nach oben

Journal of Management and Governance

Erschienen in:

01.08.2011

The role of firm ownership on internationalization: evidence from two transition economies

verfasst von: Bersant Hobdari, Aleksandra Gregoric, Evis Sinani

Erschienen in: Journal of Management and Governance | Ausgabe 3/2011

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

This paper investigates how different types of owners influence the extent of firm internationalization, measured by the share of firm exports in total sales. The results of the analysis carried out using firm level data of Estonian and Slovenian firms, show that the firms under the control of the insider owners are, on average, more internationalized. State control, on the other hand, hampers internationalization efforts. Further, more productive firms, larger firms, more capital-intensive firms and those with high level of investment in both fixed capital and R&D are more successful in internationalization process. Finally, high market share also leads to increased internationalization through exports as firms seek to expand in foreign markets after having dominated the domestic ones.

Vorheriger Artikel Shareholder activism among portfolio managers: rational decisions or 15 minutes of fame?

Nächster Artikel Board size and corporate performance: the missing role of board leadership structure

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Nur mit Berechtigung zugänglich

With the term “controlling owner” in this paper we mean the owner that aggregately holds more shares than any other owner type within the same firm.

Corporate governance is primarily concerned with the resolution of the collective action problem among investors. Five different mechanisms that mitigate this problem have been proposed in the literature: (1) partial concentration of ownership and control in the hands of one or a few large investors; (2) hostile takeovers and proxy voting contests; (3) delegation and concentration of control in the board of directors; (4) alignment of managerial interests with investors through executive compensation contracts; and (5) clearly defined fiduciary duties for CEOs together with class-action suits that either block corporate decisions that go against investors’ interests, or seek compensation for past actions that have harmed their interests (Buck et al. 2003).

Under the previous communist and socialist regimes, the firms suffered from much inefficiency in the production, financing and governance, such as outdated capital and technology, lack of managerial expertise, lack of competition, labor hoarding and soft budget constraints.

In the transition literature, firm restructuring denotes the whole process undertaken by enterprises as they adapt for survival and success in a market economy (Djankov and Murrell 2002).

We thank an anonymous reviewer for pointing this out to us.

Also, empirical evidence in general indicates that outsiders, including banks, may be a priori reluctant to invest financial funds in the insider owned firms, due to the fear that the insider controlled firms may maximize income per worker or collective utility rather than the return on firm investments.

In the meta-analysis on the privatization studies in transition, Djankov and Murrell (2002) for instance report that privatization to outsiders had a large positive effect on firm restructuring in the Eastern Europe, while no significant effect has been observed with regards to insider owners (employees and managers).

Accordingly, their previous knowledge regarding international markets and foreign consumer preferences is invaluable (IMF et al. 1991; Meyer 2001).

We check for inconsistencies using different criteria. For instance, a firm’s capital at the beginning and end of each year should be positive; sales should be positive; labor cost in a given year should be positive; average employment per year should be positive and equal or greater than 10; investment in new machines and equipment should be non-negative; and the ownership shares should add up to 100.

We count only the owners that are stated with the name and surname; banks, financial institutions, private companies or any other owners that are legal persons (or entrepreneurs) are excluded from the counting.

Since for Estonia we cannot distinguish different types of owners within the remaining outsider owners (i.e., non-financial firms, banks and other financial institutions, privatization funds), we take this as a unified control group.

More on Estonia’s entire privatization process can be found in Mygind (2000).

For theoretical arguments on why managers and employees form coalitions, see Pagano and Volpin (2005). Empirical support to this claim is, among others, provided by Prašnikar and Gregoric (2002).

This approach has been often criticized because it may not take properly into account the presence of dispersed ownership and consequently, may not lead to the optimal typology of ownership forms. However, in the Estonian data in 95% of the cases the dominant owner is also the majority owner. In the remaining 5% of the cases the difference in shares held between the dominant and the second largest owner is large, making the dominant owner highly influential in decision-making. Coalition building confirms similar pattern also for Slovenia (Brezigar et al. 2006).

According to the European Commission definition, an SME is a company with fewer than 250 employees and, in addition, an annual turnover of up to 50 million Euro and less than 43 million of assets.

