1/98 - Rainer Hampp Verlag
1/98 - Rainer Hampp Verlag
1/98 - Rainer Hampp Verlag
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Journal for East European Management Studies (JEEMS)<br />
Editor-in-Chief/Herausgeber: R. Lang, TU Chemnitz<br />
Editorial Board/Herausgeberrat: E. Dittrich, Universität Magdeburg<br />
M. Dobák, Budapest Univ. of Econ. Sciences<br />
U. Gehmann, Universität-GH Wuppertal<br />
G. Hollinshead, Bristol Business School<br />
C. Morgenstern, TEQ GmbH Chemnitz<br />
I. Novy, University of Economics Prague<br />
S.A. Sackmann, UdB München<br />
D. Wagner, Universität Potsdam<br />
Coordinator/Koordinator: F. Rudolf, TU Chemnitz<br />
Corresponding members/Mitarbeiterkreis:<br />
G. Bagijev, University of Econ. & Fin. St. Petersburg<br />
C. Baitsch, TU Chemnitz<br />
M. Becker, Universität Halle-Wittenberg<br />
J. Belak, University of Maribor<br />
M. Buble, University of Split<br />
E. Dülfer, Universität Marburg<br />
S.G. Echevarria, Universidad de Alcala Madrid<br />
V. Edwards, Buckinghamshire College<br />
J. Erpenbeck, Max-Planck-Institut Berlin<br />
F. Ettrich, Päd. HS Erfurt/Mühlhausen<br />
M. Gaitanides, UdB Hamburg<br />
B. Grancelli, Universitá di Trento<br />
J. Hentze, TU Braunschweig<br />
D. Holtbrügge, Universität Dortmund<br />
M. Ignatov, Bulgarian Academy of Science<br />
Z. Ilmete, University of Riga<br />
G. Ionescu, Western University Timisoara<br />
D. Ivanov, Berlin<br />
J. Jezak, University of Lodz<br />
N. Kailer, Ruhr-Universität Bochum<br />
K. Lindert, TU Braunschweig<br />
J. Liouville, Université R.S. Strasbourg<br />
S. Llaci, University of Tirana<br />
F. Luthans, University of Nebraska Lincoln<br />
C. Mako, Hungarian Academy of Science Budapest<br />
M. Maly, University of Economics Prague<br />
W. Maslow, Lomonossov University Moscow<br />
M. Mathiopoulos, Hannover<br />
W. Mayrhofer, Wirtschaftsuniversität Wien<br />
S. Michailova, Copenhagen Business School<br />
D. Nesterova, Gorky State University of Ekaterinburg<br />
R. Nurmi, Turku School of Economics<br />
P. Pawlowsky, TU Chemnitz<br />
D. Pucko, University of Ljubljana<br />
R. Schmidt, Universität Jena<br />
G. Schreyögg, FU Berlin<br />
W. Schüler, Universität Magdeburg<br />
L. Sekelj, University of Beograd<br />
T. Steger, TU Chemnitz<br />
B. Stieler-Lorenz, a&o research Berlin<br />
C. Stojanov, Universität Saarbrücken<br />
L. Suchodojeva, University of Nishnij Novgorod<br />
R. Üksvärav, University of Tallinn<br />
H. Wächter, Universität Trier<br />
R. Whitley, Manchester Business School<br />
G. Zaitsev, University of Econ. & Fin. St. Petersburg<br />
K. Zalai, University of Economics Bratislava<br />
Address:<br />
JEEMS, Postfach 964, 09107 Chemnitz<br />
Tel.: +49 371 531 4156, Fax: +49 371 531 3<strong>98</strong>7, E-Mail: f.rudolf@wirtschaft.tu-chemnitz.de
Journal for East European Management Studies (ISSN 0949-6181)<br />
The Journal for East European Management Journal (JEEMS) is published four<br />
times a year. The subscription rate is DM 78 for one year (including value added<br />
tax). Subscription for students is reduced and available for DM 39 (including<br />
value added tax). The annual delivery charges are DM 6. Cancellation is only<br />
possible six weeks before the end of each year.<br />
The contributions published in JEEMS are protected by copyright. No part of<br />
this publication may be translated into other languages, reproduced, stored in a<br />
retrieval system or transmitted in any form or by any means, electronic,<br />
magnetic tape, photocopying, recording or otherwise without permission in<br />
writing from the publisher. That includes the use in lectures, radio, TV or other<br />
forms.<br />
Copies are only permitted for personal purposes and use and only from single<br />
contributions or parts of them.<br />
For any copy produced or used in a private corporation serving private purposes<br />
(due to §54(2) UrhG) one is obliged to pay a fee to VG Wort, Abteilung Wissenschaft,<br />
Goethestraße 49, 80336 München, where one can ask for details.<br />
Das Journal for East European Management Studies (JEEMS) erscheint 4x im<br />
Jahr. Der jährliche Abonnementpreis beträgt DM 78,- inkl. MWSt.<br />
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Versandkosten betragen DM 6,- pro Jahr. Kündigungsmöglichkeit: 6 Wochen<br />
vor Jahresende.<br />
Die in der Zeitschrift JEEMS veröffentlichten Beiträge sind urheberrechtlich geschützt.<br />
Alle Rechte, insbesondere das der Übersetzung in fremde Sprachen,<br />
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reproduziert oder in eine von Maschinen, insbesondere von<br />
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Magnettonverfahren oder ähnlichem Wege bleiben vorbehalten. Fotokopien für<br />
den persönlichen und sonstigen eigenen Gebrauch dürfen nur von einzelnen<br />
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Kopie dient gewerblichen Zwecken gemäß § 54(2) UrhG und verpflichtet zur<br />
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80336 München, von der die einzelnen Zahlungsmodalitäten zu erfragen sind.
JEEMS • Volume 3 • Number 1 • 19<strong>98</strong><br />
Editorial<br />
Rainhart Lang 5<br />
Articles<br />
Roger Bennett<br />
First insights into the transfer of marketing know-how from<br />
Western firms to enterprises in Central and East Europe: A<br />
qualitative study 7<br />
Boštjan Zalar<br />
The transformation of companies from the standpoint of<br />
participation rights: The case of Slovenia 26<br />
Ed Clark<br />
Czech enterprises and the multidivisional form: Legitimation,<br />
legacies and structural choice 46<br />
Robin Matthews / Ara Yeghaizarian<br />
Russian Management Style: A Game Theory Approach to<br />
Evaluating Decision Making 64<br />
Book Reviews<br />
Winfried Liedtke<br />
über Heribert Warken: Unternehmenskontrolle und<br />
Finanzmärkte im Transformationsprozeß Osteuropas aus Sicht<br />
der Principal-Agent-Theorie 76<br />
László Lázár<br />
über Mariano R. Viola: Reputationsbildung und Auslandskapital:<br />
Entwicklung der Transformationsländer Ungarn und<br />
Polen 78<br />
Contents<br />
News / Information<br />
Cornelia Kunze 82<br />
Column<br />
Claus Morgenstern<br />
Qualität managen – eine erstrangige Führungsaufgabe 91
JEEMS 1/ 19<strong>98</strong>
Editorial Mission of JEEMS<br />
Objectives<br />
The Journal for East European Management Studies (JEEMS) is designed to<br />
promote a dialogue between East and West over issues emerging from<br />
management practice, theory and related research in the transforming societies<br />
of Central and Eastern Europe.<br />
It is devoted to the promotion of an exchange of ideas between the academic<br />
community and management. This will contribute towards the development of<br />
management knowledge in Central and East European countries as well as a<br />
more sophisticated understanding of new and unique trends, tendencies and<br />
problems within these countries. Management issues will be defined in their<br />
broadest sense, to include consideration of the steering of the political-economic<br />
process, as well as the management of all types of enterprise, including profitmaking<br />
and non profit-making organisations.<br />
The potential readership comprises academics and practitioners in Central and<br />
Eastern Europe, Western Europe and North America, who are involved or<br />
interested in the management of change in Central and Eastern Europe.<br />
Editorial Policy<br />
JEEMS is a refereed journal which aims to promote the development,<br />
advancement and dissemination of knowledge about management issues in<br />
Central and East European countries. Articles are invited in the areas of<br />
Strategic Management and Business Policy, the Management of Change (to<br />
include cultural change and restructuring), Human Resources Management,<br />
Industrial Relations and related fields. All forms of indigenous enterprise within<br />
Central and Eastern European will be covered, as well as Western Corporations<br />
which are active in this region, through, for example, joint ventures. Reports on<br />
the results of empirical research, or theoretical contributions into recent<br />
developments in these areas will be welcome.<br />
JEEMS will publish articles and papers for discussion on actual research<br />
questions, as well as book reviews, reports on conferences and institutional<br />
developments with respect to management questions in East Germany and<br />
Eastern Europe. In order to promote a real dialogue, papers from East European<br />
contributors will be especially welcomed, and all contributions are subject to<br />
review by a team of Eastern and Western academics.<br />
JEEMS will aim, independently, to enhance management knowledge. It is<br />
anticipated that the dissemination of the journal to Central and Eastern Europe<br />
will be aided through sponsoring.
Editorial<br />
Editorial<br />
Two years of JEEMS: A Success story?<br />
JEEMS is now in its third year. Summing up the past two years, one can observe<br />
that the first step in establishing a dialogue between East and West has been<br />
achieved. Thirty six authors from twelve countries have written twenty five<br />
articles for our Journal. A wide range of topics, including market entry strategies<br />
and decision making processes in Central and Eastern European countries, HRM<br />
in joint ventures, comparative management styles in East and West, and cultural<br />
and structural problems of change is represented in the articles.<br />
Country studies include management and transformation in Albania, Bulgaria,<br />
Russia, Hungary, Estonia, Poland, the Czech Republic, Slovenia, Slovakia and<br />
the Ukraine. In the Forum section, interviews have been reported with Peter<br />
Drucker and with young managers from Eastern European countries, as well as<br />
case studies on transformation drawn up by authors from East and West,<br />
accompanied by insider comments.<br />
At the starting point, two years ago, it was difficult to obtain articles for<br />
publication, especially from Central and Eastern European authors. Now it<br />
seems to me that many authors in East and West have recognised that JEEMS is<br />
an interesting medium in which to publish results from empirical studies into<br />
transformation.The review process has guaranteed the increasing quality of the<br />
articles, and I am grateful for the work done by our international review board.<br />
This issue also presents four very interesting articles. Roger Bennet reports on<br />
the results of a qualitative study on the transfer of marketing know- how from<br />
twelve UK firms to enterprises in CEE countries. Bostjan Zalar's analysis<br />
concerns the problems of institutionalising participation rights in Slovenia. Ed<br />
Clark's article is on multidivisional forms and, based on longitudinal case<br />
studies, the author deals with the legitimation, legacies and structural choices in<br />
former state enterprises in the Czech Republic. Last, but not least, Robin<br />
Matthews and Ara Yeghiazarian's informative paper presents possibilities to<br />
evaluate and enhance the quality of leadership by the use of simulation games in<br />
management training. The empirical sample used in the study is from Russia.<br />
JEEMS is in its third year, and I believe the start has been quite successful!<br />
What has to be done now? We think that we could all gain from further<br />
discussion, comments about articles and findings,as well as reports of managers'<br />
experiences in the East. The editorial board will encourage all these forms, and<br />
all our contributors, corresponding members, readers and authors should feel<br />
free to send us comments, messages, informative statements and book reviews,<br />
as well as books in CEE languages, practitioner reports and so on. Another area<br />
JEEMS 1/ 19<strong>98</strong> 5
Editorial<br />
for activity relates to subscriptions, which remains a problem. I ask all our<br />
partners to help in this regard.<br />
Let us make JEEMS a success story!<br />
Rainhart Lang, (Editor-in chief)<br />
A further change is to be reported.<br />
Frank Rudolf is to replace Thomas Steger as our co-ordinator. The board<br />
extends its sincerest thanks to Thomas for his creative and inspiring work over<br />
the past two years. He did a very good job. We wish him all the best with hid<br />
Ph.D and hope for future co-operation with him.<br />
Welcome now to Frank Rudolf, who will continue the work!<br />
Rainhart Lang<br />
6<br />
JEEMS 1/ 19<strong>98</strong>
Roger Bennett<br />
First insights into the transfer of marketing know-how<br />
from Western firms to enterprises in Central and Eastern<br />
Europe: A qualitative study *<br />
Roger Bennett **<br />
This paper reports the results of case study research into the methods employed<br />
by 12 large UK-based companies when transferring marketing know-how to<br />
Central and East European (CEE) joint venture partner firms. Propositions<br />
derived from transactions cost analysis and theories concerning the optimal<br />
means for transmitting technical information between organisations are applied<br />
to the data, and the usefulness of a number of collateral hypotheses are<br />
assessed. It is concluded that certain elements of transactions cost theory stand<br />
up well in the CEE business context, but that the practical devices adopted by<br />
Western enterprises when transferring marketing know-how to foreign CEE<br />
partners need to be improved.<br />
Dieser Artikel faßt die Ergebnisse von Fallstudienuntersuchungen bezüglich der<br />
Methodik des Marketing-know-how-Transfers nach Mittel- und Osteuropa<br />
zusammen. Dazu wurden 12 große britische Unternehmungen und deren Joint-<br />
Venture-Partner in Mittel- und Osteuropa untersucht. Es wurden Ansätze auf<br />
der Basis der Transaktionskostenanalyse und Theorien zur optimalen<br />
Übertragung technischer Informationen auf die Daten angewandt und eine<br />
Reihe weiterer Hypothesen geprüft. Einige Elemente der<br />
Transaktionskostenanalyse erwiesen sich im gegebenen Kontext als sehr<br />
geeignet. Die praktische Umsetzung des Know-how-Transfers bedarf aber noch<br />
erheblicher Verbesserungen.<br />
*<br />
Manuscript received: 26.5.97, accepted: 16.6.97<br />
** Roger Bennett, born 1948, PhD, Reader in the Department of Business Studies, London<br />
Guildhall University, UK. Major areas of research: marketing communications,<br />
international business, technology transfer, management of joint ventures.<br />
Mail address: Department of Business Studies, London Guildhall University, 84 Moorgate,<br />
London EC2M 6SQ<br />
Tel: (44) 0171 320 1577<br />
Email: rbennett@lgu.ac.uk<br />
JEEMS 1/ 19<strong>98</strong> 7
First insights into the transfer of marketing know-how<br />
Introduction<br />
Although a voluminous research literature exists concerning the transfer of<br />
technical information, methods and equipment between West and East European<br />
nations (see for example Gibson et al. 1990; Kerssens-Van Drongelen et al.<br />
1996 for details of recent articles); the same cannot be said for the transmission<br />
of the knowledge and know-how needed to market successfully the outputs<br />
created by the technologies passed among firms. This is an important matter in<br />
the context of Central and East European (CEE) business, however, in view of<br />
the large number of Western companies that have recently set up technology<br />
transfer (TT) related joint ventures (JVs) with CEE enterprises (CEC 1995) in<br />
conjunction with the inadequate marketing infrastructures and low levels of<br />
marketing skill allegedly characteristic of firms within many (if not most) CEE<br />
states (see Hooley et al. 1996). Several a priori considerations suggest that<br />
Western companies might wish to transfer marketing know-how (MKH) to CEE<br />
enterprises with which they have TT arrangements. Patent licensing, franchising,<br />
profit sharing JVs and certain other TT mechanisms typically entail the owner of<br />
the intellectual property transferred (the ‘transferor’ company) taking a share of<br />
the profits ensuing from the activities of the recipient organisation (the<br />
‘transferee’), e.g. through royalties on the sales of the resulting output. And even<br />
if a TT agreement provides for lump sum payments not related to sales revenues<br />
the transferee’s ability to meet its financial obligations often depends in reality<br />
on the level of sales achieved, hence creating incentives for transferors to want<br />
to ensure that final outputs are marketed effectively. It follows that Western<br />
firms may wish to offer advice and assistance to their CEE partners in order to<br />
improve the latter’s marketing efforts. Such help could range from the provision<br />
of ad hoc contributions to specific marketing functions though to the transferor<br />
virtually taking over the transferee’s marketing department.<br />
In 1997 the author completed a survey of 209 UK-based businesses known to<br />
have recently engaged in West-East joint venture TT arrangements (Bennett<br />
1997), from which it emerged that 65% of respondent companies had made at<br />
least some contribution to their CEE partner’s marketing of the output resulting<br />
from a transferred technology. Fifteen per cent of the 209 firms assumed total<br />
responsibility for marketing the end product; 31% described the extent of the<br />
help they provided as either ‘very extensive’ or ‘substantial’, 19% as ‘moderate’.<br />
The main reasons that respondents cited for intervening in transferees’<br />
marketing activities were the need to safeguard investments already sunk in<br />
West-East collaborative arrangements, uncertainty and turbulence in local CEE<br />
markets, and (overwhelmingly) lack of confidence in the marketing competence<br />
and capabilities of the foreign partner (50% of respondents assessed the latter as<br />
either ‘poor’ or ‘very poor’, with just 12% regarding their partner’s marketing as<br />
‘excellent’). These low opinions of CEE enterprises’ marketing abilities held by<br />
respondents in the author’s study matched those found by other researchers in<br />
8<br />
JEEMS 1/ 19<strong>98</strong>
Roger Bennett<br />
the field (e.g., Roos et al. 1992; Benito and Welch 1994; Welch 1996). Such<br />
investigations generally concluded that very many CEE business practices and<br />
networks continued to rely on systems, contacts and protocols developed during<br />
the communist era and that these had proven woefully inadequate for satisfying<br />
the marketing needs of competing privatised firms. Hooley et al’s (1996) survey<br />
of 2311 Hungarian, Polish and Bulgarian enterprises’ approaches to marketing<br />
(including marketing strategies and how they organised their marketing activities)<br />
found, moreover, that marketing was undertaken at an extremely<br />
rudimentary level in these countries, focusing almost exclusively on the<br />
immediate short term. Barely a fifth of respondents believed that marketing<br />
played a significant role within their firms; implementation skills were limited,<br />
and there was ‘poor understanding of what marketing is about’ (p.80). Further<br />
problems highlighted by empirical studies into CEE marketing environments<br />
include attitudinal barriers to the adoption of marketing philosophies, lack of<br />
marketing education, the casual assignment of marketing responsibilities to nonspecialist<br />
staff, absence of market research data and facilities, widespread<br />
ignorance of the benefits of marketing orientation, confusion of ‘marketing’<br />
with ‘selling’, scant regard for product quality, widespread ignorance of the<br />
importance of pricing policy, and poor commercial infrastructure (Ennew et al.<br />
1993; Lascu et al. 1993; Bennett 1994; Welch 1996).<br />
The present research sought to explore these and related matters, in depth, via an<br />
examination of the situations pertaining within specific examples of West-East<br />
technology transfers known to involve the provision by the Western partner of<br />
assistance with the marketing of the end product emerging from the<br />
arrangement. Although the assumption by one company of partial (or even full)<br />
responsibility for another firm’s marketing efforts commonly occurs within<br />
domestic collaborative business arrangements (e.g. if one firm has superior<br />
distribution systems for carrying the partner’s product, or through the setting up<br />
of a joint marketing subsidiary - see Anderson/ Narus 1990; Bucklin/ Sengupta<br />
1993); little is known about the precise mechanisms whereby enterprises<br />
actually transmit marketing know-how from one organisation to another,<br />
particularly in the international context. Hence the current investigation<br />
attempted to pinpoint relevant issues and to present some initial evidence on<br />
how MKH was undertaken by companies engaged in West-East technology<br />
transfer and where the Western partner contributed to the marketing of a CEE<br />
firm’s goods. The study aimed to identify the problems involved and to<br />
recommend an agenda for future research into this important but unexplored<br />
field.<br />
Theory<br />
Theoretical propositions from a number of areas can be drawn upon to generate<br />
relevant questions concerning MKH transfer and a specification of how MKH<br />
JEEMS 1/ 19<strong>98</strong> 9
First insights into the transfer of marketing know-how<br />
ought in principle to be transmitted. The most apposite pre-existing constructs in<br />
this regard are perhaps transactions cost analysis (TCA) and theories derived<br />
from the study of techniques for the effective transfer of technical information.<br />
According to the academic literature concerning the latter (see Kerssens-Van<br />
Drongelen et al. 1996 for a review of recent contributions) an organisation<br />
possesses a ‘knowledge base’ wherein knowledge is stored prior to its transformation<br />
and hence implementation via useful activities. This knowledge base<br />
comprises brainware, hardware, groupware, and documentware (Zeleny et al.<br />
1990). Brainware consists of experience, personal skill and acquired knowledge;<br />
hardware is the processes, equipment and other touchable items that incorporate<br />
knowledge. At the next level there exists groupware, which encompasses<br />
informal procedures, rules of thumb, stories and unwritten protocols; and above<br />
this documentware made up of databases, written reports, handbooks, patents,<br />
and formally documented knowledge held within information systems. A<br />
company’s knowledge base, moreover, has several layers: personal,<br />
departmental, divisional, strategic business unit, and organisational. (This<br />
creates problems for technology transfer in that, very often, a large amount of a<br />
firm’s knowledge is stored in brainware, i.e. the least traceable and accessible<br />
medium and hence the most difficult to transmit and then deploy in an optimal<br />
manner.) The effective transfer of know-how involves the transformation of<br />
knowledge stored in brainware in one company (and thus only available to one<br />
or a few individuals) into forms (groupware, documentware and hardware) that<br />
can be shared by many people at the organisational level. Useful devices for<br />
transferring technical knowledge identified by the (technical) TT literature<br />
include the temporary or permanent transfer of staff (brainware) to TT recipient<br />
firms, the establishment of joint subsidiaries to bring together owners and<br />
seekers of knowledge, and the creation of formal procedures for the application<br />
of specific techniques (Jain/ Triandis 1990). Brown and Eisenhardt (1995)<br />
argued that the efficacy of communications between the partners to a TT<br />
agreement crucially determined its likelihood of success. Oral communication,<br />
they concluded, was obviously important, but not necessarily the most efficient<br />
form. Rather, the sharing of tasks led to superior information flow and hence to<br />
improved performance. This could be achieved by setting up task-fulfilling<br />
project teams, especially if the teams engaged in periodic brainstorming.<br />
Interestingly, the frequency of communication between partners was not found<br />
to facilitate information transmission. Instead the ‘kinds of person’ involved and<br />
the quality of their relationships were more important. Doz (1<strong>98</strong>8) concluded<br />
that differences in the level at which particular issues were discussed within<br />
partners of technology alliances could create significant communication<br />
difficulties. A study completed by Moenaert et al. (1992) similarly revealed that<br />
the organisational climate within a transferee’s business critically influenced<br />
how readily information was received and acted upon. Other relevant factors<br />
10<br />
JEEMS 1/ 19<strong>98</strong>
Roger Bennett<br />
were the status of the information source and the perceived relevance, reliability<br />
and credibility of the information transmitted.<br />
Transactions cost analysis (TCA)<br />
This is a theory which predicts that a business will perform within the firm<br />
whichever activities it can undertake at lower cost, while relying on outsiders<br />
(agents, distributors, consultancies, etc.) for activities in which the latter have a<br />
cost advantage (Williamson, 1<strong>98</strong>5). External ‘transactions costs’ such as the<br />
costs of searching for suitable intermediaries, monitoring the latter’s<br />
performances and enforcing contractual obligations would, according to<br />
Williamson (1<strong>98</strong>5) be low if the market for external services was highly<br />
competitive. This was because intense competition implied a large number of<br />
