accompanying institutions became the most important economic goal. Although Croatia inherited the same path dependence, and although it was the most developed reforming country at the beginning of transition, ten years later is substantially lagged behind, with one of the highest unemployment rates among CEE economies. Analysis based on a sample of 1000 Slovenian and 500 Croatian privatised firms, reports that the estimated short run elasticities of labour with respect to wages and sales are very similar in both countries, confirming that firms in both economies have adjusted employment gradually over time in response to exogenous shocks occurring at the beginning of transitions (defensive restructuring). Yet, the strategic response has been much more efficient in the case of Slovenian firms, and one may conclude that main difference between the two economies resides in the extent and efficiency of strategic restructuring. The analysis in Domadenik et al (2003) confirms that Slovenian firms behave similarly to firms in developed economies as regards investment in fixed and soft (training, marketing, R&D) capital.

defensive restructuring, labour demand, transition

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