The estimation of Heckman two-step selection model is done only to obtain the parameter to account for selection bias in the main specifications. As such, the results obtained from the selection model are not reported and discussed separately. However, they are available from the authors upon request.

For more, see Prašnikar and Svejnar (1991).

Andersson, S. (2000). The Internationalization of the Firm from and Entrepreneurial Perspective. International Studies of Management & Organization, 30(1), 63–92.

Aulakh, P., Masaaki, K., & Teegen, H. (2000). Export strategies and performance of firms from emerging economies: Evidence from Brazil, Chile and Mexico. Academy of Management Journal, 43(3), 342–361.CrossRef

Autio, E., Sapienza, H. J., & Almeida, J. G. (2000). Effects of age at entry, knowledge intensity, and imitability on international growth. Academy of Management Journal, 43(5), 909–924.CrossRef

Aw, B.-Y., Chung, S., & Roberts, M. J. (2000). Productivity and turnover in the export market: Micro-level evidence from the Republic of Korea and Taiwan. The World Bank Economic Review, 14(1), 65–90.

Beatty, R., & Zajac, E. (1994). Managerial incentives, monitoring, and risk bearing: A study of executive compensation, ownership, and board structure in initial public offerings. Administrative Science Quarterly, 39, 313–335.CrossRef

Bell, J., Crick, F., & Young, S. (2004). Small firm internationalization and business strategy. International Small Business Journal, 22(1), 23–56.CrossRef

Bernard, A. B., & Jensen, B. J. (1999). Exceptional exporter performance: Cause, effect, or both? Journal of International Economics, 47(1), 1–25.CrossRef

Bernard, A. B., & Jensen, B. J. (2004). Why some firms export. Review of Economics and Statistics, 86, 561–569.CrossRef

Blanchard, O., & Aghion, P. (1996). On insider privatization. European Economic Review, 40(3–5), 759–766.CrossRef

Brezigar, M. A., Gregoric, A., & Zajc, K. (2006). Firm or private value: What is behind the creation of multiple blockholder structures? Institute for macroeconomic analysis and development working paper No. 11, Ljubljana, Slovenia.

Buck, T., Filatotchev, I., Wright, M., & Demina, N. (2000). Exporting activity in transitional economies: An enterprise level study. Journal of Development Studies, 37(2), 44–66.CrossRef

Buck, T., Filatotchev, I., Wright, M., & Demina, N. (2003). Insider ownership, human resource strategies and performance in a transition economy. Journal of International Business Studies, 34(6), 530–549.CrossRef

Collinson, S., & Houlden, J. (2005). Decision-making and market orientation in the internationalisation process of small and medium-sized enterprises. Management International Review, 45(4), 413–436.

Cvelbar, L., Domadenik, P., & Prašnikar, J. (2008). Performance, ownership, and management turnover in privatized Slovenian companies. Eastern European Economics, 46(4), 75–89.CrossRef

Denis, D., Denis, D., & Sarin, A. (1999). Agency problems, equity ownership, and corporate diversification. Journal of Finance, 52, 135–160.CrossRef

Denis, D. J., Denis, D. K., & Yost, K. (2002). Global diversification, industrial diversification, and firm value. Journal of Finance, 57, 1951–1961.CrossRef

Djankov, S. (1999a). Ownership structure and enterprise restructuring in six newly independent states. Comparative Economic Studies, 41(1), 75–95.CrossRef

Djankov, S. (1999b). The restructuring of insider-dominated firms: A comparative analysis. Economics of Transition, 7(2), 467–479.CrossRef

Djankov, S., & Murrell, P. (2002). Enterprise restructuring in transition: A quantitative survey. Journal of Economic Literature, 40(3), 739–792.CrossRef

Domadenik, P., Prašnikar, J., & Svejnar, J. (2008). Restructuring of Firms in transition: Ownership, institutions and openness to trade. Journal of International Business Studies, 39, 725–746.CrossRef

Dunning, J. H. (1988). The eclectic paradigm of FDI: A restatement and some possible extensions. Journal of International Business Studies, 19(1), 1–31.CrossRef

Earle, J., & Estrin, S. (1996). Employee ownership in transition. In R. Frydman, C. W. Gray & A. Rapaczynski (Eds.), Corporate Governance in Central Europe and Russia. Central European University Press.