service providers from which the firm could choose (so that unsatisfactory<br />
outsiders could be replaced quickly and easily), and ensured fair prices for<br />
external services. Also the threat of replacement could compel suppliers<br />
constantly to attempt to improve their levels of service quality. A major<br />
proposition of TCA is that firms are more inclined to do things for themselves<br />
(distribution, advertising management or market research for example)<br />
whenever ‘transaction specific’ assets accumulate. Examples of transaction<br />
specific assets are specialised knowledge, experience, and working relationships<br />
built up over time and which are unique to marketing the product(s) in question.<br />
An independent outsider gaining such knowledge, experience, etc., is difficult to<br />
replace, even if it performs badly or otherwise abuses its position. It follows that<br />
the presence of transaction specific assets (‘asset specificity’, as it is known)<br />
should, ceteris paribus, create an incentive to internalise a function rather than<br />
rely on outsiders (Williamson 1<strong>98</strong>5; Klein et al. 1990).<br />
Further transactions costs were said to arise from the existence of ‘uncertainty’<br />
in local markets. Uncertainty could relate either to unpredictability in the<br />
decision-making environment or to ambiguities vis à vis the monitoring of<br />
outsiders’ performances and ascertaining whether they were complying with<br />
their contractual obligations. These considerations give rise to the following<br />
propositions in relation to Western companies’ desires to become involved in<br />
their CEE partners’ marketing efforts.<br />
P1. Intervention will be greater the higher the degree of asset specificity in<br />
relation to the engagement of external marketing services. Arguably, substantial<br />
asset specificity (i.e. the situation prevailing when extensive training, time,<br />
nurturing of business contacts, knowledge accumulation, etc, are necessary to<br />
market the end product successfully) results in Western firms wanting to manage<br />
the marketing of the end product rather than leaving this to the foreign partner.<br />
In other words the transferor will want to exercise significant control over the<br />
transferee’s marketing if it believes that the development of specialised<br />
marketing skills and relationships are necessary. Transferees might not be<br />
JEEMS 1/ 19<strong>98</strong> 11
First insights into the transfer of marketing know-how<br />
deemed capable of coping with such a situation; while the transferor may be<br />
fearful of the adverse consequences of anyone in the (foreign) local market<br />
acquiring information about the end product and how it is best sold that might<br />
eventually be used against the JV’s interests.<br />
P2. Intervention will be greater the higher the level of uncertainty. As in P1,<br />
the transferor may prefer to control foreign marketing if the environment is very<br />
uncertain (i) for fear of the transferee not possessing the marketing competence<br />
to handle volatile markets, and (ii) because it wishes to safeguard the return on<br />
its investment in the joint venture.<br />
P3. The more competitive the local foreign market for the supply of external<br />
services the higher the probability that a Western firm will be content to leave<br />
the marketing of the end product to the CEE partner. The justification here is<br />
that a competitive local market should in principle enable the transferee to utilise<br />
reliable and efficient distributors, direct marketing firms, advertising agencies<br />
and other marketing services providers to help market its output.<br />
Further possible influences<br />
Empirical studies into (i) the management of marketing channels generally, and<br />
(ii) the choice of mode of entry to unfamiliar (domestic) markets (see<br />
McNaughton 1996 for details of the major investigations) suggest a number of<br />
other factors that could affect the degree of transferor intervention in West-East<br />
TT, as follows.<br />
P4. Intervention will be greater (i) the more after-sales service is required, (ii)<br />
the more complex the end product (a simple, mundane and familiar item is<br />
easier to market than something that is specialised and complicated), (iii) the<br />
closer the transferee’s end product to products already supplied by the<br />
transferor, and (iv) the greater the extent to which the Western company already<br />
possesses well-established distribution facilities in the CEE country concerned<br />
(since a new product can be inexpensively added to lines carried by an existing<br />
channel).<br />
Research questions<br />
Apart from assessing the applicability of the above-mentioned propositions the<br />
research sought to obtain tentative answers to various questions concerning the<br />
degrees to which MKH transfer methods in practice corresponded to those<br />
recommended by the academic literature on the effective transmission of<br />
technical information, as previously outlined. Additionally, respondents were<br />
questioned about how they organised MKH transfer in general terms, about the<br />
communication techniques they applied, their objectives and expectations, and<br />
the nature and quality of relationships with recipient enterprises.<br />
12<br />
JEEMS 1/ 19<strong>98</strong>
Methodology<br />
Roger Bennett<br />
An exploratory research design was adopted in view of the absence of prior<br />
empirical investigation in the MKH transfer field and because so little is known<br />
about the natures of relevant issues. Thus the aim of the work was to discover<br />
significant variables and key relationships among them and hence lay a<br />
groundwork for subsequent more rigorous quantitative testing of hypotheses<br />
(Kerlinger 1964; Churchill 1991). Accordingly, 12 examples of Western<br />
companies known to have recently undertaken technology transfers to CEE<br />
enterprises were studied in depth, using the key informant method (see Seidler<br />
1974; Phillips 1<strong>98</strong>1). The latter necessitated the holding of interviews with<br />
executives concerned with their companies’ CEE marketing operations; a<br />
methodology known to facilitate the study of decisions within their natural<br />
context (Yin 1994) and to be especially suitable for evaluating the motives<br />
behind important decisions (Robson/ Foster 1<strong>98</strong>9). A further justification for the<br />
use of a case study approach is that a major reason for the lack of previous<br />
research in this area is likely to be the sensitivity and confidential nature of the<br />
legal agreements underlying technology transfers and hence the problem of<br />
finding businesses willing to divulge their cross-border TT arrangements via<br />
responses to a mail questionnaire. Face-to-face interviews stand a better chance<br />
of eliciting relevant information in these circumstances. Firms in various<br />
industry sectors were examined in order to identify relevant factors and nascent<br />
similarities and differences across industry groupings; to assess the applicability<br />
of various propositions to a selection of diverse organisations; and to suggest<br />
explanatory variables for key decisions. The comparative case study method,<br />
moreover, creates more opportunities for the triangulation of data than does the<br />
study of an individual company (i.e., evidence can be gathered from multiple<br />
sources all pointing to the same patterns and consistencies (see Bonoma 1<strong>98</strong>5;<br />
Yin 1994), thus enhancing the generalisability of findings.<br />
The sample<br />
In 1997 the author completed a mail survey of a sampling frame of 547 UKbased<br />
companies known to have engaged in West-East TT during the previous<br />
few years. The sampling frame consisted of (i) 126 company names kindly<br />
provided by an Anglo-Hungarian trade association which had been approached<br />
by these companies for help and advice when setting up TT-related JVs in<br />
Hungary, and (ii) 421 company names obtained from the technology transfer<br />
pages of the World Wide Web and from business directory sources. The survey<br />
covered (in outline) various features of the JVs in which the Western firms had<br />
an interest, and asked whether the latter had become involved in their CEE<br />
partners’ marketing of the end products resulting from technology transfers.<br />
Two hundred and nine replies were received (37%), of which 136 stated that<br />
they had helped their foreign partners with the marketing of end products.<br />
JEEMS 1/ 19<strong>98</strong> 13
First insights into the transfer of marketing know-how<br />
Respondent companies were spread across 12 main industry sectors, plus a<br />
‘miscellaneous’ category. A stratified random sample of 26 businesses was<br />
drawn from these 136 firms (the strata being the various industry sectors), and<br />
each randomly selected company then invited to participate in the investigation.<br />
Respondents in 12 companies agreed to be interviewed. The random selection of<br />
multiple firms both within and across sectors follows the procedure suggested<br />
by Yin (1994), who argued that such a procedure is likely to yield information<br />
suggesting either (i) similar conclusions (‘literal’ replication), or (ii)<br />
contradictory conclusions but for predictable reasons (‘theoretical’ replication).<br />
Thus, the drawing of cases at random from various industry sectors ought in<br />
principle to produce (by chance) a few literal replications plus a number of<br />
theoretical replications which, if they all point in the same direction, should<br />
provide substantive support for or refutations of the initial set of propositions.<br />
Figure 1: The interview plan<br />
General characteristics:<br />
- Company features<br />
- International experience<br />
- Product markets<br />
- Services markets<br />
- Reasons for intervention<br />
Type of arrangement<br />
- JV, licensing agreement<br />
etc.<br />
- Organisation and<br />
management of transfers<br />
- Nature and extent of<br />
intervention<br />
- Pre-existing marketing<br />
facilities in the CEE<br />
country<br />
MKH transfer methods<br />
- Objectives and expectations<br />
- Practical techniques<br />
- Training provided<br />
- Areas of intervention<br />
- Communication methods<br />
- Effects of power imbalances<br />
Factors influencing<br />
decisions<br />
- Asset specificity<br />
- Uncertainty<br />
- Perceptions of the<br />
transferee's marketing<br />
ability<br />
- Need for after-sales<br />
service<br />
Outcomes<br />
- Relationships<br />
- Perceived success of<br />
the transfer<br />
- Conflicts/disagreements<br />
- Implementation of<br />
advice<br />
14<br />
JEEMS 1/ 19<strong>98</strong>
Table 1: Characteristics of respondent companies<br />
Company 1 2 3 4 5 6 7 8 9 10 11 12<br />
Employees 21500 12200 8300 5400 7000 2500 900 690 727 800 1620 530<br />
Annual turnover £3.8<br />
billion<br />
£2.1<br />
billion<br />
£1.4<br />
billion<br />
£780<br />
million<br />
£470<br />
million<br />
£270<br />
million<br />
£109<br />
million<br />
£83<br />
million<br />
£46<br />
million<br />
£32<br />
million<br />
£28<br />
million<br />
£22<br />
million<br />
Industry sector Pharmaceuticals<br />
Chemicals Engineering<br />
Plastics Clothing<br />
manufacture<br />
Chemicals Electrical<br />
equipment<br />
Rubber Plastics Leather Agroalimentaries<br />
Agroalimentaries<br />
Locations of foreign<br />
business operations<br />
Mainly<br />
Europe<br />
and Asia<br />
Europe<br />
and USA<br />
Europe<br />
and USA<br />
Worldwide<br />
Worldwide<br />
Worldwide<br />
Worldwide<br />
Worldwide<br />
Worldwide<br />
Worldwide<br />
Europe<br />
Europe<br />
and Asia<br />
Extent of international<br />
More than More than 15 years 18 years More than More than 10 years 14 years 15 years More than 10 years 10 years<br />
experience 20 years 20 years<br />
20 years 20 years<br />
20 years<br />
Extent of CEE More than More than 15 years 8 years 10 years 15 years 6 years 5 years 6 years 8 years 5 years 10 years<br />
experience<br />
20 years 20 years<br />
Past involvement with No Yes Yes No No Yes Yes Yes No Yes No No<br />
the CEE partner<br />
CEE partner’s location Hungary Bulgaria Russia Hungary Czech Romania Czech Poland Romania Slovakia Hungary Poland<br />
Republic<br />
Republic<br />
Nature of the collaborative<br />
arrangement<br />
Contract<br />
Contract<br />
Contract<br />
Contract<br />
Did the Western firm<br />
already have a branch<br />
or subsidiary in the<br />
transferee’s country?<br />
Respondent’s estimate<br />
of the number of<br />
employees in the CEE<br />
partner<br />
Contract<br />
with<br />
licensing<br />
Equity JV Equity JV<br />
with majority<br />
share-<br />
majority<br />
with<br />
Contract<br />
with<br />
licensing<br />
Equity JV<br />
with minority<br />
shareholding<br />
Contract<br />
with<br />
licensing<br />
Contract<br />
with<br />
licensing<br />
Equity JV<br />
with<br />
minority<br />
agreement holding shareholding<br />
agreement<br />
agreement agreement<br />
share-<br />
and a<br />
and a<br />
holding<br />
licensing<br />
licensing<br />
agreement<br />
agreement<br />
Yes Yes Yes No Yes Yes Yes No Yes No Yes No<br />
1200 850 700 60 250 2500 100 75 150 80 3000 200
First insights into the transfer of marketing know-how<br />
A total of 14 interviews were conducted in the 12 firms either with a person<br />
closely connected with his or her company’s Central and East European<br />
marketing operations, or with other senior managers (e.g. export director,<br />
licensing manager). In 2 companies a second interview took place with a second<br />
person because the first interviewee suggested that a colleague might be able to<br />
provide additional information. This is consistent with the key informant<br />
approach as recommended by the academic literature on the subject (e.g.<br />
Trembley 1<strong>98</strong>2; Miles/ Huberman 1994). These key informants were able to<br />
draw on their personal experiences and specialised knowledge in order to define<br />
the essential characteristics of the problems considered. The sample was small,<br />
but reasonable considering the preliminary nature of the investigation. A brief<br />
summary of the essential characteristics of the 12 companies is shown in Table<br />
1.<br />
The interview procedure applied followed that recommended by Eisenhardt<br />
(1<strong>98</strong>9), i.e. a semi-structured approach based on questions of a general nature<br />
derived from a comprehensive review of academic literature in relevant areas. In<br />
line with this approach, respondents were themselves allowed to determine the<br />
emphasis given to various questions, detailing the factors they believed most<br />
relevant to their firms’ intervention decisions and omitting or explaining the<br />
perceived irrelevance of other variables. Unfortunately respondents’ comments<br />
could not be verified (via press coverage or market research reports for<br />
example), although there were no a priori reasons for supposing that interviewees<br />
would wish to provide misleading information. A schematic overview<br />
of the issues and linkages explored in the interviews is presented in Figure 1.<br />
This was used as a general guide for the progression of interviews, although care<br />
was taken not to presuppose that the dimensions outlined were all-embracing.<br />
Responses were coded under headings relating to the main propositions of the<br />
study. Verbatim quotes were also recorded where these were likely to enhance<br />
the quality of the outcomes to the investigation. Respondents’ comments were<br />
analysed using a two-stage strategy beginning with a within-case study of the<br />
characteristics and behaviour of each company followed by a cross-case<br />
integration of information. The former generated a list of issues that respondents<br />
believed to be important; the latter an overall pattern of similarities and<br />
differences across companies.<br />
Findings<br />
Two of the Western companies (firms 2 and 3) were involved in JVs in which<br />
they held most of the equity; 2 in JV arrangements whereby the CEE partner had<br />
a majority shareholding (firms 6 and 11); and the remainder in agreements<br />
governed by contracts which specified the rights and duties of each party but<br />
without the formation of a subsidiary. Half the deals incorporated a formal<br />
licensing contract (firms 1, 2, 5, 6,8, 9). Two of the TTs could reasonably be<br />
16<br />
JEEMS 1/ 19<strong>98</strong>
Roger Bennett<br />
described as turnkey arrangements (i.e., firms 4 and 11 had installed equipment<br />
and/or systems, and then trained local personnel to whom they handed over<br />
control of the installation). MKH transfer was organised in a variety of ways<br />
within respondent companies, as indicated in Figure 2 which shows also a<br />
summary of the firms’ MKH transfer methods and areas of intervention. In 7<br />
firms MKH transfer was the responsibility of either (i) and export or<br />
international division which looked after all the company’s cross-border<br />
marketing activities, or (ii) a general marketing department that dealt with both<br />
domestic and foreign sales (see Figure 2.C). Four firms completed these tasks<br />
through pre-existing foreign branches or subsidiaries; one had set up a joint<br />
marketing subsidiary with the CEE partner specifically to manage the sale of the<br />
output emerging from a JV. By far the commonest method of assisting CEE<br />
firms with their marketing was through personal visits to transferees by<br />
marketing executives of the transferor company in order to help with particular<br />
marketing problems (only firms 10 and 12 did not regard this as one of their<br />
primary transfer mechanisms). The situation prevailing in firm 3 was explained<br />
as follows. ‘We have a global marketing system with 2 or 3 of our senior people<br />
constantly moving around the world to pick up on problems as they arise. These<br />
guys are truly international in outlook and soon put things right. They regularly<br />
visit our contacts in East Europe to sort things out.’ Otherwise, the visits were<br />
from marketing personnel in the transferor’s local regional branch or subsidiary<br />
(firms 1, 5, 6, 7, 11) or from the Western firm’s headquarters (3, 4, 8, 9, 11).<br />
Such visits were seen as a fast, convenient and reliable means of transmitting<br />
information. Two companies (2 and 5) had transferred marketing staff for short<br />
periods (described as ‘a couple of weeks’ in both cases). Interestingly this was<br />
not the case for either of the firms undertaking turnkey contracts.) The main<br />
functional areas in which respondents stated their companies helped their CEE<br />
partners with their marketing (see Figure 2.D) were pricing, (marketing planning<br />
and distribution). Two of the companies (2 and 6) actually distributed the<br />
transferee’s outputs via their own facilities, and 4 more proffered advice on how<br />
to distribute products.<br />
JEEMS 1/ 19<strong>98</strong> 17
First insights into the transfer of marketing know-how<br />
Figure 2: Responses concerning areas and methods of mkh transfer<br />
A. How assistance was provided<br />
- Informal sharing of information<br />
(2,4,5,7,8,9,10,12)<br />
- Written documents<br />
(1,2,3,5,6,8,9,11,12)<br />
- Specification of standard<br />
procedures (2,3,7,11)<br />
- Systematic training<br />
(2,6)<br />
- Ad hoc training<br />
(1,2,3,4,5,6,8,11)<br />
B. Communication methods<br />
- Visits<br />
(all except 10 and 12)<br />
- Staff transfers<br />
(2,5)<br />
- Teamwork<br />
(2,5,7,9)<br />
- Brainstorming sessions<br />
(2,9)<br />
- Task sharing<br />
(2,5)<br />
MKH transfer<br />
C. Organisation mode<br />
- Export department/division<br />
(7,8,11,12)<br />
- General marketing department<br />
(4,5,10)<br />
- Pre-existing branch or subsidiary<br />
(1,3,6,9)<br />
- Joint marketing subsidiary<br />
( 2)<br />
Note:<br />
Numbers in parentheses indicate companies<br />
D. Areas of intervention<br />
- Advertising and promotion<br />
(3,5,7,9,12)<br />
- Marketing planning<br />
(3,4,6,7,8,10,11)<br />
- Market research<br />
(1,3,6,11)<br />
- Distribution<br />
(2,3,4,6,7,9,12)<br />
- Pricing policy<br />
(1,3,5,6,8,9,10,12)<br />
- After-sales service<br />
(1,2,3,9)<br />
Effectiveness of communications<br />
The communications methods adopted by Western companies when transmitting<br />
marketing know-how did not appear to correspond to those recommended by the<br />
academic literature on technology transfer. Most respondents stated (see Figure<br />
2.A) that information was transmitted predominantly on an informal basis. Many<br />
companies transferred written documents regarding marketing techniques, e.g.,<br />
sales manuals (firms 1, 3, 6, 11), standard distributor and other contracts used by<br />
the transferor for its general marketing operations (2, 3, 5, 7, 11), and examples<br />
of mailshot and other promotional literature (3, 5, 9, 12). Some transferors made<br />
available to their CEE partners various systems and procedures employed within<br />
their own firms; such as customer database management systems (firms 2 and<br />
11), credit control procedures (firm 2), market research templates (firm 11), and<br />
18<br />
JEEMS 1/ 19<strong>98</strong>
Roger Bennett<br />
order processing systems (firms 2 and 11). It seemed however that a substantial<br />
amount of the documentation transferred related in some way or other to the<br />
Western companies’ own in-house training programmes. Eight transferors stated<br />
that they offered training in marketing methods to their CEE partners, but only<br />
two companies described this as being rigorous and systematic (see Figure 2.A).<br />
The rest of the training offered was ad hoc in nature; variously described as<br />
‘showing the ropes’ (firm 6), ‘giving the tools to complete the job’ (firm 3),<br />
‘giving an insight into what it’s all about (firm 5), and similar perfunctory<br />
characterisations. Although all the respondents claimed that teamwork applied<br />
within their collaborative arrangements as a whole, only those in firms 2, 5, 7<br />
and 9 mentioned this as a distinct feature of the transfer of marketing know-how.<br />
No respondent talked about brainstorming without a prompt; although when<br />
asked this specific question two (firms 2 and 9) said that brainstorming sessions<br />
had in fact occurred. Evidence of the deliberate sharing between personnel in<br />
transferor and recipient companies of tasks relating to the marketing function (as<br />
opposed to ‘joint decision-making’) emerged in just 2 cases (firms 2 and 5).<br />
Rather, transferees were usually presented with information, a set of operating<br />
procedures, documentation and so on, and then expected themselves to utilise<br />
the materials received. Where task sharing did occur it related to marketing<br />
planning, finding distributors, market research and the implementation of database<br />
systems.<br />
Transactions cost analysis<br />
Several respondents mentioned the existence of significant asset specificity in<br />
relation to CEE operations (see Figure 3.B). Following previous empirical<br />
research in this area (notably that of Anderson/ Coughlan 1<strong>98</strong>7; Klein et al.<br />
1990; McNaughton 1996) the presence of asset specificity was assessed via<br />
questions regarding whether the marketing of the end product required<br />
specialised facilities, substantial employee training, the development of<br />
specialist inside knowledge; whether it took a long time to get to know the<br />
customer and how difficult it would be for outsiders to learn how to market the<br />
product. Particular examples of asset specificity cited by interviewees included<br />
the need to develop specialised databases (firm 5), the effort involved in<br />
‘acquiring contacts and avenues for gathering intelligence’ (firm 3), ‘network<br />
development’ (firm 7), and the dangers that would result if competitors obtained<br />
detailed information about the techniques and know-how used to market the<br />
item (firms 2, 5, 6, 7 and 11). The marketing director of company 2 pointed out<br />
that the staff involved in MKH transfer had to become familiar with business<br />
methods in the transferee’s country, and this itself had a cost. He also<br />
commented upon the extra workloads falling on key marketing staff and the<br />
consequent increased complexity of their duties.<br />
JEEMS 1/ 19<strong>98</strong> 19
First insights into the transfer of marketing know-how<br />
Figure 3: Influences on intervention decisions<br />
A. The product and the market<br />
- Simple end product<br />
(2,3,4,7,9,12)<br />
- End product closely related to<br />
transferor's core business<br />
(2,3,4,6,7,9)<br />
- Market for the end product is<br />
highly competitive (5,7,12)<br />
- Market for providers of<br />
marketing services is highly<br />
competitive (4,5,9,12)<br />
- Substantial after-sales service<br />
required (2,3,5,7,8)<br />
Influences<br />
on decisions<br />
B. TCA and other factors<br />
- Substantial asset specificity<br />
(2,3,5,6,7,9,11,12)<br />
- Local environment seen as<br />
very uncertain<br />
(1,4,5,7,8,9,11,12)<br />
- CEE regarded as having low<br />
marketing competence<br />
(2,3,4,5,6,9,10,11,12)<br />
- Already operated distribution<br />
systems in the CEE country<br />
(2,3,4,5,6,9,11)<br />
Note:<br />
Numbers in parentheses indicate companies<br />
In line with pre-existing literature in the TCA area, respondents’ perceptions of<br />
‘uncertainty’ were tapped by asking whether they were ‘frequently surprised’ by<br />
the actions of competing businesses; outside distributors, retailers, agencies and<br />
