Public enterprises (PEs) were widely established in industrial countries between the 1930s and 1950s and rapidly expanded among developing countries in the 1960s and 1970s.
This paper conducts a literature review in relation to the three main arguments and sets up a theoretical perspective for the analysis in transition. This paper is arranged as follows: It first reviews the reasons and objectives for the establishment of public enterprises, which is aimed to constitute a part of the basic framework of understanding why PEs were established and where the possible sources of PE problems lie. Secondly, the main theme is developed by examining the debates concerning the mechanisms for the improvement of public enterprise performance. These include three aspects: ownership, competition and management reform. Finally, it reviews labour issues associated with the transformation of public enterprises in transition.
Drawing on the literature review of public enterprises transition, this study found that a broad concept of competition, ownership, management and labour (COML) framework could be essential in guiding a smooth transformation of public enterprises as well as economic transition from plan to market. In this study, the transformation of public enterprises has been more likely to be successful when achieved through a gradual approach, as ownership change has constraints, and preconditions such as supporting institutions, which takes time to establish and function in an emerging new market environment. Moreover, labour interacts with the transformation of public enterprises, especially in the situation where there is a lack of a well-established social security, the consequences for labour from the transformation of public enterprises can be considerable.
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Author: Mei-Xiang Zhou, Kuo-Tai Cheng