Estrin, S., Hanousek, J., Kočenda, E., and Svejnar, J. (2009). Effects of privatization and ownership in transition economies. IPC Working Paper No. 30. International Policy Center, Gerald R. Ford School of Public Policy, University of Michigan.

Fernandez, Z., & Nieto, M. J. (2006). Impact of ownership on the international involvement of SMEs. Journal of International Business Studies, 37(3), 340–351.CrossRef

Filatotchev, I., Demina, N., Buck, T., & Wright, M. (2002). Exporting activity in transitional economies: An enterprise-level study. In O. Morrissey & I. Filatotchev (Eds.), Globalization and trade: The implications for exports from marginalized economies (pp. 44–66). London: Frank Cass.

Filatotchev, I., Dyomina, N., Wright, M., & Buck, T. (2001). Effects of post-privatization governance and strategies on export intensity in the former Soviet Union. Journal of International Business Studies, 32(4), 853–871.CrossRef

Filatotchev, I., Isachenkova, N., & Mickiewicz, T. (2007). Corporate governance, managers’ independence, exporting, and performance of firms in transition economies. Emerging Markets Finance and Trade, 43(5), 62–77.CrossRef

Filatotchev, I., Jindra, B., & Stephan, J. (2008). Ownership structure, strategic controls and exporting of foreign-invested firms in transition economies. Journal of International Business Studies, 39(7), 1133–1148.CrossRef

Filatotchev, I., Wright, M., & Bleaney, M. (1999). Privatization, insider control and managerial entrenchment in Russia. Economics of Transition, 7, 481–504.CrossRef

Filatotchev, I., Wright, M., Uhlenbruck, K., Tihanyi, L., & Hoskisson, R. E. (2003). Governance, organization capabilities, and restructuring in transition economies. Journal of World Business, 38, 331–347.CrossRef

George, G., Wiklund, J., & Zahra, S. (2005). Ownership and the internationalization of small firms. Journal of Management, 31(2), 210–233.CrossRef

Grosfeld, I., & Hashi, I. (2007). Changes in ownership concentration in mass privatized firms: Evidence from Poland and the Czech Republic. Corporate Governance an International Review, 15(40), 520–534.CrossRef

Heckman, J. (1981). Heterogeneity and state dependence. In S. Rosen (Ed.), Studies in labor markets. Chicago: University of Chicago Press.

Hitt, M. A., Hoskisson, R. E., Johnson, R. A., & Moesel, D. D. (1996). The market for corporate control and innovation. Academy of Management Review, 39(5), 1084–1118.CrossRef

Hitt, M. A., Tihanyi, L., Miller, T., & Connelly, B. (2006). International diversification: Antecedents, outcomes, and moderators. Journal of Management, 32(6), 831–867.CrossRef

Hoskisson, R. E., Eden, L., Lau, C.-M., & Wright, M. (2000). Strategy in emerging economies. Academy of Management Journal, 43(3), 249–267.CrossRef

IMF, World Bank, OECD, & EBRD. (1991). A study of the Soviet Economy. Paris: OECD.

Johanson, J., & Vahlne, J. E. (1977). The internationalization process of the firm: A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1), 23–32.CrossRef

Jones, D. C., & Mygind, N. (1999). The nature and determinants of ownership changes after privatization: Evidence from Estonia. Journal of Comparative Economics, 27(3), 422–441.CrossRef

Jones, D. C., & Mygind, N. (2000). The effects of privatization on productive efficiency: Evidence from the Baltic Republics. Annals of Public and Cooperative Economics, 71(3), 415–439.CrossRef

Jones, D. C., & Mygind, N. (2002). Ownership and productive efficiency: Evidence from Estonia. Review of Development Economics, 6(2), 284–301.CrossRef

Katsikeas, E., & Skarmeas, D. (2003). Organizational and managerial drivers of effective export sales organizations. European Journal of Marketing, 37, 1723–1745.CrossRef

Krugman, P. (1979). A model of innovation, technology transfer and the world distribution of income. Journal of Political Economy, 87(2), 253–266.CrossRef

Meyer, K. (2001). International business research in transition economies. In T. L. Brewer & A. M. Rugman (Eds.), Oxford handbook of international business (pp. 716–759). Oxford: Oxford University Press.CrossRef

Morgan, R. E., & Katsikeas, C. S. (1997). Theories of international trade, foreign direct investment and firm internationalization: A critique. Management Decision, 35(1), 68–78.CrossRef

Mygind, N. (2000). Privatization, governance, and restructuring of enterprises in the Baltics. OECD, Center for Cooperation With Non-members, Working Paper CCNM/BALT, 6: 1–83.