other providers of marketing services; and by customer reactions to the product.<br />
Many respondents regarded CEE environments as highly uncertain (Figure 3.B),<br />
and this seemingly encouraged Western companies to want to intervene. As the<br />
international marketing director of Firm 9 commented, ‘becoming involved (in<br />
the transferee’s marketing) is vital to protect our interests in so erratic a market’.<br />
Uncertainty was perceived by this respondent as ‘a state of flux in which you<br />
don’t know who you can trust’. Apart from viewing CEE markets as uncertain,<br />
the great majority of respondents saw them as uncompetitive in relation both to<br />
the markets for end products and for the external provision of marketing services<br />
(Figure 3.A). Typical comments in these connections were that in many CEE<br />
countries, local distributors ‘are few and far between and most of them are<br />
incompetent’ (firm 2), that ‘it is almost impossible to find out whether local<br />
market research firms, distributors, etc. are actually doing what they are<br />
supposed to do’ (firm 3), and that ‘if a local (marketing services) firm lets you<br />
down you haven’t a hope of getting any compensation’ (firm 8). The end<br />
product marketed in consequence of technology transfers was described as<br />
‘simple’ (i.e. well-established or similar to local competing products) in 6 cases,<br />
and as being closely related to the transferor’s core traditional or desired<br />
activities in 6 firms (Figure 3.A). Seven transferor companies already operated<br />
some form of distribution system within the transferee’s country (see Figure<br />
3.B).<br />
Relations with transferees<br />
Respondents generally held extremely low opinions of their CEE partners’<br />
marketing competencies (Figure 3.B), although this apparently did not worsen<br />
20<br />
JEEMS 1/ 19<strong>98</strong>
Roger Bennett<br />
the quality of relationships between Western and CEE firms. All interviewees<br />
reported that inter-company relationships were (at least) satisfactory; 5 stated<br />
that transferees had eagerly taken up the help and advice the transferor had been<br />
able to provide (firms 2, 3, 7, 9, 10). No substantial conflicts or disagreements<br />
with CEE partners were mentioned regarding how exactly the end product<br />
should be marketed. When asked to justify their poor ratings of CEE enterprises’<br />
marketing abilities, respondents complained (inter alia) that ‘the questions about<br />
marketing put forward by CEE executives were very basic and naive’ (firm 4),<br />
that people in partner companies ‘don’t have a clue’ where marketing is<br />
concerned (firm 3), and that there was ‘no history of marketing’ in CEE<br />
enterprises (firm 6). Several respondents commented on the differences between<br />
Western and CEE executives that existed vis à vis individual perceptions of<br />
what the term ‘marketing’ actually meant (firms 2, 3, 5, 6, 8, 11). Often<br />
‘marketing’ was viewed by CEE managers as little more than selling and<br />
advertising (as reported by, for example, the respondents in firms 1, 3, 6 and 8),<br />
as opposed to an integrated package of activities that includes pricing policy,<br />
distribution, customer care, marketing planning, and so on.<br />
Apart from the perceived lack of marketing acumen, no major problems relating<br />
to national cultural differences were reported that might hinder the effective<br />
transfer of marketing know-how to CEE firms, although a number of<br />
organisational barriers were mentioned. In particular, it was sometimes felt that<br />
decisions about marketing methods were delegated to too low a level within<br />
CEE partner enterprises (firms 2, 3, 5, 6), that insufficient managerial resources<br />
were devoted to marketing (firms 3, 6, 8, 11) and that too few of the transferee’s<br />
employees were assigned to marketing activities (firms 2, 6, 8, 11). Hence, there<br />
appeared to be a ‘managerial imbalance’ in relation to approaches to the<br />
marketing function within Western and CEE firms. Two transferors (6 and 11)<br />
specifically mentioned problems within the organisational climates of recipient<br />
enterprises that might interfere with the practical implementation of the<br />
marketing know-how transferred. These complaints focused on apathy among<br />
the CEE partner’s workforce, bureaucratic management structures, anticommercial<br />
philosophies held by certain individuals within partner enterprises,<br />
and poor management communication skills.<br />
Summary and discussion<br />
The picture that emerges from the present study is one wherein large Western<br />
companies are seemingly very keen to transmit MKH to CEE businesses, and<br />
the latter are anxious to receive the knowledge transferred. Respondents lacked<br />
confidence in their foreign partners’ marketing competence, although this did<br />
not lead to bad intercompany relations. Two main groupings of companies<br />
within which similar characteristics and respondent attitudes could be identified<br />
emerge from the investigation, as follows.<br />
JEEMS 1/ 19<strong>98</strong> 21
First insights into the transfer of marketing know-how<br />
1. Large firms. Half of the six largest companies in the sample (firms 1 to 6)<br />
were involved in equity JVs, compared to just one in the remaining half dozen.<br />
Five out of six of these larger enterprises already operated branches or<br />
subsidiaries in transferees’ countries and had extensive experience of Central<br />
and East Europe and of general international trade. Five of the companies had<br />
pre-existing distribution systems in the relevant CEE nation. All these large<br />
firms provided some form of marketing training to partners, and were more<br />
likely to furnish formal documentation.<br />
2. Companies with CEE partners producing ‘simple’ end products. Firms in<br />
this category (see Figure 3.A) tended to have pre-existing distribution systems in<br />
their partners’ countries, and respondents within them reported that substantial<br />
after-sales service was required. They contributed extensive assistance with<br />
foreign distribution (figure 2.D), and overall provided more help in other areas.<br />
Also they appeared to rely more on informal communications with CEE partners<br />
than did other companies. There was a considerable overlap between this group<br />
and companies reporting that transferees’ end products had a close relation to<br />
their core businesses.<br />
Assessment of the initial propositions<br />
Two-thirds of respondents indicated the presence of significant asset specificity<br />
in relation to the marketing of end products (Figure 3.B). Three out of 4<br />
interviewees in companies that intervened in the provision of after-sales service<br />
commented on the existence of asset specificity. Substantial overlaps were<br />
evident between companies with respondents who noted asset specificity and<br />
those intervening in transferees’ distribution and advertising and promotion<br />
activities (Figure 2.D) Additionally, all companies that engaged in marketing<br />
teamwork and task sharing with CEE partners reported asset specificity,<br />
arguably because the presence of the latter encouraged the application of<br />
teamwork and task sharing methods. It was also the case that 5 out of 8 of the<br />
respondents who mentioned asset specificity also regarded local CEE markets as<br />
being highly uncertain. Examination of Figure 2.A reveals that these perceptions<br />
of asset specificity and uncertainty relate closely to (i) the use of written<br />
documents when furnishing assistance, and (ii) the provision of training to CEE<br />
firms. Uncertainty in local markets again appears to be positively associated<br />
with intervention vis à vis distribution and advertising and promotion. Overall,<br />
therefore, the results offer considerable support to the transactions cost hypothesis<br />
as outlined in Propositions 1 and 2. The majority of respondents viewed<br />
the markets both for end products and for service providers as fundamentally<br />
uncompetitive in CEE countries. Interestingly, firms with respondents who saw<br />
CEE markets as highly competitive (see Figure 3.A) were less likely to be<br />
involved in their foreign partners’ marketing planning and market research<br />
activities than were the rest, lending tentative (albeit limited) support to<br />
22<br />
JEEMS 1/ 19<strong>98</strong>
Roger Bennett<br />
Proposition 3. The fourth Proposition is also broadly supported, as previously<br />
discussed.<br />
Communications methods<br />
In general, respondent companies did not utilise the communication techniques<br />
recommended by the academic literature on technology transfer. Information<br />
transmission was essentially informal and ad hoc, typically involving occasional<br />
visits to transferee companies and the passing across of written documents used<br />
by transferors for their own domestic marketing. There was little evidence of<br />
staff transfers or task sharing teams made up of members from both enterprises,<br />
thus limiting the scope for converting brainware into groupware and meaningful<br />
documentware. Information flow was based more on shared informal<br />
understandings than on systematic procedures which spelt out in detail the<br />
activities, schedules and tasks that were required and which were likely to<br />
become permanently embedded in a transferee’s knowledge base. Another<br />
problem was that whereas marketing was invariably seen as a senior<br />
management responsibility in Western companies, it was often regarded as a<br />
mundane operational matter in CEE firms. Another disturbing result was the<br />
obvious difference in Western and CEE executives’ definitions of what the word<br />
‘marketing’ actually meant. Such differences in interpretation could seriously<br />
damage the effectiveness of communications between partners concerning the<br />
implementation of marketing programmes. The specification of marketing<br />
objectives becomes difficult in such circumstances, and the criteria to be applied<br />
when managing various marketing functions may be unclear. Crucially<br />
interpretation differences could improperly influence transferees’ expectations<br />
of the sorts of MKH that they require.<br />
Although the results of the present study are highly provisional in nature, they<br />
do suggest that Western businesses wishing to transmit MKH to CEE nations<br />
should establish more formal and systematic procedures for communicating<br />
information than currently seem to apply. Also, greater consideration needs to be<br />
given to the issue of training the marketing employees of CEE firms. Some of<br />
these problems could be overcome, perhaps through Western companies getting<br />
together and collaboratively transferring MKH to groups of CEE enterprises.<br />
Alternatively it might be appropriate for external agencies (specialist training<br />
firms for instance) to take over Western companies’ MKH transfer activities in<br />
their entirety. Further research is necessary in relation to this and a number of<br />
collateral matters. In particular, it would be useful to discover the factors which<br />
cause CEE firms to regard specific aspects of MKH as credible, reliable, and<br />
especially relevant to their needs. How in reality do CEE organisations learn<br />
about marketing? How permanent is the impact on CEE enterprises of the MKH<br />
information supplied by Western firms, and do they continue to apply the<br />
marketing methods they pick up from their Western partners to their own purely<br />
domestic operations in the longer term?<br />
JEEMS 1/ 19<strong>98</strong> 23
First insights into the transfer of marketing know-how<br />
Acknowledgement<br />
The research assistance of Diane Hutchinson is gratefully acknowledged.<br />
References<br />
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the Issues of Knowledge Management in R&D: Towards a Communication and<br />
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the Transition from a Centrally-Planned Economy to a Consumer-Oriented Economy,<br />
in: European Journal of Marketing, Vol. 27, No. 11/12, pp. 102-124<br />
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Computer Software Firms, in: International Business Review, Vol. 5, pp. 23-52.<br />
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2nd Edition, London: Sage.<br />
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Styles of Marketing and R&D Personnel During Technological Product Innovation<br />
Projects, in: R&D Management, Vol. 22, pp. 1-23.<br />
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Methodological Note on Organisational Analysis in Marketing, in: Journal of<br />
Marketing Research, Vol. 28, pp. 395-415.<br />
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Stake, R. (1995): The Art of Case Study Research, Thousand Oaks, CA: Sage.<br />
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Burgess, R. (ed.): Field Research: A Sourcebook and Field Manual, London: Allen<br />
and Unwin.<br />
Welch, L.S. (1996): Information Behaviour and Internationalisation, in: International Journal<br />
of Technology Management, Vol. 11, No. 1/2, pp. 179-191.<br />
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Yin, R. (1994): Case Study Research: Design and Methods, London: Sage.<br />
Zeleny, M./ Cornet, R.J./ Stoner, J.A.F. (1990): Moving from the Age of Specialisation to the<br />
Era of Integration, in: Human Systems Management, Vol. 9, pp. 153-157.<br />
JEEMS 1/ 19<strong>98</strong> 25
The transformation of companies from the standpoint of participation rights: The case of slovenia<br />
The transformation of companies from the standpoint of<br />
participation rights: The case of Slovenia *<br />
Boštjan Zalar **<br />
Analysis of the legislation from the transitional period shows that, despite some<br />
uncertainties regarding the formal state of the protection of the rights of<br />
industrial democracy, this aspect of democratic development together with the<br />
right to join trade-unions seems to have enough guarantees for an adequate<br />
standard of protection in practice. This is not the case, however, when speaking<br />
of the rights of economic democracy, as these were only temporarily<br />
institutionalised. Although the constitutional concept of human rights in<br />
Slovenia is based on the triple principle of freedom, equality and justice, the<br />
author finds the exclusion of the participation rights of economic democracy<br />
from the system of legally enforceable rights to be the major deficiency in the<br />
legislature on participation rights.<br />
Eine Analyse der Gesetzgebung während der Transformationsperiode läßt<br />
vermuten, daß (trotz einiger Unsicherheiten ihres formalen Status) der Schutz<br />
der Mitbestimmungsrechte im Zusammenhang mit dem Recht zur Bildung von<br />
Gewerkschaften auch in der Praxis ausreichend sei. Dies ist jedoch nicht der<br />
Fall, da sich Mitbestimmungsrechte gerade erst herausbilden und nur teilweise<br />
institutionalisiert sind. Obwohl das Grundkonzept der Menschenrechte in<br />
Slowenien auf den Prinzipien der Freiheit, Gleichheit und Gerechtigkeit basiert,<br />
stellt der Autor den Ausschluß des Rechtes auf Partizipation im ökonomischen<br />
Bereich aus dem Rechtssystem fest. Dies kennzeichnet den wesentlichen<br />
Unterschied in der Gesetzgebung bezüglich der Partizipationsrechte in<br />
Slowenien.<br />
*<br />
Manuscript received: 2.6.97, accepted: 21.10.97<br />
** Boštjan Zalar, born 1965, Doctoral candidate and research fellow, University of Ljubljana,<br />
Faculty of Social Sciences; Main research topics: privatization from the human rights law<br />
point of view.<br />
Mail address: Faculty of Social Sciences, Institut of Social Sciences, Center for<br />
Evaluations and Strategic Studies Kardeljeva pl. 1, 1000 Ljubljana, Slovenia<br />
Tel.: +386-61-1683118<br />
26<br />
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1. Introduction<br />
Boštjan Zalar<br />
The model of (ownership) transformation of commercial companies in the<br />
Republic of Slovenia was adopted on December 5th, 1992 with the Law on<br />
Transformation of Company Ownership (herein after LTCO). It shows some<br />
similarities to the models in Central and Eastern Europe. The following<br />
procedures are most typical in this regard:<br />
the sale of shares at reduced prices (50 % discount) to employees (including<br />
managers);<br />
the free distribution of vouchers among the citizens;<br />
the allocation of 40 % of the shares of each company to the pension,<br />
compensation and development funds;<br />
public sale of company shares (LTCO 1992).<br />
On the basis of this law, the citizens of Slovenia and employees should become<br />
owners of a given amount of company shares or of some assets that were<br />
previously socially owned. 1<br />
However, to understand the importance of the LTCO in the transformation<br />
process of companies in Slovenia from the participation rights point of view, it<br />
is necessary to establish a thesis of interdependency and indivisibility of the<br />
rights of industrial, economic and trade union democracy.<br />
The right of trade union democracy means the right for everyone to form and<br />
join trade unions for the protection of his/her interests as defined in Art. 22 of<br />
the International Covenant on Civil and Political Rights (1<strong>98</strong>8) or in Art. 11 of<br />
the Convention for the Protection of Human Rights and Fundamental Freedoms<br />
(1995).<br />
The rights of industrial democracy mentioned in this paper are related to all<br />
kinds of existing participation models in Europe, which regulate the involvement<br />
of employees in the decision making processes and supervision at all levels of<br />
the company, for example: the right to self-regulation of the working<br />
environment, the right to be informed about particular decisions or to be<br />
consulted before implementation of decisions in certain defined cases, or even<br />
the right to veto decisions which have important social consequences for<br />
employees.<br />
The rights of economic democracy have to be understood as the employee right<br />
to share profits together with managers and owners and (or) the right to<br />
1<br />
Before the adoption of the LTCO the capital of companies was legally considered as social<br />
property. It was neither in the ownership of employees nor in that of the companies as legal<br />
entities. The prevailing supposition was that it was in the ownership of all citizens of the<br />
Socialist Federal Republic of Yugoslavia.<br />
JEEMS 1/ 19<strong>98</strong> 27
The transformation of companies from the standpoint of participation rights: The case of slovenia<br />
employee share-ownership (Proposal for a Council Recommendation concerning<br />
the promotion of employee participation in profits and enterprise results<br />
including equity participation 1991). These two rights might also be considered<br />
as the means for the gradual realisation and protection of the right to fair<br />
remuneration, which is, to an extent, already taken into account in Art. 4 of the<br />
European Social Charter (1992).<br />
I will use the notion ”right” in relation to economic, industrial and trade union<br />
democracy, because this paper is based on the idea that political, civil,<br />
economic, social and cultural rights should be more integrated and treated as<br />
interdependent. This was actually the idea at the very beginning of the United<br />
Nations human rights charters (Universal Declaration of Human Rights 1<strong>98</strong>8)<br />
and it is still on the agenda for some international policy makers (Vienna<br />
Declaration 1993), UN officials (Lasso 1994/95) and commentators as well<br />
(Sudre 1990; K?nnemann 1995).<br />
Since this paper will concentrate on the problems of the transformation of<br />
companies in relation to the legislation on employee participation rights, it is<br />
necessary that the entire legal framework regulating this field is examined.<br />
But, in order to gain a better understanding of the approaches to privatisation,<br />
we need to go back in time (before the adoption of the new Constitution) when<br />
the first laws regulating the status and ownership transformation of companies<br />
were passed in Slovenia.<br />
2. The legal framework for the transformation of companies<br />
before the adoption of the new constitution<br />
The transformation of the status of Slovenian companies had already begun in<br />
January 1<strong>98</strong>9. It occured at the time of the adoption of the Law on Companies<br />
(herein after LC), but still within the legal order of the Socialist Federal<br />
Republic of Yugoslavia.<br />
The major scope of the LC was to initiate the transformation process of<br />
company status and the gradual adaptation to proven forms of the developed<br />
market economy. According to this law, some companies were transformed from<br />
the so called social companies into joint-stock companies and into limited<br />
liability companies. The capital of these companies was legally still considered<br />
as social property, but it had formally been divided into shares.<br />
According to similar laws in Western European countries, the LC should<br />
regulate all aspects of commercial companies from the question of the company<br />
title, registered office, business literature and annual reports, to the definitions of<br />
different types of companies and their bodies, including mergers, acquisitions<br />
and transformation of companies. Instead of this, the LC consisted of only about<br />
200 articles. From an industrial democracy point of view, it is interesting, that<br />
28<br />
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Boštjan Zalar<br />
the LC has completely overruled the old industrial democracy legislation and<br />
has simply introduced nothing in its place. So, the LC initiated a system which<br />
was the direct converse to previous legislation in Yugoslavia. Legislation until<br />
then, as a response to capitalism, was based on the principle of the complete<br />
domination of labour over capital, by binding all participation rights (including<br />
management) to labour and thereby formally abolishing capital. 2<br />
Because the LC has had absolutely no implication of the rights of industrial<br />
democracy being a civilisation standard within the process of democratisation<br />
and humanisation of work, this law has also failed in the approach to the<br />
proposed legal standards of the European Union in this field (Amended proposal<br />
for a Fifth Directive founded on Article 54 (3) (g) of the EEC 1<strong>98</strong>3; Proposal for<br />
a Council Directive complementing the Statute for a European company with<br />
regard to the involvement of employees in the European company 1<strong>98</strong>9).<br />
The first law supporting economic democracy in this transitional period was the<br />
Law on Social Capital (December 1<strong>98</strong>9), which ceased the prohibition on the<br />
disposal (”ius disponendi”) of social assets. According to this law, companies<br />
were able to convert their debt into stock and to sell socially-owned assets to<br />
Yugoslavian and foreign legal entities. The amendment to this law in August<br />
1990 gave companies the possibility to issue employee shares for the purpose of<br />
internal buy-outs or in order to raise additional equity capital.<br />
The period from 1<strong>98</strong>9 to 1992, when these legal reforms were introduced, which<br />
transformed the system from socialist self-government into a system of private<br />
ownership, was characterised by a high degree of entropy. The situation in<br />
Slovenia compared to other Eastern and Central European countries was specific<br />
in so far as there was not only a transformation of the social and economic<br />
system, but also a process of forming a new, internationally acknowledged state.<br />
Numerous unexpected changes in the socio-economic and political field, as well<br />
as in the sphere of social values, have culminated into conflict with the<br />
Yugoslav People’s Army during the brief war period. Due to the war in the<br />
Balkans, Slovenian companies had to find new markets in the more demanding<br />
Western markets or the remaining Central or Eastern European markets.<br />
Under the circumstances it is impossible to isolate the concrete and direct<br />
consequences of the new laws on industrial, economic and trade union<br />
democracy. However, there is a sufficient evidence which suggests a general<br />
deterioration of employee rights during this period. The evidence is provided by<br />
2<br />
The exclusive right of labour to determine the fortunes of companies was amended in 1<strong>98</strong>8<br />
when the Constitution of SFRY was changed in order to also recognise the right of<br />
(socially owned) capital to play a legitimate role in the decision-making processes in<br />
companies and in economic system in general.<br />
JEEMS 1/ 19<strong>98</strong> 29
The transformation of companies from the standpoint of participation rights: The case of slovenia<br />
the reports of three different institutions which were - each in its own way -<br />
monitors over the protection of (not just) employee participation rights. 3<br />
The number of reports of violations which were received by these three<br />
institutions increased steadily. In 1992 the number of complaints to the Council<br />
for the Protection of Human Rights and Fundamental Freedoms was twice as<br />
high as in 1991, and from 1990 to 1991 the Labour Court had a 100 % increase<br />
in cases.<br />
The reports clearly show that the most arbitrary and massive violations (of all<br />
human rights) were made in the field of the protection of employee participation<br />
rights. Most disputes were in connection with the ceasing of employment within<br />
programmes of redundancies and transfer to other workplaces.<br />
There were also numerous disputes and violations of collective agreements<br />
issues which broadly could be classified as violations of economic democracy.<br />
These violations are:<br />
disrespect of the obligations from wage agreements of collective bargaining;<br />
controversies in connection with the classification into grades and salary<br />
bands;<br />
problems regarding the evaluation of work places and personal incomes;<br />
intolerable delays with the payment of salaries;<br />
illegal proceedings on the payment of money compensation in the case of<br />
unemployment or illness.<br />
Concerning the field of industrial democracy, I can only point to some cases of<br />
restriction of the workers right to solve the disputes before neutral bodies in the<br />
company. The report of the Labour Court emphasised the standpoint that the<br />
management of some companies have handled disciplinary proceedings without<br />
authorisation. This is especially true in the case of companies which were<br />
transformed into limited liability companies.<br />
Regarding the field of trade union democracy the reports make it clear that most<br />
problems were caused because procedures for the authorisation and naming of<br />
trade union representatives in companies were not defined in law. A special<br />
problem was the general trade union disorganisation in the sense that trade<br />
3<br />
These are three reports and a memorandum from the Council for the Protection of Human<br />
Rights and Fundamental Freedoms which was, as an institution of civil society, the<br />
predecessor of the present Ombudsman. A part from this, I have used reports from two<br />
state bodies, namely of the Social Attorney of Self-Management who was a general<br />
attorney of socially-owned capital from the beginning of the socialist system and a report<br />
from the Labour Court - specialized for cases falling under the legislation of labour.<br />
30<br />
JEEMS 1/ 19<strong>98</strong>
Boštjan Zalar<br />
unions were not effective in protecting and representing employee rights and<br />
their interests.<br />
During this period all three institutions have put pressure on the government and<br />
parliament to prepare as soon as possible a legislation which will:<br />
reorganise the special courts for labour and social disputes;<br />
set a framework for the organisation of trade unions;<br />
set a framework for employee participation rights;<br />
implement a network of inspectors of working conditions so that employee<br />
need not always seek help in court (Council for the Protection of Human<br />
Rights and Fundamental Freedoms 1991, 1992, 1993a, 1993b; Social<br />
Attorney of Self-Management 1992, 1993; Labour Court 1993).<br />
The above described violations of employee participation rights were probably<br />
also caused by the fact that during the last 40 years in SFRY, the notion of<br />
”human rights” was linked essentially to labour law and employment. With the<br />
beginning of the economic reforms and a new wave of liberal values the old<br />
belief in labour rights has been undermined in legislature and even further in<br />
practice. Furthermore, the overburdened labour courts in fact represented a<br />
guarantee for the potential violators that they would not be appropriately<br />
sanctioned.<br />
3. The period after the adoption of the new constitution<br />
In order to understand the present legal status and protection of employee<br />
participation rights in the new Slovenian legislation on commercial companies, I<br />
need to explain three areas of legislation:<br />
the Constitution which provides the basic framework of human rights;<br />
the Law on Commercial Companies which among other things deals with the<br />
composition of bodies in commercial companies and the rights of<br />
shareholders;<br />
the Participation of Employees in the Management Act which most directly<br />
deals with the labour side in the sense of employee participation in decision<br />
making processes and supervision of business operations.<br />
Each of these will be considered in turn. In the third part of the chapter 3, I will<br />
present the report regarding the level of the protection for employee<br />
participation rights during this period.<br />
The status of employee right to shareholdership and profit-sharing will be<br />
discussed in a (separate) chapter 4.<br />
JEEMS 1/ 19<strong>98</strong> 31
The transformation of companies from the standpoint of participation rights: The case of slovenia<br />
3.1. The constitution of slovenia<br />
The Slovenian Parliament adopted a new Constitution in December 1991.<br />
The constitutional concept of human rights in Slovenia differentiates between<br />
the basic political and civil rights on the one hand (II. Chapter of the<br />
Constitution), which are enforceable in court and have the so called ”negative”<br />
status, and on the other hand the economic and social rights (III. Chapter of the<br />
Constitution), which have a ”positive” status. 4 According to the Commission for<br />
Constitutional Questions, which prepared the new Constitution, the economic<br />
and social rights are not adequately developed to guarantee an effective legal<br />
protection. If they were incorporated among the classic human rights, it would<br />
lower the level of protection guaranteed by law. The Commission for<br />
Constitutional Questions (1991) declared them as ”programmatic” and<br />
”ideological”, and understands them as an obligation of the state to establish the<br />
circumstances for their future legal protection. 5 However, from the classical<br />
liberal doctrine point of view, this legal separation of civil and political rights<br />
from the economic and social rights in the Constitution of the Republic of<br />
Slovenia was not consistently followed. Namely, the right to health care and the<br />
right to social security were included among the classical liberal rights that are<br />
legally enforceable. However,<br />
the problem is that the constitutional basis for the rights of industrial and trade<br />
union democracy - the right to participate in decision making processes and<br />
supervision of business operations, the right to join trade unions, together with<br />
the right to strike - has been also placed under Chapter III. of the Constitution,<br />
under the so called ”programmatic” or ”ideological” rights. 6<br />
4<br />
5<br />
6<br />
We have thus adopted a concept which is also valid at the level of international law on<br />
human rights. On one side we have the International Covenant on Civil and Political<br />
Rights and on the other the International Covenant on Economic, Social and Cultural<br />
Rights (1<strong>98</strong>8) where the Article 2. represents the foundation for the positive status of the<br />
rights from this covenant. At the level of the European human rights law the demarcation<br />
was set with the Convention for the Protection of Human Rights and Fundamental<br />
Freedoms and the European Social Charter.<br />
Among these so called ”programatic” rights the Constitution mentions the right to<br />
adequate housing, the right to work, the right to a healthy environment etc. (The<br />
Constitution of the Republic of Slovenia 1991).<br />
The formal position of the right of trade union freedom in the Constitution of Slovenia is<br />
not in accordance with the regulation of this right in the Convention for the Protection of<br />
Human Rights and Fundamental Freedoms, where it has a negative status (1995: Article<br />
11. and Art. 13.).<br />
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The field of economic democracy in the Constitution is regulated merely by a<br />
classic provision ensuring the right to own property (Article 33, Chapter II.).<br />
With regard to Article 67. of the Constitution (Chapter III.), a special law should<br />
regulate the possible ways of acquiring possessions, also in order to ensure<br />
economic, social and ecological function of property.<br />
In a case which was in no way related to the economic, industrial or trade-union<br />
democracy, the Constitutional Court of Slovenia gave an explanation for the<br />
differentiation between human rights from the second Chapter and human rights<br />
from the third Chapter of the Constitution. The Constitutional Court supported<br />
the argumentation for the legal differentiation between the civil and political<br />
rights on the one side and the economic, social and cultural rights on the other in<br />
the same way as it was defended by the Commission for Constitutional<br />
Questions Yet a concrete decision of the Constitutional Court shows a more<br />
appealing, and to my opinion, a more progressive (but separated) position of the<br />
Constitutional Judge M. Krivic. Judge Krivic expressed the idea that the<br />
Constitutional Court should recognise as a basic human rights, some other ones<br />
as well, for example one from international charters that are valid in Slovenian<br />
legislature (for example: from the Convention for the Protection of Human<br />
Rights and Fundamental Freedoms), or the rights which already are in the<br />
Constitution, but in Chapter III. instead of Chapter II. (The Constitutional Court<br />
1992, 39/I, separate opinion of Judge Krivic).<br />
I have the pleasure in establishing that judge Krivic’s position had proved to be<br />
right. Nine months after the passing of this rigid decision of the Constitutional<br />
Court regarding the status of the rights from Chapter III. of the Constitution, the<br />
same institution accepted the decision, which recognised the negative status to<br />
the right of free economic initiative, otherwise being in Chapter III. (The<br />
Constitutional Court 1993, 18/II).<br />
Other decisions of the Constitutional Court also strengthened the trend of<br />
transcending the paradigm of the disintegration and independence of rights from<br />
Chapter II of the Constitution with those rights from Chapter III of the<br />
Constitution. From the arguments of the Constitutional Court it may also be<br />
understood that the right to participate in the management of (non)commercial<br />
companies is recognised the status of enforceability (The Constitutional Court<br />
1994: 86/III). The same applies for the right to strike (The Constitutional Court<br />
1994: 38/III), as well as the right to freedom of association, operation and the<br />
formation of trade unions (The Constitutional Court 1994: 85/III).<br />
The Constitutional court also gives equal legal protection to classical civil and<br />
political rights as well as to the provision of Chapter III of the Constitution,<br />
which regulates ownership rights (The Constitutional Court 1992: 35/I, 56/I;<br />
The Constitutional Court 1993: 52/II, 117/II, 121/II; The Constitutional Court<br />
1994: 39/III, 50/III, 99/III). This provision (Article 67) stipulates that the law<br />
should regulate the acquisition and enjoyment of ownership rights in a manner<br />
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The transformation of companies from the standpoint of participation rights: The case of slovenia<br />
ensuring its economic, social and ecological functions. It is also relevant that the<br />
Constitutional Court make reference to the general provision of Article 2 of the<br />
Constitution, which stipulates that Slovenia is a welfare state (The Constitutional<br />
Court 1992: 23/I; The Constitutional Court 1995: 147/IV, Vol. 2) and that the<br />
notion of welfare state actually represents the principle of justice (The<br />
Constitutional Court 1995: 42/IV, Vol. 1).<br />
From the above-mentioned I may conclude that the Constitutional Court has not<br />
only mitigated, but to a significant degree corrected the initial legal separation of<br />
civil and political rights on the one side from economic, social and cultural<br />
rights on the other. This has clarified and strengthened the legal status of rights<br />
of industrial and trade union democracy as enforceable participation rights. One<br />
area that has remained insufficiently protected is the field of economic<br />
democracy rights. For this reason I have devoted a special section - Chapter 4 of<br />
this contribution - to the problem of economic democracy rights.<br />
3.2. The law on commercial companies and participation of employees in<br />
management act<br />
The Law on Commercial Companies (herein after LCC) was adopted in July<br />
1993. It annulled a non-satisfactory regulation on the status of commercial<br />
companies, which was since January 1st, 1<strong>98</strong>9 regulated by the LC. The<br />
solutions in the LCC were adjusted with reference to directives and<br />
recommendations of the European Union. The trends of the European legislation<br />
on corporations were considered, too, so that all conditions for the compatibility<br />
of the Slovenian economic system with the European Union jurisdiction were<br />
fulfilled.<br />
However, in comparison to similar laws of other European countries it is<br />
considerably less detailed regarding the regulation of:<br />
cases of exclusive competence of the assembly of a corporation (opening of<br />
branch offices, mergers, sales and buying of real estate and other cases of<br />
risky business);<br />
rights of minority share-holders (nomination of a representative to the<br />
supervisory board; nomination of an expert for the inspection of business<br />
operations; dealing with accusations of negligence against a member of the<br />
executive or supervisory board);<br />
rights of privileged share-holders (the possibility of the shareholders to<br />
convene a special assembly of privileged shareholders at the issue of<br />
additional preferred shares and when distributing profit; the right to ask<br />
questions and make suggestions etc.).<br />
The LCC does not regulate the participation rights of employees. This is the<br />
mission of the Participation of Employees in the Management Act (herein after<br />
PEMA), which explicitly deals with the issue of industrial democracy models<br />
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and thus overcomes the negative inheritance of the 1<strong>98</strong>9 LC. The PEMA is in<br />
accordance with the proposed documents of the European Union. The basic<br />
concept is that employee right to take an active part in business decisions at the<br />
highest company level are restricted in their right to information and<br />
consultation through employee representatives, which are, of course, not<br />
necessarily members of trade-unions. Regarding the decisions at company level<br />
that have important social consequences, the employee representatives have the<br />
right of veto. The right of supervision over the business operations is divided<br />
between capital owners and employees in the following way, that the employees<br />
in companies with more than 1000 employed hold at least one half of the seats<br />
of the supervisory board; elsewhere (where supervisory boards are installed)<br />
they hold at least one third of the seats on the supervisory board (PEMA 1993).<br />
Such a legal approach to the regulation of industrial democracy is in my opinion<br />
the right way, but there are still some deficiencies. The first would be that the<br />
PEMA pays too little attention to the (self)regulation of the working<br />
environment. The right to participate in the regulation of the working<br />
environment should be guaranteed as a basic participation right in companies. It<br />
is substantially connected with the constitutional rights, for example the right to<br />
personal dignity and safety and the right to freedom of expression. The field of<br />
self-regulation of the working environment is not only connected with the notion<br />
of human rights, but also with the conception of competition. The legalisation of<br />
participation rights at the level of the workplace, as it was adopted in some<br />
Northern European countries, would establish the necessary basis for the<br />
development of various forms of democracy at the workplace, such as quality<br />
circles, autonomous working groups, etc. In American companies employee<br />
participation at the level of workplace was reached in a different way.<br />
Successful companies are aware that those who do a job know more about it<br />
than anybody else. Therefore, the employees are given more power, direct<br />
control and responsibility (Drucker 1993). Without such direct participation at<br />
the level of the workplace, without the so called ”early diagnosis”, it is<br />
impossible for the company to be successful in realising what Drucker calls ”the<br />
theory of the business” (Drucker 1994).<br />
The second important issue in connection with the basic concept of the PEMA is<br />
the danger of getting satisfied with the regulation this act comprises. The law<br />
has to provide merely a general framework; it has to be the general means for<br />
the realisation of the participation rights in the company. With such an umbrella<br />
act, only the minimum level of rights is set, anything more detailed and adjusted<br />
to concrete circumstances has to be a matter of negotiations between the<br />
employers and employees, various autonomous associations, the management, at<br />
individual and collective levels.<br />
With regard to the connection between industrial and trade-union democracy it<br />
should be emphasised that the organised networks of trade union representatives<br />
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have to struggle for the rights of employees in the companies and especially for<br />
a fair reward system. The trade unions have to negotiate for an improvement in<br />
working conditions and to represent the employees in disputes within the<br />
company or in the proceedings before arbitrators or courts. However, from the<br />
standpoint of the legislation on employee participation rights, it is not acceptable<br />
that the trade unions are holders of these rights. The participation rights belongs<br />
to employees as individuals, but their interests and rights may be represented by<br />
(trade-union) representatives. This should be valid at the company level, where<br />
the employees realise their right to participate in the decision making process<br />
and in supervision through their representatives, as well as at the level of their<br />
workplace, where the individual character of participation rights should be of<br />
special importance, although they can be also realised collectively within<br />
working groups.<br />
However, it has to be emphasised that the link between industrial and tradeunion<br />
democracy is today challenged by the fact that trade unions in more highly<br />
developed countries (Italy, France, Great Britain, USA, Japan, Austria,<br />
Netherlands, Switzerland, Germany) are losing their power and membership<br />
(Kapstein 1996). In connection to this assertion, a study can be cited wich<br />
resulted in the conclusion that in American companies a higher level of rights is<br />
ascertained to the employees, if they are members of a trade union and this<br />
specific fact has the effect of a higher degree of productivity (Freeman, Medoff<br />
1<strong>98</strong>4). This is not unusual for the USA, where legal protection of employee<br />
rights is lower than in Western Europe and where more things fall under the<br />
negotiated power of employers and employees.<br />
Generally speaking, it is reasonable to expect that the level of realisation and the<br />
protection of participation rights will be higher in Europe as well, if trade unions<br />
will negotiate for the employee rights, so that the individual will not stand alone<br />
in opposition to a company or an association of employers.<br />
3.3. Evaluation of the level of the protection for participation rights<br />
From the reports of the earlier mentioned institutions, which have worked in the<br />
field of the protection of human rights (during the period after the adoption of<br />
the new Constitution, the Law on Commercial Companies, the Participation of<br />
Employees in the Management Act and the Law on the Transformation of<br />
Company Ownership) the following facts become apparent.<br />
The general evaluation is that the level of respect for human rights (in general) is<br />
similar to those in other countries of the Council of Europe. However, the lack<br />
of the real enforcement of employee rights which are (only) formally protected,<br />
continues to be a problem and has also resulted in the overburdening of the<br />
labour courts. The disregard of employee rights has to be understood in a sense<br />
that (most) managers do not have enough respect for the laws and collective<br />
agreements. They refuse to provide sufficient places on the supervisory board to<br />
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employee representatives in the joint-stock companies or they try to prevent<br />
participation in the decision making of socially-owned capital. Furthermore,<br />
there are also frequent problems in relation to the late payment of wages and<br />
salaries, or the refusal by employers to pay compensation for illness (Social<br />
Attorney of Self-Management 1994, 1995).<br />
On the other hand, I agree with the standpoint of those labour market experts,<br />
who reproach the Slovene legislation for having a too protective a role,<br />
especially regarding the generous insurance payments in cases of<br />
unemployment, the bountiful subvention of early retirement and high<br />
compensation used by companies to solve the problem of overemployment<br />
(Vodopivec 1995).<br />
Perhaps, it is necessary to say that during this period there was no mention in<br />
political discussions of the importance of the realisation and protection of the<br />
rights of the industrial, economic and trade union democracy, and even less<br />
about their interdependency or indivisibility. These rights were not perceived as<br />
a measure for the legitimate or functional passing of the privatisation law and<br />
other legislation. Though there were clearly cases of illegal bankruptcy, which<br />
have in the most radical way led to concrete and massive violations of employee<br />
rights, this issue was ignored by the mass media. Instead all attention was,<br />
concentrated on the problem of fraudulent appropriation of socially-owned<br />
assets - which directors or executive officers were ”stealing” socially-owned<br />
assets and how much of it was stolen? This is being used in political<br />
confrontations in order to convene extraordinary sessions of the parliament and<br />
in some other ways, the useless waste of energy.<br />
4. The status of the economic democracy<br />
So far, I have emphasised the interdependency and indivisibility of economic,<br />
industrial and trade union democracy. However, I have not mentioned the<br />
estimation that in general, legal regulations are the least modern and progressive<br />
(not only in Slovenia) in the field of economic democracy. This is the reason for<br />
giving special attention to economic democracy in the following chapter.<br />
It is a fact that the system of private property in its commencement connects the<br />
basic participation rights in a company i.e., the right of management, control and<br />
profit-sharing, exclusively to (financial) capital. However, labour too, has<br />
gradually become a foundation for the right to participate in the decision making<br />
and supervision of business operations within the system of private property.<br />
This is not only a merit of the legislation on human rights and of the processes<br />
of democratisation in higher developed countries, but also one of the<br />
evolutionary changes in the field of management, looking for ways to be a more<br />
competitive company with higher productivity. It is a characteristic of the<br />
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The transformation of companies from the standpoint of participation rights: The case of slovenia<br />
legislation of the European countries and the proposed legal documents of the<br />
European Union that today these rights are regulated by law.<br />
Yet, the liberal doctrine does not allow the legal institutionalisation of the<br />
employee right to share ownership or profits in companies, which would<br />
actually mean that employees also take part in decision making processes about<br />
distribution of financial benefits. Instead, the right to share ownership and profit<br />
stays only with the financial capital. Nevertheless, the more highly developed<br />
world knows rather more wide-spread forms of economic democracy, for<br />
example: employee share ownership, internal buy-outs, profit-sharing, gain<br />
sharing, individual incentives plan, group incentives plan etc.<br />
According to some estimation, in the USA with 10.8 million employee<br />
shareholders, 25 % of big American corporations should by the end of the<br />
millennium have a substantial employee ownership plan (Owen 1995). By the<br />
end of the eighties 90 % of Japanese companies, have listed their ESOP on the<br />
stock exchange including about 50 % of all employees in these companies<br />
(Jones, Kato 1993). France, having among the states of the European Union the<br />
most developed economic democracy, had in 1991 about 17.000 valid contracts<br />
on various kinds of financial employee participation. In Germany financial<br />
participation was organised in approximately 5.000 companies. The<br />
Commission of the European Union has for some time emphasised the<br />