Oviatt, B. M., & McDougall, P. P. (1994). Toward a theory of international new ventures. Journal of International Business Studies, 25(1), 45–64.CrossRef

Pagano, M., & Volpin, P. (2005). Managers, Workers and Corporate Control. Journal of Finance, 60, 843–870.CrossRef

Peng, M. W. (2003). Institutional transitions and strategic choices. Academy of Management Review, 28(2), 275–296.

Peng, M. W. (2004). Outside directors and firm performance during institutional transitions. Strategic Management Journal, 25(5), 453–471.CrossRef

Pihno, J. C. (2007). The Impact of Ownership. Location-specific advantages and managerial characteristics on SME foreign entry mode choices. International Marketing Review, 24(6), 715–734.CrossRef

Prašnikar, J., & Gregoric, A. (2002). The influence of workers’ participation on the power of management in transitional countries: The case of Slovenia. Annals of Public and Cooperative Economics, 73(2), 269–297.CrossRef

Prašnikar, J., & Svejnar, J. (1991). Workers participation in management vs. social ownership and government policies: Yugoslav lessons for transforming socialist economies. Comparative Economic Studies, 33(4), 27–46.CrossRef

Puffer, S. (1994). Understanding the bear: A portrait of Russia business leaders. Academy of Management Executive, 8, 41–54.CrossRef

Reid, S. D. (1981). The decision-maker and export entry and expansion. Journal of International Business Studies, 12(2), 101–112.CrossRef

Rojec, M., Damijan, J. P., & Majcen, B. (2004). Export propensity of Estonian and Slovenian manufacturing firms. Does foreign ownership matter? Eastern European Economics, 42, 33–54.

Roper, S., Love, J. H., & Higon, D. A. (2006). The determinants of export performance: Evidence for manufacturing plants in Ireland and Northern Ireland. Scottish Journal of Political Economy, 53(5), 586–615.CrossRef

Shleifer, A., & Vishny, R. W. (1994). Management entrenchment: The case of manager-specific investment. Journal of Financial Economics, 25(1), 123–139.CrossRef

Sinani, E., & Hobdari, B. (2008). Export market participation with sunk cost and firm heterogeneity. Applied Economics, doi: 10.1080/00036840802112372.

Tihanyi, L., Johnson, R. A., Hoskisson, R. E., & Hitt, M. A. (2003). Institutional ownership differences and international diversification: The effect of boards of directors and technological opportunity. Academy of Management Journal, 46, 195–211.CrossRef

Uvalic, M. (2006). Employee ownership—Western lessons for the Eastern New EU Member States, in The Pepper III Report: Promotion of Employee Participation in Profits and Enterprise Results in the New Member and Candidate Countries of the European Union.

Wagner, J. (2001). A note of firm size-export relationship. Small Business Economics, 17, 229–237.CrossRef

Titel: The role of firm ownership on internationalization: evidence from two transition economies
verfasst von: Bersant Hobdari
Aleksandra Gregoric
Evis Sinani
Publikationsdatum: 01.08.2011
Verlag: Springer US
Erschienen in: Journal of Management and Governance / Ausgabe 3/2011
Print ISSN: 1385-3457
Elektronische ISSN: 1572-963X
DOI: https://doi.org/10.1007/s10997-009-9112-y

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 3/2011

Corporate governance and stakeholder conflict

Martin Hilb: New corporate governance

Shareholder activism among portfolio managers: rational decisions or 15 minutes of fame?

Becoming the best: by beating or ignoring the best? Toward an expanded view of the role of managerial selection in complex and turbulent environments

Seeking and finding emerging issues in management and governance

The governance of non-profit micro finance institutions: lessons from history

Premium Partner