importance of employee participation in ownership of the company and views it<br />
as a mean to reach a more just distribution of wealth, a possibility to secure<br />
appropriate economic growth without the effects of inflation, to achieve<br />
employee motivation, and hence a higher productivity and a better competitive<br />
position in the market. However, the result of the work of the Commission is for<br />
now, a special proposition still in the phase of examination in the European<br />
Parliament and the Economic and Social Committee (Proposal for Council<br />
Recommendation concerning the promotion of employee participation in profits<br />
and enterprise results including equity participation 1991).<br />
Nevertheless, economic democracy is still an issue for business decisions of<br />
company management wanting to prevent hostile take-over or seeing in an<br />
economic democracy stimulation for the employees to work better and for a<br />
more effective use of working time. Economic democracy is, therefore,<br />
negotiable but is far from being a part of the legislation on participation rights<br />
in companies.<br />
Evidently the protectors of the liberal institutional system are neglecting the<br />
standpoint of the founders of liberalism, who based capitalism on the idea that<br />
an individual, who has contributed his labour to something productive, has the<br />
right to obtain the fruits of his work (Locke 1992). Through this postulate, the<br />
constitution of the so called conception of ”self-ownership” is protected (Mill<br />
1995), which is right at the basis of the liberal doctrine and human rights law.<br />
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This rather philosophical position is not irrelevant because of the timely<br />
distance, but has to be explored within the modern challenges of the market<br />
economy. Namely, from the conclusions of Robert Solow, Nobel Prize winner<br />
for economics, we learn that the key factor for economic growth is technology,<br />
knowledge, innovation and not capital or the growth of labour force (Marshall<br />
1<strong>98</strong>9). His thesis had been proved by calculations and findings confirming that<br />
the level of productive use of knowledge is the factor determining the level of<br />
economic growth (Romer 1990; Pfeffer 1994; Becker et al. 1990). These<br />
findings are also accepted by sociologists talking about the economy of goods<br />
changing into a knowledge economy (Drucker 1993), with the intelligentsia<br />
becoming the largest class and the source of economic and social progress<br />
(Gouldner 1979). The consequence is that financial capital as a factor of<br />
production has become subordinate to intellectual capital (where the quality of<br />
social networks belongs ) and what was once called the labour as investment<br />
into the company, today means knowledge - the intellectual capital.<br />
By exchanging the classic, repetitive, physical work with intellectual work,<br />
which has taken over the role of the main production factor, it becomes obvious<br />
that profit is created by labour (intellectual capital), as well as by financial<br />
capital.<br />
Does the new legislation in Slovenia really mean a step towards the expansion,<br />
realisation and protection of the rights of economic democracy?<br />
The Constitution, the Law on Commercial Companies and the Participation of<br />
Employees in the Management Act, which we have already discussed, do not<br />
mention the right of the employee to shareownership or profit-sharing (or the<br />
right to fair remuneration) within commercial companies.<br />
At first sight, it seems that this great and important step will be taken by the<br />
LTCO, for it establishes the internal buy-out strategy as the most attractive<br />
option of privatisation. But this appearance is deceptive. The law grants the<br />
companies, having also been established by Constitutional Judge Krivic, a high<br />
degree of autonomy and brings them together in a legally regulated way in a<br />
position to look for appropriate owners (The Constitutional Court 1993, 127/II,<br />
separate opinion of Judge Krivic). It is true that the law has, through financial<br />
discounts and incentives, given an important advantage to the employees of<br />
companies, but the legal power of the LTCO is limited only within the<br />
transitional period. What will happen after the transformation is completed, is a<br />
completely open question.<br />
If it really was the aim to maintain an ownership structure characterised by a<br />
significant part of employee ownership, then a number of additional regulations<br />
would be required.<br />
It would be necessary, officially and at state level, to recognise the right of<br />
employees to shareownership or the right to share profit (and loss). An<br />
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appropriate tax policy should be adopted, encouraging the employees to invest<br />
in their companies. The state should find appropriate solutions in the pension<br />
system and low taxation for the sale of these shares among employees (Blasi<br />
1992). An appropriate way to attract banks into this project should be found,<br />
although banks are momentarily expecting rehabilitation and have a low<br />
creditworthiness. Appropriate legislation for the employee shares should be<br />
adopted and financial and legal experts to advise the managers of the employee<br />
funds should be given training. We would need independent institutions for the<br />
evaluation of employee shares, if these were not listed on the stock exchange. If<br />
we fail to grant a protective mechanisms against the massive sale of vouchers for<br />
money, when the trade on the open markets will be released, it will lead to a<br />
breakdown in the stock exchange.<br />
An important achievement speaking in favour of economic democracy (a right to<br />
fair remuneration) in Slovenia are discussions between the representatives of the<br />
employers, the representative trade unions and the government. The result, for<br />
example, was the adoption of the Social Agreement for 1995 together with the<br />
agreement on the policy on wages and other incomes of the employees in<br />
commercial business. 7<br />
In my conviction, this is a very important and welcome form of co-operation and<br />
legal regulation setting among other things the ratio between the highest and the<br />
lowest salary as 1:15. Here it is not the most important factor that Plato already<br />
taught Aristotle that within an organisation, the highest paid man should not get<br />
rewarded more than five times higher than the one with the lowest pay. For the<br />
time being, the findings that a very obvious inequality in incomes is negative for<br />
the economic growth are most relevant. T. Persson and G. Tabellini studied 56<br />
countries and established a strong negative correlation between unequal incomes<br />
and the growth of the gross income per capita. The Institute for Public Policy<br />
Research found the same results published in Paying for Inequality. The USA<br />
and Switzerland having the biggest differences in incomes within their citizens<br />
had in the eighties, a significantly slower increase in productivity than more<br />
egalitarian countries like Japan, Germany, Sweden (The Economist 1994).<br />
Morton Deutsch established through forty years of study on the relationship<br />
between egalitarianism and productivity that small differences in salaries<br />
increase the cohesion between people and this stimulates an effective cooperation<br />
and increases productivity (Levine 1990).<br />
7<br />
It is mentioned in the Social Agreement that the Government of Slovenia will in 1995<br />
propose legal solutions to regulate the participation of the employees and the management<br />
in the net profit of commercial companies (Social Agreemnet for the Year 1995). This<br />
promise was not fulfilled. However, a spacial law on the regulation of profit sharing in<br />
commercial companies is being drafted by the government in the year 1997.<br />
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The connection between Plato’s thesis and modern research may be found in the<br />
fact that it is (simply) unjust that the differences among the salaries are too<br />
extreme and that justice too, should be the basic regulatory principle within<br />
human rights law and not just the principles of freedom and equality.<br />
5. Conclusion<br />
Despite the fact that during the transitional period in Slovenia we have<br />
experienced, because of the LC, quite a drastic deterioration in industrial<br />
democracy, I could conclude that the present legislation, in the event that it will<br />
be supported by trade-unions, guarantees an appropriate model of industrial<br />
democracy and a sufficient level of protection of these rights. Trade-union<br />
democracy is well protected because the right to freedom of association is<br />
commonly accepted as the basic (liberal) right. However, the relation between<br />
trade-union and economic democracy seems to be more problematic. Trade<br />
unions have to struggle for the rights of the employees. If employees increase<br />
their share in the ownership structure of the company, it means that one person<br />
joins both sides i.e., of the worker and the owner. Parallel to this development,<br />
the protective function of trade unions becomes obsolete. However, are the trade<br />
union lobbies prepared to abolish themselves gradually? 8<br />
Within this paper I wanted to emphasise the strong connection between the<br />
contents of economic, industrial and trade-union democracy and I have given<br />
special attention to economic democracy which is, in my opinion,<br />
underdeveloped and not sufficiently protected. I have only come across one<br />
Slovenian publication that deals with the existence of a connection between<br />
economic, industrial and trade-union democracy. The title of the book is<br />
”Between Anti-Communism and Post-Socialism” (Rus 1992). Among the<br />
relevant actors responsible for running the state, I have found no echo of this<br />
book. Seen from the angle of promoting economic democracy the book The<br />
Slovene Company in the Future (Èibej et al. 1992) will probably have a more<br />
significant influence. Some authors from the Faculty of Economics in Ljubljana<br />
are suggesting (by explaining all positive and negative aspects) to the companies<br />
in Slovenia to choose one of the forms of profit-sharing and to include it into<br />
their organisational culture.<br />
My major argument is that the rights of economic democracy should become<br />
part of the legislation on participation rights in companies. Not only because of<br />
functional needs such as the connection of the contents of trade union, economic<br />
and industrial democracy, micro- and macro-economic reasons, but above all<br />
because of justice. It is undoubtedly true that profit is made from financial, as<br />
8<br />
Here it is worth mentioning that in the USA 10.8 million employees are included in the<br />
ESOP, but they are not members of any trade union (Blasi, Kruse 1990).<br />
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The transformation of companies from the standpoint of participation rights: The case of slovenia<br />
well as from intellectual capital. The legalisation of economic democracy would<br />
establish a more balanced relation between labour and capital. A stronger<br />
connection between these two elements of industrial civilisation would establish<br />
a better link between freedom and responsibility and a possibility for the social<br />
emancipation of a wider population. Without economic democracy it is also<br />
impossible to talk about the principle of democratic order, which has been<br />
included into Article 1. of the Slovene Constitution. The democratic principle of<br />
the social system demands a certain distribution of power and wealth.<br />
Consequently the democratic principle is not established by merely having a<br />
party system with a parliamentary structure, free elections and non imperative<br />
mandate of the elected representatives in the parliament. There is no democracy<br />
without the active and functional participation of individuals in making<br />
decisions at all levels, from the micro-regulation of the working environment in<br />
commercial and non-commercial organisations, through participation in local<br />
and public issues, up to (active) citizenship at the national level.<br />
In my opinion, the institutionalisation of participation rights of economic<br />
democracy is a necessary tool (but not a sufficient one) for realising the concept<br />
of development proposed by the United Nations in the Declaration on the Right<br />
to Development (1<strong>98</strong>6). 9<br />
From the point of view of justice, such a concept of development implicitly<br />
suggests that a legal system of human rights should not only protect civil and<br />
political rights and thus reward only those who are the most talented, advantaged<br />
and have the most luck. The concept of human rights must also include the<br />
protection of autonomous agents from risks which are out of their control. The<br />
concept of human rights should therefore be based on the integrity of human<br />
personality, needs, abilities and risks, such as: ignorance, disability, accidents,<br />
disease, poverty, unemployment, criminality, etc., because they are constant<br />
factors in our life and do by all means affect social, economic and cultural rights<br />
as well.<br />
It seems that this idea of social justice, which had already been advocated at the<br />
very beginning of modern sociology (Durkheim 1957) and developed further by<br />
J. Rawls (1971), has not been overlooked in the constitutional concept of human<br />
rights in Slovenia, since this concept is based on the triple principles of equality,<br />
freedom and justice (welfare state). However, speaking only with respect to the<br />
legal transformation of companies in Slovenia, if the legislature doesl not protect<br />
the participation rights of economic democracy as a basic human right, this will<br />
only prove the thesis that the process of transition and, in particular,<br />
9<br />
”The right to development is an inalienable human right by virtue of which every human<br />
person and all peoples are entitled to participate in, contribute to, and enjoy economic,<br />
social and political development, in which all human rights and fundamental freedoms can<br />
be fully realized” (Declaration on the Right to Development 1<strong>98</strong>6: Art. 1)<br />
42<br />
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Boštjan Zalar<br />
privatisation in Central and Eastern Europe has depended mostly on political<br />
feasibility (Boycko et al., 1994). Some emphasis has also been placed on<br />
expectations for the improvement of economic effectiveness, whereas justice has<br />
been left aside.<br />
References<br />
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Blasi, J./ Kruse, D. (1990): The New Owners, Harper & Business.<br />
Blasi, J. (1992): Employee Ownership is not Socialism, Gospodarski vestnik, 4. 6. 1992,<br />
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Boycko, M. (1994): Voucher Privatisation, Journal of Financial Economics, Vol. 35, 249-266.<br />
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The transformation of companies from the standpoint of participation rights: The case of slovenia<br />
International Covenant on Civil and Political Rights, (1<strong>98</strong>8): in: A Compilation of<br />
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Law on Companies, (1<strong>98</strong>9): Official Gazette of the Socialist Federal Republic of Yugoslavia,<br />
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Marshall, E. (1<strong>98</strong>9): Robert Solow: Nobel Prize Winner for Economics, Pregled Embassy of<br />
the United States of America, Belgrade, No. 245, pp 8-9.<br />
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the European Communities, 5.<br />
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Proposal for a Council Recommendation concerning the promotion of employee participation<br />
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the European Communities, COM, 259, Brussels.<br />
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de l’homme: Une ”bavure” dans une jurisprudence dynamique, Revue universelle des<br />
droits de l’homme, 2, No. 10, pp 349-353.<br />
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pp 102-104; 56/I, 134-136, Nova revija, Ljubljana.<br />
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JEEMS 1/ 19<strong>98</strong> 45
The transformation of companies from the standpoint of participation rights: The case of slovenia<br />
The European Social Charter, (1992): Council of Europe, The Directorate of Human Rights,<br />
Strasbourg.<br />
Universal Declaration of Human Rights, (1<strong>98</strong>8): in: A Compilation of International<br />
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Vodopivec, P. (1995): Elements of the Strategy for Labour Market Development, in: Rus, V.<br />
(ed.), Slovenia after the Year 1995, Faculty of Social Sciences, Ljubljana, pp 281-297.<br />
46<br />
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Ed Clark<br />
Czech enterprises and the multidivisional form:<br />
Legitimation, legacies and structural choice *<br />
Ed Clark **<br />
This article examines the divisionalisation of organisational structures in three<br />
former state enterprises in the Czech Republic. The research findings suggest<br />
that this process has occurred in three broad phases and that structural change<br />
in the three enterprises has exhibited both common and divergent patterns.<br />
While considering the role of economic and institutional factors in the<br />
explanation of these different pathways, the main argument focuses on<br />
management motives behind the structural choices made, the socio-political<br />
responses to those choices from other social actors, and the significance of pre-<br />
1<strong>98</strong>9 organisational legacies.<br />
Der vorliegende Artikel untersucht die Divisionalisierung dreier früherer<br />
Staatsbetriebe in der Tschechischen Republik. Die Untersuchungsergebnisse<br />
zeigen drei wesentliche Phasen der Umstrukturierung. Der Prozeß der<br />
Strukturveränderung in den drei Unternehmen weist sowohl Gemeinsamkeiten<br />
als auch Unterschiede auf. Bei der Erklärung dieser unterschiedlichen<br />
Transformationspfade werden ökonomische wie auch institutionelle Faktoren<br />
berücksichtigt. Die wesentliche Argumentation konzentriert sich aber auf<br />
entscheidungsbeeinflussende Motive des Managements, die Reaktion anderer<br />
gesellschaftlicher Kräfte auf diese Entscheidungen und die Bedeutung<br />
organisationaler Regelungen vor 1<strong>98</strong>9.<br />
*<br />
Manuscript received: 10.9.97, accepted: 12.1.<strong>98</strong><br />
** Ed Clark, born 1949, Principal Lecturer in Organisational Behaviour at Nottingham<br />
Business School, Nottingham Trent University. Major areas of research interest: changes<br />
in management practices, organisational structures and work behaviour in central and<br />
eastern Europe; changing nature of enterprise and community life in the same region.<br />
Mail address: Department of Human Resource Management, Nottingham Trent<br />
University, Burton Street, Nottingham, United Kingdom<br />
Tel.: +44 (0) 115 941 8418<br />
Email: ed.clark@ntu.ac.uk<br />
JEEMS 1/ 19<strong>98</strong> 47
Czech enterprises and the multidivisional form: Legitimation, legacies and structural choice<br />
Since 1990, the large state enterprises that used to dominate the socialist<br />
economies of Central and Eastern Europe (CEE) have undertaken fundamental<br />
processes of structural change. Organisational researchers have observed in<br />
CEE during this period the rise and spread of the multi-divisional form (MDF),<br />
which has been accepted by many practitioners as the antidote to the centralised<br />
functional hierarchy that had been the institutional blueprint of the command<br />
economy (see for example, Musil/Mares 1993; Bakacsi 1993; Cziria 1994;<br />
Hradecká 1994; Thirkell et al. 1995). In the West - particularly in the United<br />
States - evidence of the widespread adoption since the second world war of<br />
divisional principles in large organisations has led to a prolonged search for<br />
possible explanations. In general, the MDF has been seen to offer certain<br />
technical advantages and efficiencies for the prevailing business conditions of<br />
anti-monopolistic capitalism where large corporations are still expected to<br />
pursue strategies of growth.<br />
As is often the case when examining Central and Eastern Europe, the researcher<br />
is left wondering how far the Western experience and Western accounts of that<br />
experience can help in understanding the processes of transitional economies<br />
and their constituent enterprises. Although the MDF has undoubtedly spread<br />
rapidly throughout the former communist region, corporate growth and product<br />
diversification within former state enterprises have not been the typical<br />
experiences (but see Peng/ Heath 1996). Indeed, large CEE enterprises have<br />
been subject to almost the opposite tendencies - decline in employment,<br />
reduction of product range, greater focus on core activities, and the shedding of<br />
many other activities that used to come under the enterprise umbrella (Soulsby/<br />
Clark 1995). This paper, then, explores alternative explanations of the observed<br />
divisionalisation of industrial enterprises as part of their internal transformation,<br />
taking as its empirical basis findings from an in-depth study of three former<br />
state enterprises in the Czech Republic.<br />
The findings are drawn from a research project which has traced in detail the<br />
progress of a number of mechanical engineering enterprises in Moravia. Since<br />
1992, the author 10 has spent a period of two weeks in each enterprise, during<br />
which over sixty senior and middle managers (as well as a few office and<br />
manual workers) were interviewed in depth about the past and about the post-<br />
1<strong>98</strong>9 changes taking place in the enterprises. These initial field research periods<br />
have been followed up with regular re-visits aimed at updating knowledge about<br />
10 The research was conducted with my colleague Anna Soulsby, who has contributed to the<br />
development of the following arguments in a variety of ways. The author is also grateful<br />
to colleagues at the Faculty of Business and Management at the Technical University of<br />
Brno, without whose help and support this research would not have been possible. In<br />
particular, I thank Milos Kerkovsky, Milos Drdla, Hana Skyvarová, Mirka Cermáková,<br />
Thaddeus Mallya, Jan Hobl, Ales Vladik and Alena Kerkovská.<br />
48<br />
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the enterprises. The empirical materials have been further enhanced by work in<br />
the same enterprises on other related research topics. Altogether, about ninety<br />
managers have been interviewed and extensive formal and informal documents<br />
have been collected.<br />
The three enterprises in question are all involved in the mechanical engineering<br />
industry of the Czech Republic, which had been of strategic economic<br />
significance under state socialism. Vols 11 used to employ over 5,500 people in<br />
the small rural town of Volna and manufactured metallurgical products and<br />
heavy industrial machinery, 70-80% of which used to be exported to the former<br />
Soviet bloc countries and their third world client states. Following 1<strong>98</strong>9, Vols<br />
has retained almost unchanged its product portfolio, but has reduced its<br />
workforce to about 4,500 by 1996. Jesenické Strojírny also produces heavy<br />
engineering machines and plants for industrial clients, and was primarily<br />
oriented to the Soviet Union and the countries of the Council for Mutual<br />
Economic Assistance (CMEA). It is one of four major manufacturers in the<br />
medium-sized town of Jesenice, where its employment has diminished from<br />
7,000 to 3,800 12 in the first seven years of the transition. Both enterprises were<br />
privatised through the first wave of the mass voucher scheme, receiving private<br />
status in the first half of 1993.<br />
Agstroj was also an enormous enterprise, employing over 10,000 people in the<br />
large industrial city of Stromesto, but it manufactures agricultural machinery<br />
that before 1<strong>98</strong>9 was sold across the world for hard currency. In recognition of<br />
its economic contribution to the Czechoslovak command economy, Agstroj was<br />
the recipient during the 1<strong>98</strong>0s of massive investment in its productive capacity.<br />
In 1993, the enterprise was ”privatised” through a merger with its engine<br />
supplier, which had itself gone through the first mass privatisation wave. By<br />
1996, it was still in majority held by the Consolidation Bank 13 , and employment<br />
had declined to less than 6,000.<br />
In what follows, it is argued that divisionalisation in the enterprises has not<br />
merely been the technical adoption of a structural form, passively implemented<br />
as an economically optimal mechanism for managing a corporate strategy.<br />
Rather, it can be better understood as a structural choice enacted by senior<br />
decision makers to serve personal, professional and corporate-strategic interests,<br />
and as an ongoing process of social contestation involving other interested<br />
actors. These socio-political processes of divisionalisation are driven by the<br />
11 All names of places and enterprises have been anonymised in order to preserve the<br />
confidentiality of respondents.<br />
12 This includes the splitting-off as a separate entity of Jesenické Strojírny’s assembly plant.<br />
13 Konsolidacní banka is a state-owned bank set up in 1991 to take on and consolidate the<br />
bad debts and poorly performing ”assets” of the state sector.<br />
JEEMS 1/ 19<strong>98</strong> 49
Czech enterprises and the multidivisional form: Legitimation, legacies and structural choice<br />
motives, values and preferences of the parties in question, drawing on<br />
contemporary and historical resources at their disposal. First the article<br />
considers some of the theory underlying these propositions, before looking at<br />
the evidence that can be adduced from the experiences of divisionalisation in<br />
the three enterprises. The paper ends with a brief set of conclusions for the study<br />
of the multidivisional form in Central and Eastern Europe.<br />
Divisionalisation: Structural Change and Social Process<br />
In his seminal work, supported by later refinements (e.g. Salter 1970; Channon<br />
1973; Rumelt 1974; Wrigley 1974; Williamson 1975), Chandler (1962) argued<br />
that the key factor in explaining the adoption of the MDF in Western capitalism<br />
has been the technical superiority, and hence economic efficiencies, associated<br />
with a multi-divisional structure under conditions of product or market<br />
diversification. This has led to the famous dictum that structure always follows<br />
strategy, in recognition of the management benefits attributed to the MDF in<br />
relation to the problems created by manufacturing multiple, possibly unrelated,<br />
products under the same organisational roof. In similar vein, contingency<br />
arguments have pointed to the technical and economic problems created by<br />
organisational size and market diversity, and suggested that these difficulties<br />
may in principle be more efficiently and effectively managed through<br />
divisionalised structures (see for example, Mintzberg 1979:393ff; Child<br />
1<strong>98</strong>4:94-95; Palmer et al. 1993:102-103).<br />
More recent American research has questioned the technical-economic<br />
argument as the sole or major explanation of the spread of the MDF, raising for<br />
consideration factors linked with institutional-isomorphic pressures and internal<br />
political, or strategic choice, processes (cf Fligstein 1<strong>98</strong>5, 1991; Palmer et al.<br />
1993). Following the theoretical leads of institutional theorists (cf. Meyer/<br />
Rowan 1991; DiMaggio/ Powell 1991), various researchers of the Western<br />
MDF have attempted to assess whether the adoption of structural mechanisms is<br />
influenced by the need for organisations to operate in a socially legitimate<br />
manner rather than by some externally imposed constraint to be economically<br />
efficient. The organisational imperative for socially aware managers is thus to<br />
select organisational forms which meet the expectations of the business and<br />
management community and of wider groups of stakeholders (see Fligstein<br />
1<strong>98</strong>5, 1991; Palmer et al. 1993; and more generally Greenwood/ Hinings 1996),<br />
and this is thought to create the further tendency to acquire the fads and fashions<br />
of ”progressive” management (cf. Huczynski 1993; Abrahamson 1996).<br />
Another theoretical view expressed in the literature focuses on the ways in<br />
which important organisational decision makers exercise their power and<br />
declare their preferences in the processes which lead to the choice of a structural<br />
form such as the MDF. Both Fligstein (1<strong>98</strong>5) and Palmer et al (1993) argue for<br />
the relevance of these essentially political factors, thereby building on the<br />
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insights of Child (1972, 1997) into the role of strategic choice in organisational<br />
structuring and change. It is this view that is explored in more detail both<br />
theoretically, here, and empirically, below.<br />
In conventional accounts, the adoption of the multi-divisional form is often<br />
described and analysed as an apparently unproblematic reorganisation of a<br />
company, a movement from an established, but technically sub-optimal,<br />
structural arrangement to another more efficient one 14 . The classical formulation<br />
that "structure follows strategy" implies that the rationales for choice of both<br />
strategy and structure are essentially driven by rational economic-technical<br />
considerations - e.g. the strategy of diversification is selected because of legal<br />
constraints on existing corporate growth in a single product/market; the MDF is<br />
then chosen as a technically efficient response to managing multiple products or<br />
markets. In this way, the motives of decision makers are narrowed by fiat to<br />
some technical concern with corporate profitability, market share or similar<br />
organisational goal. Moreover, in spite of the fact that structural changes may<br />
have major implications for the working environment of managers, employees<br />
and other stakeholders, the possible responses of such other social actors tend to<br />
be ignored as irrelevant, or treated as if they were unproblematic. With these<br />
implicit assumptions, it is easy to give the impression that structural change<br />
such as the introduction of the MDF is accepted as a shared organisational goal.<br />
However, there are benefits to seeing the transformation of formal structures as,<br />
first, a social process which, second, takes place over a prolonged period of<br />
time, two issues which are more commonly raised in approaches to change<br />
management. From such a perspective, structural change involves questions not<br />
only of the selection of a relevant structural form, but also of the appropriate<br />
strategies of implementation to overcome resistance or conflict. Transformation,<br />
second-order change, quantum change, reorientation - or however the radical<br />
change is conceptualised (see, for example, Miller/ Friesen 1<strong>98</strong>4; Tushman/<br />
Romanelli 1<strong>98</strong>5; Levy 1<strong>98</strong>6) - necessarily demand a notion of change over time,<br />
including various possible "pathways" or "tracks", which may or may not end<br />
up with the desired structure being adequately installed (cf. Greenwood/<br />
Hinings 1<strong>98</strong>8; Laughlin 1991; Clark/ Soulsby 1995). In developing this<br />
perspective, structural change is understood less as a mechanistic response to<br />
inescapable economic or institutional demands in the external environment, and<br />
more as the social construction of actors with preferences, interests and the<br />
power to influence the structural outcome. In the words of two recent<br />
commentators:<br />
14 This mechanistic process in many respects mimics the conventional economists’ view of<br />
the macro-economic transition from hierarchical state socialism to a liberal market<br />
economy.<br />
JEEMS 1/ 19<strong>98</strong> 51
Czech enterprises and the multidivisional form: Legitimation, legacies and structural choice<br />
”... the understanding of radical change requires more than an analysis of the<br />
institutional arena or sector. There must be a concern with the patterns of value<br />
commitments, power dependencies, interests and capacity for action within the<br />
organization.” (Greenwood/ Hinings 1996: 1042; see also, for example, Wood<br />
1979)<br />
In this respect, the adoption of the MDF is an ongoing socio-political process,<br />
not the introduction of a technical object, a drawing or chart. The MDF is<br />
perceived in different ways by different social actors according to how it affects<br />
their stake in the organisation. These differential perceptions of and interests in<br />
the MDF lead to the exercise of power and authority in its promulgation by<br />
those managers whose interests and values are served by its institution; to social<br />
conflict over its implications for divisional or departmental life, such as the<br />
allocation of resources, rewards and work obligations; and to patterns of active<br />
and passive resistance to the design and meaning of the MDF when it does not<br />
fulfil the perceived needs of those without effective authority. These social<br />
processes, which create conditions for deviations from the planned structure and<br />
from its implementation, may be complemented and exacerbated by technical<br />
problems, such as the failure to provide the systems and procedures (e.g.<br />
information, costing and pricing systems) necessary to support the changes in<br />
question.<br />
In responding to the new internal environments created by strategic and<br />
structural changes, managers and other employees make sense of the new<br />
conditions by drawing on various resources that are available to them by virtue<br />
of their experiences as organisational participants. Of particular importance,<br />
especially in circumstances that are changing rapidly and radically, are<br />
historical resources, which provide an anchor and reference point for<br />
individuals. In the words of an Agstroj director, ”... the past is an iron shirt...”,<br />
and the legacies of management and of organisation define in part the prevailing<br />
patterns of preferences, values, motives and ways of perceiving and evaluating<br />
the organisational world.<br />
All organisations have their own histories which influence in a variety of ways<br />
their later development. For post-communist managers, it is necessary to work<br />
not only in the context of the emergent market-economic world, but also within<br />
a commonly accepted organisational and managerial framework inherited from<br />
communist days - sets of traditions and values, physical and technological<br />
legacies, enterprise reputations etc. Enterprise managers have accumulated<br />
experiences of their enterprises and a stock of knowledge and recipes about the<br />
”proper ways” of handling recurrent problems. These organisational legacies are<br />
sedimentations of years of experience of everyday management life in particular<br />
enterprises which offer both constraints on what is seen to be possible, and<br />
resources that can be enacted to help accomplish new managerial tasks<br />
(Soulsby/ Clark 1996). This argument affirms that processes of structural choice<br />
52<br />
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and change - such as the adoption of the MDF - do not come out of the blue.<br />
Rather, they are, at least in part, constructed from historically available<br />
ingredients of management and organisation which continue to affect strategic<br />
decision making and implementation via the taken-for-granted knowledge and<br />
practices of key powerful social actors. This thesis is strongly reminiscent of<br />
certain features of Stark’s (1992) ”path dependence” proposition.<br />
”Actors who seek to move in new directions find that their choices are<br />
constrained by the existing set of institutional resources. Institutions limit the<br />
field of action, they preclude some directions, they constrain certain courses.<br />
But institutions also favor the perception and selection of some strategies over<br />
others.” (Stark 1992:21).<br />
Empirical Patterns of Divisionalisation in the Czech Republic,<br />
1990-1996<br />
In the following sub-sections, empirical case materials are drawn upon in order<br />
to explore the above issues in greater depth. Over the period from 1990-1996,<br />
none of the three enterprises took an easy and straightforward route to its<br />
preferred MDF, and I argue below that the actual pathways of divisionalisation<br />
can be understood in large part as products of the socio-political processes<br />
which occurred within the historical contexts of the particular enterprises. The<br />
general processes may be described in three stages. The first two stages<br />
correspond loosely with the period leading up to privatisation, 1990-1993, when<br />
the enterprises underwent very similar experiences of rapid decentralisation,<br />
followed by some degree of recentralisation. In the third stage, which occurred<br />
mostly after privatisation and leading up to 1996, the enterprises began to go<br />
down their own distinct paths.<br />
Decentralisation: the politics of strategic and structural choice<br />
In 1990, all three enterprises experienced rapid changes in their management<br />
and organisation. As the new senior management bodies took shape, small<br />
management teams were established to undertake strategic planning. In spite of<br />
espoused government policy, most senior managers believed that it was crucial<br />
to reorganise and restructure their enterprises before privatisation, and a high<br />
degree of pre-privatisation restructuring was uniform across all three<br />
enterprises. In each enterprise, strategic managers advocated and introduced a<br />
radical structural form, with more decentralised elements of the MDF. By<br />
designing structural units as cost-centres and profit-centres with greater degrees<br />
of autonomy and self-responsibility, senior managers eagerly embraced the<br />
Western model of the large corporation. The enthusiasm shown for the MDF in<br />
JEEMS 1/ 19<strong>98</strong> 53
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particular, and for Western models in general 15 , was almost unbounded, and<br />
seemed to bear little relation to the technical relevance of the MDF for the<br />
enterprises. In fact, its adoption created technical problems, since the structure<br />
rapidly became too decentralised for the businesses and their environments (see<br />
below).<br />
The question at this stage is why the senior managers in the three enterprises<br />
adopted the MDF with such enthusiasm, when its technical advantages in the<br />
prevailing circumstances were far from self-evident. To answer this question, it<br />
is necessary to consider the values, objectives and motives of senior managers<br />
and the nature of the problems they faced in 1990, when the first strategic and<br />
structural choices were made. The story of these managers and of enterprise<br />
management is one of both change and continuity. In the sample, only 19% of<br />
the ”old guard” retained their directorate positions in the three enterprises. Yet<br />
81% of those in post-1<strong>98</strong>9 senior positions had been promoted from just the<br />
level below, and in 1<strong>98</strong>9 had obviously been in the process of being groomed<br />
for the most senior levels (see Clark/ Soulsby 1996). Being either nomenklatura<br />
or aspiring nomenklatura managers, these men (there were no women) had<br />
joined the Communist Party and its organs and many had managed the<br />
enterprises through the socially and normatively difficult period of<br />
normalisation 16 , which followed the suppression of the Prague Spring.<br />
Being associated with the repressive communist state had personal and<br />
professional consequences. At a personal level, these individuals were seen as<br />
blemished, and they suffered from a deficit of social legitimacy inside the<br />
enterprise and within the larger local community, where typically employees<br />
and citizens paid mere lip-service to the regime and to its institutional<br />
representatives (Holy 1996: 27ff). Following the Velvet Revolution, local Civic<br />
Forum 17 groups were rapidly established in the enterprises and they began to<br />
take strong actions against a number of senior managers, thus creating intense<br />
personal insecurity for the existing management cadres. Their professional<br />
careers were further thrown into doubt by public debates about how to deal with<br />
the former Party officials, and the subsequent passing of the Screening<br />
(lustrace) Act (1991). This legislation prohibited former senior communists<br />
from holding important public office, which included directorships of state-<br />
15 One strategic manager was so keen that after being interviewed he asked the researchers to<br />
send him information on matrix structures, a topic which had spontaneously become part<br />
of the interview discussion.<br />
16 Normalisation here refers to the period following the Warsaw Pact invasion of 1968, when<br />
neo-Stalinist political and economic structures were reimposed on Czechoslovakia. The<br />
recentralising of political and economic control and the harsh punishments for<br />
disobedience led to strong popular dislike for the regime.<br />
17 Civic Forum was the main anti-communist coalition during the Velvet Revolution of 1<strong>98</strong>9.<br />
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owned enterprises (see Wheaton/ Kavan 1992; Jeffries 1993). Given these local<br />
and national, social and legal processes, the legitimacy of state socialist<br />
managers was in serious dispute, both as individual citizens and, more<br />
especially, as career professional managers. It is contended here that within the<br />
three enterprises, which were in the main still directed by surviving former<br />
(aspiring) nomenklatura managers, the political process was substantively<br />
affected by their motives, including the felt need to transform their hitherto state<br />
socialist management credentials to those of bona fide market-economic<br />
managers.<br />
In the immediate post-1<strong>98</strong>9 context, the senior managers of the three enterprises<br />
made strategic and structural choices which they believed would enhance their<br />
chances of professional transformation and survival. While their main aim was<br />
to prepare the enterprises for the expected process of privatisation, in each case<br />
their strategic priority was to secure the interim survival of the enterprise. This<br />
strategy chimed well with their own personal goals of staking a legitimate claim<br />
to enterprise management. Given the wider talk in the communities about what<br />
to do with the ex-communists, the former nomenklatura realised that the main<br />
evidence of their own transformation to capitalist managers would come from<br />
their ability to demonstrate the health of the enterprise.<br />
Drawing on the knowledge they had of existing large Western businesses,<br />
senior managers exhibited an implicit belief in the MDF as the appropriate<br />
model for large corporations, which would in turn, improve the chances of<br />
survival of their own enterprises. Some senior managers were unable to<br />
contemplate the possible failure of the MDF, and the degree of faith shown is<br />
illustrated by one director in Vols, who opined that the new structures would<br />
work because they ”... had to work”. In as much as they believed that the MDF<br />
offered a strategy for enterprise survival, their own hopes of managerial survival<br />
were also boosted.<br />
The strong appeal of the MDF can be understood as part of an overall<br />
management strategy of re-legitimation. The MDF offered structures, systems<br />
and mechanisms that were not only directly related to known institutional<br />
models from the West - the ultimate source of values and validation for the new<br />
post-communist era; they were also a direct, explicit and clear refutation of the<br />
structures, systems and mechanisms upon which the now-discredited past had<br />
been constructed. By associating themselves with the market-economic MDF,<br />
and distancing themselves from command-economic functional form, the<br />
managers were allying themselves culturally and symbolically with the general<br />
prevailing expectations and values of marketisation, decentralisation, strategic<br />
autonomy, freedom, personal responsibility etc. (cf Child 1993). The MDF<br />
resonated with Western capitalist values and institutional concepts of<br />
modernness, which in turn brimmed with the one thing they perceived<br />
themselves as lacking in the post-1<strong>98</strong>9 world - social legitimacy.<br />
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In the first year or so after 1<strong>98</strong>9, the structural choices of these professionally<br />
vulnerable managers showed all the hallmarks of a social group seeking wider<br />
social acceptance and legitimation. The early, enthusiastic adoption of the MDF<br />
supports this socio-political explanation of post-communist management<br />
behaviour. However, in spite of senior management faith in the structures,<br />
technical and social problems soon arose.<br />
Recentralisation: Technical problems and social resistance<br />
Introducing a new head office for strategic matters, each enterprise redefined a<br />
multitude of structural units as ”divisions”, implemented more delegated<br />
patterns of authority and responsibility between the centre and the units, and<br />
created more autonomy in the divisions and more competition between them.<br />
The radical divisionalisation that took place after 1<strong>98</strong>9 led to two related kinds<br />
of control problem: technical control and social control.<br />
Agstroj is essentially a single product business, yet in 1990 the strategic team<br />
devised a structure with ten divisions each operating as cost centres, with an<br />
intention of moving later to a profit-centred model. The substantially devolved<br />
responsibilities led to severe technical problems for the enterprise. In the words<br />
of one director:<br />
... there were too many divisions and the span of control [of the General<br />
Director] was too great.<br />
Jesenické Strojírny went much the same way, introducing sixteen units with<br />
divisional status and profit-centred responsibilities, far too many for the existing<br />
technical systems to cope with. Once again, having so many operating units<br />
reporting directly to him, the new General Director suffered serious problems of<br />
control. Furthermore, the accounting and general information support systems<br />
were slow, old fashioned, and poorly designed for controlling the MDF. In these<br />
conditions, the strategic head office could neither monitor divisions accurately<br />
nor have confidence in the reported performance of the decentralised units.<br />
Although Vols was more conservative in its restructuring, it too instigated a<br />
cost-centred multi-divisional structure which its management anticipated would<br />
move towards a profit-centred arrangement. Again, the management<br />
information systems provided inadequate assistance, leaving the centre<br />
structurally isolated from divisional decision making, and conceding to<br />
divisional and middle managers far more discretion than the senior managers<br />
had foreseen.<br />
These technical weaknesses, the severity of which had been unforeseen by<br />
senior managers in their rush to divisionalise, were further revealed in and<br />
exacerbated through the diverse patterns of social response which the new<br />
structures elicited. The structures of the MDF generated an unfamiliar socioeconomic<br />
environment for both managers and employees. Senior and middle<br />
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managers faced new expectations for their work and for their roles in the<br />
organisation, and the very basis of their relationships with other managers and<br />
other departments were altered. There is no doubt that some middle managers<br />
were simply afraid of the new demands:<br />
The problem with the central plan was that everything was written and there<br />
was no place for ”activity”... Sometimes [now], when I need to take a decision,<br />
I just feel confused... [Many managers] are unable to take decisions without<br />
getting confirmation from above. I worry so much about my responsibility that<br />
sometimes I cannot sleep. (Vols middle manager)<br />
Such confusion and lack of confidence also led to conscious action against the<br />
new structures. In the past, middle managers had grown accustomed to an<br />
atmosphere of fear and mistrust, so that when asked for cost or other financial<br />
information, they used to conceal, withhold, bias or otherwise distort data to<br />
cast themselves and their colleagues in the best light. This routine fear of<br />
punishment continued to be reproduced in the early days of the MDF, thereby<br />
completely undermining the control processes necessary for a decentralised<br />
system.<br />
The effects were cumulative. The centre could only inadequately monitor<br />
divisional performance by using informed guesswork to correct for inaccurate<br />
information coming through the formal systems, and the gap between centre and<br />
division in turn made it possible for divisional managers to exercise discretion<br />
in their own plants. A director at Jesenické Strojírny noted how<br />
... each factory [using its new autonomy] effectively employed too many people.<br />
They protected people and services [and] overall it was inefficient.<br />
In this respect, management decisions at divisional level were often expressions,<br />
not of the new hard-nosed market-economic rationality, but of a logic grounded<br />
in pre-1<strong>98</strong>9 management values. A senior Agstroj director reflected upon this<br />
tendency:<br />
Agstroj is soft on the individual [employee], which is typical... We are not used<br />
to saying ”we don’t want you from the 1st January”... There is still a lot of<br />
social thinking... [Hardness]... is not in the Czech culture.<br />
While there is some evidence to locate such social thinking in the Czech value<br />
system, other managers saw the divisional protection of staff as a communist<br />
legacy:<br />
[These managers]... are not red, but pink. (Another Agstroj director)<br />
At Vols, there was a general agreement between senior managers, even at the<br />
level of head office, that the most important goal in the short to medium term<br />
was to defend the rights of employees and to look after their families, and they<br />
took strategic and operational decisions on social as well as market-economic<br />
grounds. A strategy manager at Jesenické Strojírny echoed these sentiments:<br />
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Czech enterprises and the multidivisional form: Legitimation, legacies and structural choice<br />
[In the past, there was]... a certain pride, a loyalty and a sense of social<br />
responsibility; [these were reflected in]... the enterprise’s social policy, [which]<br />
was in substance good.<br />
However, the MDF did not induce an identical response from all managers in<br />
the enterprises. In spite of the general sharing of the social values referred to<br />
above, the MDF actually benefited some divisions and some operations rather<br />
than others, and the rule of expedience meant that the ”winners” were more<br />
likely to support the new arrangements than the ”losers”. The more internally<br />
competitive and marketised the structure, the more it exposed some newly<br />
created divisions, whose poor economic performance had been concealed in<br />
aggregated enterprise information, as potential drags on the whole-enterprise<br />
performance. Hence, in 1990-1991, Vols’ metallurgy division was a huge lossmaker,<br />
and the divisional head was among the most vociferous opponents of<br />
advancing the MDF to a fully-fledged profit-centred structure.<br />
Meanwhile, the profit-centred MDF at Jesenické Strojírny served to aggravate<br />
and re-kindle inter-divisional conflicts that had smouldered for years under state<br />
socialism. Its most profitable turnkey business, requiring the coordination of the<br />
production schedules of the operating plants in order to ensure the construction<br />
of, say, a cement factory, was put in the hands of the Commercial Division.<br />
While the Production Divisions had to supply their products to Commercial for<br />
these integrated projects, they could only make profits from the production and<br />
delivery of less profitable single machines. The Production Divisions therefore<br />
felt not only that Commercial was able to put on excellent divisional<br />
performances on the back of their (i.e. Production’s) hard work; but further that<br />
they were at the beck and call of Commercial, which had the full support of the<br />
General Director. Tense relations had always existed between these functions,<br />
but the marketised MDF exacerbated this structural conflict, led to passive<br />
resistance and a withholding of goodwill between the divisional managers.<br />
In short, at most levels of management, the MDF was accepted as the right and<br />
proper structure for the transforming enterprises. However, in practice, the<br />
chosen form of divisionalisation created technical problems of head office<br />
control, threatened the confidence and the inherited social values of many<br />
managers, exposed latent unit weaknesses, revealed deep interdivisional<br />
conflicts through the use of competitive monitoring, and led to a good deal of<br />
resistance to the full force of divisional mechanisms and practices. By 1992, all<br />
three enterprises had stepped back from their initial attempts at the MDF,<br />
retrenching around more centralised, less competitive structures which<br />
conformed more closely to the capabilities of the information systems in place<br />
and to the values of the managers whose goodwill was necessary to make the<br />
structures work. Nevertheless, even in this process of retrenchment, the senior<br />
managers of all three enterprises remained faithful to their ideal of<br />
divisionalisation - the full holding company form, in which each division would<br />
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become its own legal corporate entity within a looser umbrella of the parent<br />
company.<br />
Taking different paths: organisational legacies and the diversity of<br />
divisionalisation<br />
By the time they took on private status in the first half of 1993, each enterprise<br />
had undergone a very similar process, namely, the enthusiastic adoption of<br />
decentralised, divisionalised structures, which, for technical and social reasons,<br />
had been unsustainable in their initial forms. In the post-privatisation period,<br />
however, the three enterprises began to take divergent roads to divisionalisation.<br />
While Agstroj management was eventually forced to abandon its decentralising<br />
ambitions in favour of a recentralised functional form, Jesenické Strojírny<br />
proceeded rapidly - in spite of mentioned technical and social problems - to the<br />
full holding company form, and Vols remained broadly in a mixed cost-centre<br />
and profit-centre arrangement. Only Jesenické Strojírny achieved the common<br />
goal of installing a holding company structure, but the other two managements<br />
remained committed, formally or informally, to its realisation in the longer term.<br />
Having explained the pre-privatisation processes of divisionalisation in terms of<br />
managers’ needs to reclaim legitimacy for their careers and the technical and<br />
social problems that arose within the three enterprises, it is now necessary to<br />
account for the diverse pathways followed by the enterprises. It will be argued<br />
that each enterprise was in some way a prisoner of its own historical legacies -<br />
whereas these worked more or less as positive resources for the managers of<br />
Vols and Jesenické Strojírny, Agstroj managers’ choices have been severely<br />
constricted by its state socialist past.<br />
A huge injection of state investment during the 1<strong>98</strong>0s had not only boosted<br />
Agstroj’s strong industrial reputation within the Soviet world and beyond, but<br />
also increased its productive capacity in order to enhance its potential to earn<br />
hard currency. It is a strange irony that within years of acquiring this capacity,<br />
the demise of the command economy completely altered the enterprise’s<br />
prospects within the ailing global agricultural industry of the 1990s. In the new<br />
circumstances, Agstroj has never been able to sell enough machines to reach the<br />
high break-even point determined by its new plant. In spite of formal<br />
privatisation through merger with its (privatised) engine supplier, Agstroj<br />
remained essentially a loss-maker, 70% owned by the National Property Fund.<br />
In 1994, its assets and liabilities were ”sold” to the state-owned Consolidation<br />
Bank to manage and billions of crowns of debt were effectively wiped out.<br />
Agstroj’s experimentation with delegated authority and responsibility had been<br />
disastrous given the central need to minimise costs, and in 1995, Consolidation<br />
Bank insisted on appointing a new Production Director to whom all divisions<br />
were directly responsible:<br />
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[The divisions]... had been decentralised following the pursuit of a holding<br />
company structure, [and it]... was not working. The organisation was felt to<br />
have become too decentralised - with duplication of resources and activities<br />
[and poor communication]. Agstroj had to be reorganised from scratch... They<br />
also needed tighter financial controls, so there had to be re-centralisation, a<br />
kind of tougher centralisation... (Agstroj Director)<br />
The legacy of its high production capacity - its ultimate Achilles’ heel - and the<br />
consequent inability to make profits have created a permanent financial crisis in<br />
the enterprise, which has effectively defined the economic limits of structural<br />
choice open to Agstroj managers. Its structural units may still be called<br />
divisions, but by 1996 they acted more like traditional plants.<br />
While Agstroj serves to illustrate that technical-economic factors have an<br />
important role in determining the boundaries within which structural choice<br />
may operate, Jesenické Strojírny, which advanced rapidly to the holding<br />
company form, demonstrates the way in which powerful managers can enforce<br />
their structural preferences in spite of the existence of opposition. Technically<br />
the activities of Jesenické Strojírny called for structures which emphasised<br />
cooperation and coordination between plants, rather than interdivisional<br />
competition and rivalry, yet the senior managers persisted with their espousal of<br />
an internal market model. It is possible to trace this senior management fervour<br />
for the holding company structure back to the enterprise’s history.<br />
Jesenické Strojírny has a progressive reputation, deriving in large part,<br />
according to respondents, from the open attitudes and behaviour of the pre-1<strong>98</strong>9<br />
General Director who had ruled the enterprise for more than 20 years. In line<br />
with politico-economic reforms during the late 1960s, the enterprise had<br />
experimented with decentralised MDF-style structures, but had had to abandon<br />
such "modernising" concepts in the early 1970s, when normalisation began to<br />
take hold in the economic sphere. When the new General Director, who had<br />
himself been a reforming middle manager during the late 1<strong>98</strong>0s, appointed as<br />
his Strategy Director the very person who had been responsible for the<br />
structural experiments of the 1960s, it came as little surprise to find the senior<br />
management team advocating the adoption of the MDF with the goal of moving<br />
as rapidly as possible to a holding company structure. The opposition by key<br />
divisional managers had restrained the divisionalisation process before<br />
privatisation, but once the senior managers had gained the confidence and<br />
support of the new owners in 1993, the strong emotional commitment of key<br />
managers to the holding company was enough to drive forward its realisation. In<br />
January 1995, when the new legal form was officially implemented, it was as if<br />
some inevitable historical process had eventually unfolded within the enterprise.<br />
The case of Vols falls between the other two enterprises, as during the 1990s it<br />
has maintained a commitment to a moderately decentralised MDF, steering a<br />
steady line between the felt need to become more modern, more Western and<br />
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more market-oriented in its structures, and the maintenance of its social<br />
legacies. Vols was established and built up during the 1950s as a conscious part<br />
of Czechoslovakia’s social and economic policies. The enterprise and the local<br />
community of Volna gained hugely because of their roots in communist policies<br />
and the strength of their links with the National Communist Party. Managers<br />
who joined Vols had been strongly committed to the social role of the enterprise<br />
- as shown above - and these commitments and values have continued to<br />
circumscribe the structural decision making in the enterprise. Social thinking<br />
has tempered the willingness of managers to introduce any changes into the<br />
enterprise that might damage its social and economic relationship with Volna.<br />
Like Jesenické Strojírny, after privatisation and with the support of the new<br />
owners, Vols’ senior managers continued to operate within decision making<br />
boundaries set by their own motives and values, but the traditions of Vols<br />
predisposed its management towards a more gradualist approach to<br />
divisionalisation.<br />
Conclusions<br />
By examining the actual processes of divisionalisation within three enterprises<br />
in the Czech Republic, it has been possible to explore a number of explanations<br />
for the paths adopted. The nature of the argument has been shaped by<br />
consideration of the three factors which have emerged in the literature that has<br />
extended the pioneering work of Chandler (1962): viz. technical-economic<br />
factors, institutional factors and political (strategic choice) factors. However, the<br />
theoretical presumption has been that all structural changes are ultimately the<br />
choices of senior managers in the enterprises, and this stance has informed the<br />
types of explanation proposed. The research findings have highlighted the role<br />
of personal and professional motives in the structural choices of the powerful<br />
social actors in the enterprises and have pointed to the need to consider<br />
divisionalisation as a socially contested process circumscribed by external<br />
economic and institutional factors and by historical legacies. The evidence from<br />
the enterprises suggests that divisionalisation has passed through three stages.<br />
The first two stages emphasise similarities in organisational experience, which,<br />
it is contended, relates to the initial motives and anxieties of the post-communist<br />
managers, many of whom had been deeply implicated in enterprise management<br />
under the communist regime. Concerned with their personal and professional<br />
legitimacy, senior managers made structural choices which they estimated<br />
would optimise the chances of enterprise survival, and thus improve their own<br />
claims to being bona fide market-economic managers. The MDF was not only<br />
based on highly credible Western models, but it also embodied and symbolised<br />
the critical values of the emergent society - freedom, devolved responsibility,<br />
private accountability, decentralisation etc. The enthusiastic advocacy of these<br />
principles thus served to enhance managers’ credentials in the eyes of<br />
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organisational stakeholders, who included not only the employees and the<br />
liberal-economic government, but also would-be shareholders and owners. The<br />
strength of support for the holding company concept, even where it was a<br />
technical mismatch with product-market or financial realities, may be a direct<br />
indicator of the severity of the problem of managerial legitimacy faced in the<br />
early post-1<strong>98</strong>9 period.<br />
Following implementation of some variant of the MDF, each enterprise faced<br />
technical and social problems of control. The latter were particularly important,<br />
and the MDF could be seen to create or make manifest personal anxieties and<br />
inter-unit conflicts. During this second stage of contestation, each enterprise<br />
withdrew to some degree from the decentralised model it had initially adopted.<br />
During the final stage, which followed privatisation, the enterprises began to<br />
follow their own distinctive pathways to divisionalised, decentralised forms.<br />
The discussion of these findings dwelled particularly on continuing influence of<br />
specific enterprise histories and legacies.<br />
To conclude, it is possible to make a judgement about the relative importance<br />
of, or the respective roles played by, technical-economic factors, institutional<br />
factors and strategic choice processes in the adoption of the multi-divisional<br />
form. The evidence and interpretation offered here suggests that external<br />
economic factors are best understood as playing a significant role in defining<br />
the limits of management choice. Technical-economic factors seemed to<br />
establish the boundaries beyond which structures had to become more<br />
centralised in order to assert firm control over organisational activities, but<br />
within which managers could enjoy a broad degree of discretion to be able to<br />
pursue their own preferences with respect to organisational design. Institutional<br />
pressures emanated from society at large with its general normative expectations<br />
about decentralisation, private responsibility and autonomy; and, more<br />
concretely, from the business environment of internationally available and<br />
socially acceptable patterns or blueprints regarding appropriate structural forms<br />
for a post-communist, market-economic organisation. The MDF provided<br />
enterprise managers with a socially legitimate design that fulfilled these general<br />
and specific institutional expectations. However, from the detailed cases of<br />
divisionalisation reported here, it is argued that the influence of both technicaleconomic<br />
and institutional contextual factors has been crucially mediated by the<br />
intervention of human agency. Divisionalisation can therefore be understood as<br />
a process which is socially constructed by significant organisational actors, who<br />
exercise power within a set of constraints and opportunities afforded by<br />
contemporary and historical circumstances.<br />
References<br />
Abrahamson, E. (1996): Management fashion, in: Academy of Management Review 21(3),<br />
254-285.<br />
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Bakacsi, G. (1994): Organisational transition - management legacy, in: Makó, C./ Novoszát,<br />
P. (Eds.), Convergence versus Divergence: The Case of the Corporate Culture,<br />
Budapest: Communication and Consultation Co, Ltd, 37-45.<br />
Chandler, A. D. (1962): Strategy and Structure: Chapters in the History of the Industrial<br />
Enterprise, Cambridge, Massachusetts: MIT Press.<br />
Channon, D. F. (1973): The Strategy and Structure of British Enterprise, London:<br />
MacMillan.<br />
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Russian Management Style: A Game Theory Approach to Evaluating Decision Making<br />
Russian Management Style: A Game Theory Approach to<br />
Evaluating Decision Making *<br />
Robin Matthews / Ara Yeghiazarian **<br />
This paper springs from the practical problem of designing management<br />
training programs to improve decision making by Russian managers in the<br />
market economy. We approach the problem by attempting to identify any<br />
clustering (focal points) in their decision making, and investigating the impact<br />
upon the efficiency of firms in a simulation game. We then consider the<br />
implications for a real economy and for the orientation of management training<br />
programs by asking whether these focal points inhibit effective decision making<br />
and efficient results. We believe that our methodology has wide implications for<br />
identifying management training needs generally, and is not confined to the<br />
Russian managers who provide the empirical basis for this paper.<br />
Ausgangspunkt dieser Arbeit sind praktische Probleme der Entwicklung von<br />
Managementtrainingsprogrammen zur Verbesserung der Entscheidungsfindung<br />
russischer Manager im Hinblick auf marktwirtschaftliche Erfordernisse. Dazu<br />
wurden zunächst Schwerpunktbereiche der Entscheidungsfindung identifiziert<br />
und deren Auswirkungen auf die Effizienz mittels Simulationen überprüft. Aus<br />
den Ergebnissen wurde die notwendige Ausrichtung von Trainingsprogrammen<br />
abgeleitet. Wir glauben, daß unsere Methode zur Identifikation von<br />
Weiterbildungsbedarf allgemein verwertbar und nicht nur auf russische<br />
Manager anwendbar ist.<br />
*<br />
Manuscript received: 9.8.96, revised: 29.10.97, accepted: 12.1.<strong>98</strong><br />
** Robin Matthews, born 1945, Professor of International Business Policy, Kingston<br />
University Business School; Research interests: Game theory, Economics of transition,<br />
Complexity.<br />
Ara Yeghiazarian, born 1957, Senior Lecturer Information Systems at Kingston University<br />
Business School; Research interests: Cross-cultural management decision making,<br />
Economics of transition.<br />
Mail address: Kingston University Business School, Kingston Hill, Kingston on Thames,<br />
Surrey KT2 7LB, UK<br />
Tel.: +44 0181 547 2000<br />
Email: r.matthews@kingston.ac.uk<br />
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1 Introduction 18<br />
The paper reports on the methodology and results of a project whose aim is to<br />
identify constraints on the developing market economy that stem from the way<br />
Russian managers make decisions and the type of decisions they make. This<br />
approach is seen as complementary to work on reforming the Russian economy<br />
at a macro level. (see for example Dietz 1992; Dyker 1992; Economist<br />
Intelligence Unit, Sachs 1995, 1994(a) and (b); Sachs/ Wyplosz 1994). We are<br />
looking for any clustering of decisions around focal points that may inhibit or<br />
enhance decision making by Russian managers from the point of view of the<br />
firms for which they have responsibility, and for the economy in general. The<br />
project has practical purpose of helping to orient training effectively on<br />
management programs generally.<br />
We describe our methodology in the next section. The theoretical structure is<br />
based on observations of Russian managers taking part in Managers’<br />
Programme in Kingston Business School (Hicks 1995; Yeghiazarian/ Matthews<br />
1995). They have wide ranging business experience in State and private owned<br />
enterprises. They are drawn from both large and small businesses. Many could<br />
be classified as entrepreneurs. Their industries range over much of the Standard<br />
Industrial Classification, including labour intensive industries such as mining,<br />
building & construction, capital intensive industries such as heavy engineering<br />
chemicals and oil, through to fast evolving technical and service industries such<br />
as computing, software houses, telecommunications, media, supermarkets,<br />
consulting and advertising.<br />
We report on the focal points we have identified in managerial behaviour in a<br />
business simulation game. The game, TOPEXEC 19 , has been under continuous<br />
development on a range of undergraduate, postgraduate and executive programs<br />
in companies, including Boeing, BT, Shell in the USA and Europe for over 10<br />
years. The simulation has evolved both in terms of updating the econometric<br />
database and information architecture. There is no limit to number of iteration of<br />
18 The Thatcher and Rothschild Foundations provided the financial support the International<br />
Managers Program by the Business School of Kingston University. The Knowhow Fund<br />
(Training and Academic Links) of the British Council supported the setting up of a<br />
business planning course jointly by Kingston Business School and the Academy of<br />
National Economy under the Government of the Russian Federation. We emphasize that<br />
finance from these bodies was provided and used for the purpose of designing and<br />
operating practical training courses for Russian managers but we would like to<br />
acknowledge that this research is one of the unplanned spin-offs. We hope it is of interest<br />
to a wider audience.<br />
19 The authors would like to thank Professor Al Shreiber of University of Washington at<br />
Seattle, the pioneer of the TOPEXEC Business Management Game. We are also grateful to<br />
Mr Ken Harry who has been a major contributor and user of the game for several years,<br />
and to Mrs Eve Hicks for her collaboration on earlier versions of the paper.<br />
JEEMS 1/ 19<strong>98</strong> 67
Russian Management Style: A Game Theory Approach to Evaluating Decision Making<br />
game but Russian mangers are restricted by time to eight. At the end of each<br />
iteration, players of TOPEXEC are provided with detailed financial statements<br />
and costing data relating to their own company. This enables them to evaluate<br />
past decisions, and if necessary revise them. Although they have only limited<br />
information about rivals' strategies, they are given the opportunity to negotiate<br />
sales and purchases of inventory or to form strategic alliances. Strategic decision<br />
variables include prices, outputs, investment, marketing expenditures, research<br />
and development, and inventory. Players respond to their interpretation and<br />
analysis of business data, rivals strategies, and to changes in the business<br />
environment simulated by quarterly time series data on factors such as interest<br />
rates, GNP, and activity indices, including prices and employment.<br />
To achieve the practical purpose and aims we have developed a methodology<br />
based upon the theory of focal points. So the paper outlines the theory of focal<br />
points, and our developments of the theory. The aims of the paper are as<br />
follows: i) to outline and theory focal points and their significance for<br />
management decision making, ii) to identify focal points, using data on Russian<br />
managers decision making in a simulation game, iii) to comment upon the<br />
significance of the focal points which we have identified, firstly for the Russian<br />
economy, and secondly for the training of Russian managers. Our results raise<br />
significant issues that are too often ignored both in policy prescriptions for<br />
Russia and in management training.<br />
The paper is organised into three further sections. The next section, section two,<br />
outlines the methodology of our approach. In the third section, we identify focal<br />
points. In the fourth, we make some remarks on their significance.<br />
2 Methodology<br />
This section is in two parts. In the first part we outline the theory of focal points<br />
which was originally developed by Schelling (1960), and Kreps (1990). In the<br />
second part we describe the procedures we use to identify focal points.<br />
2.1 The theory of focal points<br />
The theory of focal points is well developed, but as far as we can detect its<br />
implications for management science have not previously been investigated, so<br />
our paper represents a novel approach. The emphasis is on behaviour on the<br />
micro level: on interactive decisions within firms and between them. We attempt<br />
to identify focal points, or to use another metaphor, attractors, around which<br />
managerial decisions cluster, and assess their effects on the market economy<br />
through the medium of a simulation game.<br />
The notion of Nash equilibrium is central to focal points (Nash 1951). A Nash<br />
equilibrium in a game corresponds to a strategy that a player has no incentive to<br />
revise, provided that other players to not revise their strategies. The notion of<br />
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focal points captures a recurrent theme in social sciences; the idea of hidden<br />
order. It appears in number of forms that are variations on the theme of the<br />
Invisible Hand. Focal points and focal equilibria are wider concepts in two<br />
senses: i. they apply generally, to any ordering, or reconciling principles, or<br />
spontaneous agreements, existing in individual or group psychology, or in<br />
culture, that enable people to choose between alternative Nash equilibria; ii. they<br />
may imply suboptimal as well as optimal behaviour.<br />
We are not concerned here with problems of the existence of equilibrium, but<br />
with situations (simulation games, or interactions in a real market setting)<br />
where there is a multiplicity of possible equilibria, and a large number of<br />
players. Dealing with multiple potential Nash equilibria, Schelling, examined<br />
conditions that may cause players in a game to expect each other to implement a<br />
particular equilibrium. When this happens, the expected equilibrium becomes<br />
self fulfilling. Schelling called this phenomenon a focal point effect. A focal<br />
point equilibrium has some property that conspicuously distinguishes it from all<br />
others.<br />
The following example, illustrating focal points was provided by Kreps (1<strong>98</strong>9,<br />
1990). Consider a game between two players, both American college students.<br />
They are presented with a list of eleven cities, (New York, Kansas City, Dallas,<br />
Denver, Chicago, Los Angeles, Phoenix, Boston, Philadelpia, San Francisco,<br />
and Atlanta), each of which has been given an arbitrary index, ranking its<br />
importance to commerce, the arts, and so on. The students know that New York<br />
scores highest with 100 points, and Kansas City, the lowest, with 1. Each<br />
student is asked to choose a subset of cities independently without consulting the<br />
other. One is told that he must list Boston: the other that he must list San<br />
Francisco. After the lists are drawn up they are compared. If a city appears on<br />
one list and not the other, the student listing that city wins as many dollars as the<br />
city's index. If a city appears on both lists, each loses twice as many dollars as<br />
the cities index. If the students manage to partition the eleven cities between<br />
them, this triples their total winnings.<br />
In pure strategies, the game has 512 Nash equilibria. When it is played though,<br />
there is significant co-ordination. The Boston list nearly always contains New<br />
York, and Philadelphia, and less frequently, Chicago. Los Angeles, Phoenix, and<br />
Denver are invariably included on the San Francisco list, and sometimes, but<br />
less frequently, Dallas, and Kansas City. The reason, apparent to people familiar<br />
with the geography of the United States, is that choices are based upon which<br />
cities are located to the east, and which to the west, of the Mississippi river.<br />
Sometimes a Sunbelt/Snowbelt division is chosen, but the joint presence of<br />
Miami and Atlanta, both in the sunbelt usually causes this principle to be<br />
rejected.<br />
Many examples of focal points are provided in Schelling's (1960) book. Simple<br />
qualitative factors underlie focal points. Symmetry and uniqueness seem to be<br />
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Russian Management Style: A Game Theory Approach to Evaluating Decision Making<br />
important in selecting principles. In games involving division of payoffs, the<br />
symmetric notions of equity, or efficiency, often become organising principles.<br />
When one ordering principle defines a unique equilibrium, and an alternative<br />
suggests many, the first tends to be applied (Myerson 1991). Cultural norms<br />
may be important, as for example in the listing of cities. The experimental work<br />
of Roth and Schoumaker (1<strong>98</strong>3) suggests that implicit agreements often arise<br />
through a process of adaptive expectations: learning from the experience about<br />
how others have played in the past, affects a players current and future<br />
behaviour.<br />
2.2 The data set<br />
The work reported here is an application of the theory of focal points to<br />
management decision making. The data set we used to identify focal points is<br />
based upon evidence from 86 Russian managers, participating on the<br />
International Managers Programs over the period 1993-97. Managers are aged<br />
between 25-40. They have wide ranging business experience prior to coming on<br />
the course. They are drawn from both large and small businesses. Many could be<br />
classified as entrepreneurs. Examples of their industries include labour intensive<br />
industries such as mining, building and construction through to fast evolving<br />
industries such as computing, software houses, telecommunications, media and<br />
advertising. Less than 10% of them have visited UK previously, although the<br />
majority of them had business experience with at least one or more country<br />
outside the Eastern block during the pervious five years. Although we have<br />
evidence from Russian managers on programmes prior to 1993, and evidence<br />
from number of case studies (Matthews/ Harry 1993), we have not included<br />
them explicitly in our analysis, but we have taken them into account in our<br />
commentary upon the results.<br />
2.3 The simulation game<br />
Our results are based on successive iterations of a simulation game TOPEXEC.<br />
The game consists of 2 simulation years (ie 8 decision making processes). The<br />
participants in each company receive nearly 1000 item of information about the<br />
company on each run, and they have to make 20-30 decisions for subsequent<br />
run. The simulation is subject to random shocks and noise from real macro<br />
economic data which is fed into model. Decisions range over pricing, marketing<br />
expenditures, research and development, stock control, financial reporting, and<br />
loan management.<br />
3 Focal points in russian management<br />
We begin with two general observations that underlie the elements in the table<br />
as a whole.<br />
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i) A marked characteristic of the behaviour of Russian managers is that they<br />
seem to perceive the market economy as a zero sum game, having fixed total<br />
payoffs to be distributed among participants; in aggregate gains are seen as<br />
being matched exactly by losses.<br />
ii) Russian players of the game attempt to maximise profits, but this is carried<br />
out as we might expect with bounded rationality (Simon 1<strong>98</strong>2): they have<br />
limited information and powers of calculation. Short time horizons are evidence<br />
of rationality: discount rates that incorporate expected inflation and other risks<br />
mean that longer term earnings can rationally be ignored. Also we note that as<br />
expected inflation falls, so time horizons seem to lengthen. Competitive<br />
advantage seems to be defined by Russian decision makers, not so much by<br />
profitability (cost structures are higher), but by the leverage that market share<br />
gives in setting prices.<br />
In successive iterations of the game by the eight cohorts of Russian mangers we<br />
observed a set of focal points that are summarised in Table 1.<br />
Table 1: Focal points in Russian management decision making<br />
Focal Point<br />
Strength of clustering<br />
MANAGERIAL GOALS<br />
Bounded profit maximisation<br />
Strong clustering<br />
Perception of the market as a zero sum game Strong clustering<br />
Positive utility for stocks<br />
Short time horizons<br />
Weak clustering<br />
Strong clustering but adaptation over time as expected<br />
inflation declines<br />
COMPANY BEHAVIOUR<br />
Rigid pricing<br />
Limited arbitrage<br />
Poor controls<br />
Strong clustering<br />
Strong clustering<br />
Strong clustering<br />
Considering the elements in Table 1 in some detail we list a number of findings.<br />
(a) Generally prices are relatively high in Russian games. Games involving<br />
Western players have lower prices, and consequently higher sales. However a<br />
more important feature is the rigidity of prices.<br />
(b) Russian companies in the simulation frequently lose sales through shortages<br />
of finished goods, which could be rectified by exchange of stocks that exist<br />
within the system at a given time. Among Russian firms, there are significant<br />
differences in levels of stocks held, in terms of raw materials, work in progress,<br />
and finished goods. Stock levels are relatively higher on average than in<br />
Western games, but stocks are poorly distributed in terms of final customer<br />
demand. There is marked reluctance by firms holding excess stocks to sell them<br />
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Russian Management Style: A Game Theory Approach to Evaluating Decision Making<br />
to other firms who are experiencing excess demand. For example in a typical<br />
game we observe stocks increasing by more than 50% and prices as a whole<br />
finished goods rising by 20%. We would normally expect the correlation to be<br />
negative rather than positive, with prices of finished goods tending to be reduced<br />
in the face of rising stock levels; as the table shows the relationship is<br />
predominantly positive at the cumulative level. At the same time as some firms<br />
are experiencing stock shortages, others have excess supplies [see Table 2].<br />
(c) Another way of expressing the previous paragraph is to say that arbitrage<br />
among Russian firms in the simulation is distinctly low. Russian managers tend<br />
to see inter company trade as a zero sum game, and strategic alliances,<br />
subcontracting, and even straightforward sales of stocks are excluded from their<br />
decision set. The reason for this seems to be that the sale of scarce stocks will<br />
simply result in the surrender of competitor advantage to rivals since in a zero<br />
sum game there are no net overall gains to be made from such an exchange.<br />
(d) Although unit costs of production are often higher, because of smaller<br />
volumes of production, and excessively large stocks, overall profitability of<br />
Russian games is relatively high in comparison to games played by Western<br />
players. Low levels of price competition, together with price leadership by the<br />
dominant firm, leads to the high price structure in Russian games.<br />
As compared to a typical game played by UK and USA managers, the overall<br />
result of Russian games is that their economy, defined by aggregate output of<br />
their game, tends to be smaller, and economic efficiency, measured by consumer<br />
surplus, tends to be lower. The average cost of finished goods is relatively high,<br />
due not only to poor inventory policy noted above, but also to excessive<br />
expenditures on marketing and under provision for research and development,<br />
and maintenance. In their smaller economy, Russian teams end up with more<br />
profitable companies operating with greater X inefficiency (Leibenstein 1966),<br />
taking the form of higher unit costs, and lower asset utilisation.<br />
The results of this section are summarised in Figure 1. Constant costs are<br />
assumed for convenience, hence the supply curves MS and NS' are horizontal.<br />
The vertical distance between the curves illustrates X inefficiency. Outputs in the<br />
Russian game are smaller by the amount KB, and prices higher, by RP, than the<br />
efficient market quantity price combination. Higher unit costs are represented by<br />
NM. Area HGJ represents the additional loss of consumer surplus through<br />
restricted output: in addition, area NMXT is lost through higher opportunity<br />
costs of production.<br />
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Table 2: Excess demand and supply at the firm and economy level 20<br />
Company A Company B Company C<br />
Year Quarter Period Price changes Stock changes Price changes Stock changes Price changes Stock changes<br />
[P(t+1)-P(t)]/P(t) [Q(t+1)-Q(t)]/Q(t) [P(t+1)-P(t)]/P(t) [Q(t+1)-Q(t)]/Q(t) [P(t+1)-P(t)]/P(t) [Q(t+1)-Q(t)]/Q(t)<br />
0 4 T(1) -1.22% 4.28% -0.24% 4.28% -2.68% 3.41%<br />
1 1 T(2) -0.21% -0.56% -1.<strong>98</strong>% -3.18% 0.00% -4.60%<br />
1 2 T(3) -3.76% 12.73% -1.18% -1.71% -0.74% 8.38%<br />
1 3 T(4) -1.24% -1.35% -6.88% 5.74% -2.00% 6.21%<br />
1 4 T(5) 8.35% 1.36% 12.83% -12.27% 7.25% -4.16%<br />
2 1 T(6) -3.85% -23.78% 0.00% -33.74% 7.90% 32.53%<br />
2 2 T(7) 2.61% 28.78% 5.97% 37.86% 0.00% 4.11%<br />
2 3 T(8) 4.49% 19.33% 0.00% 5.89% -0.89% -33.15%<br />
2 4 T(9)<br />
Cumulative 5.17% 40.79% 8.52% 2.87% 8.83% 12.73%<br />
Source: TOPEXEC results of Russian Managers Course Oct 1996<br />
20 In the table P(t) denotes price per unit and Q(t) quantity of stock at the end of period t (t=1,…,8).<br />
The impact of decisions about stocks does not become evident in the game until the end of year 0.
Russian Management Style: A Game Theory Approach to Evaluating Decision Making<br />
Figure :1 Outcomes of the simulation illustrated<br />
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Russian Management Style: A Game Theory Approach to Evaluating Decision Making<br />
simulation decision making in the Russian teams tends to be hierarchical, with a<br />
leader rapidly emerging. The main criteria for leadership seem to rest upon<br />
dominant character traits, rather than skills or aptitudes. Once the issue of<br />
leadership is decided, decisions are more or less automatically agreed by all<br />
members of the team. The leader’s decision tends not to be challenged when it is<br />
seen to involve contentious issues. Good team players were viewed as those who<br />
agreed with their leader rather that those who work well with the leader to reach<br />
the right decision.<br />
There are relatively few informal meetings among the Russian teams, and there<br />
seems to be little attempt to make use of diverse skills in apportioning work.<br />
Although the simulation produces too much data for one person to analyse, and<br />
interpret alone, we find a significant reluctance to delegate, or to apportion tasks,<br />
and trust subordinates. Instead of developing trust, and a dividing<br />
responsibilities, all decisions seem to be discussed collectively, and decided<br />
primarily as a result of character dominance.<br />
Whilst all the elements discussed above may exist at the outset in games<br />
between Western players, they are gradually eroded: in comparison we find that<br />
hierarchical structures tend to be robust in Russian games, even when the team is<br />
unsuccessful.<br />
4 Concluding remarks<br />
We have sufficient confidence in the existence of a mapping from the focal<br />
points we have identified into actual managerial behaviour, to take account of<br />
our conclusions and methodology in designing training programmes for Russian<br />
managers. We attach most importance to the approach itself. The identification<br />
of focal points provides a useful path to the understanding of management<br />
culture and its significance for decision making.<br />
The perception of markets as zero sum games suggests that the nature of markets<br />
is not understood. Unless the perception is modified, it can become self fulfilling<br />
prophesy, with managers refusing to trade, especially in stocks of goods and<br />
work in progress, even when such trade is capable of producing mutual benefits.<br />
Prices remain rigid in successive games in spite of evidence of substantial<br />
excess supply or demand at the firm level.<br />
By control we refer to the process of comparing current and recent performance<br />
with plans. The importance given to business environment analysis and<br />
accounting, especially management accounting, suggests that although the need<br />
for them has been grasped, the significance of controls has not. Although<br />
opportunities exist in the game to revise behaviour in response to information<br />
about the consequences of past decisions, Russian managers are reluctant to take<br />
76<br />
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Robin Matthews / Ara Yeghaizarian<br />
advantage of this by altering prices, engaging in arbitrage over stocks of goods,<br />
or revising marketing and research and development expenditures, in the light of<br />
evidence of shortfalls between aims and achievements.<br />
The shock therapy model adopted by international institutions and accepted by<br />
many Russian reformers involves the following elements (Sachs1995; 1994(a);<br />
1994(b)): liberalising prices, and cutting subsidies; opening the economy to<br />
international trade; privatisation and encouraging foreign direct investment;<br />
trade led growth and democratic consolidation provided that they do not block<br />
the therapy. A problem with such measures is that the drastic redistribution of<br />
real income and wealth involved in the process, destabilises the economic<br />
reforms that shock therapy is designed to promote, by engendering a feeling of<br />
unfairness, and resistance to the market system itself.<br />
The fundamental assumption of shock therapy is that the sudden shift in the<br />
business environment that it brings, causes a change in the behaviour of decision<br />
makers; it is assumed that the shock is sufficient to shift the focal points of<br />
economic behaviour that have adjusted over the years to a command economy,<br />
to the kind of (boundedly) rational behaviour that makes a market system work.<br />
Focal points, at least in the short and medium term, are more autonomous than<br />
the proponents of shock therapy assume. It takes time to adjust, and especially<br />
since so much of the change that people experience involves redistribution of<br />
income and wealth, it may be legitimate for decision makers to view the market<br />
as a zero sum game, in which behaviour inherited from the past is still<br />
appropriate.<br />
We are struck by similarity as well as differences in the behaviour of managers<br />
across cultures and national boundaries. In the same way as planned and market<br />
economies form part of a continuum with market like planning (for example the<br />
use of shadow prices within large organisations) and planning like markets (state<br />
sponsored regulation, corporatism and industrial policy within market<br />
economies), so differences between decision making behaviour by Russian and<br />
Western managers are of degree rather than of kind. However the focal points<br />
that we have identified, over the period 1993 to 1997 are sufficiently resilient to<br />
withstand shocks and determine the nature of the market economy that emerges<br />
in Russia.<br />
5 References<br />
Dietz, R. (1992): Ten Propositions Towards a Theory of Transformation; From Command to<br />
Exchange Communication, in: Sandor Richter (ed): The transition from Command to<br />
Market Economies in East-Central Europe, Westview Press, Oxford.<br />
Dyker, D.A. (1992): Restructuring the Soviet Economy, Routledge, London.<br />
Economist (1992): A Survey of Russia, December.<br />
Economist Intelligence Unit, Russia: Country Profile, various issues.<br />
JEEMS 1/ 19<strong>98</strong> 77
Russian Management Style: A Game Theory Approach to Evaluating Decision Making<br />
Hicks, E./ Yeghiazarian, A./ Matthews, R. (1995): Culture And Decision Making Styles Of<br />
Russian Managers: A Comparative Analysis, Frontiers in Economic Psycology<br />
Proceeding of the 20th IAREP conference, Bergen.<br />
Hayek, F.A. (1949): Individualism and Economic Order, Routledge and Keegan Paul,<br />
London.<br />
International Monetary Fund (1992): The Economy of the Former USSR in 1991,<br />
Washington, D.C..<br />
International Monetary Fund (1992): Common Issues and Interrepublic Relations in the<br />
Former USSR, Washington D.C.<br />
Kreps, D.M., (1<strong>98</strong>7): Nash equilibrium, in: Eatwell, J./ Milgate, M./ Newman, P. (eds): The<br />
New Palgrave: A Dictionary of Economics, Macmillan, London.<br />
Kreps, D.M., (1990): Corporate Culture and Economic Theory, in: Alt, J. E./ Shepsle, K.A.:<br />
Perspectives on Political Economy, Cambridge University Press.<br />
Liebenstein, H., (1966): Allocative Efficiency vs. X-Efficiency, in: American Economic<br />
Review, Vol. LVI.<br />
Matthews, R./ Harry, K., (1993): The Russian Firm: Managing Chaos in Vladivostok, in:<br />
European Business and Economic Development, Vol.2, Part 2.<br />
Myerson, R.B. (1991): Game Theory: Analysis of Conflict, Harvard University Press,<br />
London.<br />
Nash, J. (1951): Non Cooperative Games, in: Annals of Mathematics, 54.<br />
Porter. M. (1<strong>98</strong>5): Competitive Advantage: Creating and Sustaining Superior Performance,<br />
Collier Macmillan, London.<br />
Roth, A.E./ Schoumaker, F. (1<strong>98</strong>3): Expectations And Reputations In Bargaining, in:<br />
American Economic Review 73, pp 362-372.<br />
Sachs, J.D. et al (1995): Economic reform and the process of global integration, in:<br />
Comments Brookings Papers on Economic Activity, Issue, 1.<br />
Sachs, J.D. (1994a): The prospects for reform in Russia, in: Canadian Business Review, Vol:<br />
21, Issue, 3.<br />
Sachs, J.D./ Wyplosz, C. (1994): Too little, too late?, in: East European Markets, Vol: 14,<br />
Issue, 2.<br />
Sachs, J.D. (1994b): Russia's struggle with stabilization: Conceptual issues and evidence, in:<br />
World Bank Research Observer, Annual Conference Supplement.<br />
Schumpeter, J.A. (1942): Capitalism, Socialism and Democracy, George Allen and Unwin,<br />
London.<br />
Schelling. T. (1960): The strategy of Conflict, Harvard University Press.<br />
Simon, H.A. (1<strong>98</strong>2): Models of Bounded Rationality. 2 Vols, Cambridge Mass., MIT Press.<br />
Varian, H. (1<strong>98</strong>7): Measuring the Deadweight Costs of DVP and Rent Seeking Activities,<br />
Mimeo, University of Michigan.<br />
78<br />
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JEEMS 1/ 19<strong>98</strong> 79
Book Reviews<br />
Book Reviews<br />
Heribert Warken: Unternehmenskontrolle und Finanzmärkte im<br />
Transformationsprozeß Osteuropas aus Sicht der Principal-Agent-Theorie,<br />
Josef Eul <strong>Verlag</strong>, Lohmar/ Köln 1997, DM 67,-<br />
Der Titel dieser Schrift, die als Dissertation in Köln angenommen wurde, klingt<br />
vielversprechend. In einer Zeit, in der Überlegungen naheliegen, warum der<br />
Transformationsprozeß in den Staaten Osteuropas unterschiedlich weit<br />
fortgeschritten ist, ist die Suche nach Erklärungsansätzen hierfür ein aktuelles<br />
Thema. Der Rücktritt des Radikalreformers Václav Klaus in Tschechien im<br />
Dezember 1997 und sein Hinweis auf Versäumnisse im Transformationsprozeß<br />
lenken den Blick einmal mehr auf dieses Gebiet. Da liegt die Frage auf der<br />
Hand, welche Bedeutung den Finanzmärkten und einer funktionierenden<br />
Unternehmenskontrolle in diesem Zusammenhang zukommt. Liefern<br />
ineffiziente Finanzmärkte und eine mangelnde Unternehmenskontrolle eine<br />
Erklärung für den manchmal als zu langsam beklagten Produktivitätsfortschritt<br />
und die Unterschiede im Transformationsprozeß?<br />
In seiner Einführung klärt Autor Heribert Warken über das Ziel der Arbeit auf.<br />
Der Schwerpunkt soll in “der Erarbeitung von Vorschlägen für die Gestaltung<br />
der Rahmenbedingungen eines effizienten Unternehmensmanagements in<br />
Osteuropa liegen.” An dieser Zielsetzung soll sich die Beurteilung der Arbeit<br />
orientieren.<br />
Warken beginnt seine Untersuchung mit einer Darstellung der<br />
Systemtransformation in den einzelnen Ländern Osteuropas. Er betrachtet<br />
makroökonomische Größen und kommt zu dem Schluß, daß die insgesamt noch<br />
unbefriedigende wirtschaftliche Entwicklung auch auf ein funktionsuntüchtiges<br />
Bankensystem zurückzuführen ist. Dementsprechend sieht er im Aufbau eines<br />
funktionierenden Finanzsystems eine Grundlage für weiteres Wachstum. Im<br />
folgenden Kapitel widmet sich der Autor den grundlegenden Überlegungen der<br />
Principal-Agent-Theorie. Diese Überlegungen wendet er anschließend auf<br />
Probleme der Unternehmenskontrolle an. Den Abschluß bildet ein Kapitel zur<br />
Frage von Unternehmensfinanzierung und Kapitalmärkten im<br />
Transformationsprozeß, in dem Warken Vor- und Nachteile bank- und<br />
marktbasierter Finanzsysteme untersucht. Als bankbasierte oder bankdominierte<br />
Systeme bezeichnet er dabei solche, in denen “die Kontrolle des Managements<br />
durch Bankenvertreter stark beeinflußt wird.” (S. 74) Dies ist bedingt durch<br />
Beteiligungen der Banken oder die Verwaltung der Stimmrechte für andere.<br />
Demgegenüber sind marktbasierte Systeme “hauptsächlich dadurch<br />
charakterisiert, daß die Kontrolle durch einen Markt (Wertpapiermarkt)<br />
vollzogen wird.” (S. 75) Hier wird bereits ein Grundproblem dieser Arbeit<br />
deutlich: Der Mangel an Sorgfalt. Warken läßt bei seiner Einteilung in bankund<br />
marktbasierte Systeme Mischformen völlig außer acht. Die Tatsache, daß<br />
80<br />
JEEMS 1/ 19<strong>98</strong>
Book Reviews<br />
auch bei Verwaltung der Depotstimmrechte durch ein Kreditinstitut<br />
(bankbasiertes System), Unternehmensübernahmen und damit Kontrolle durch<br />
den Markt möglich sind, wird vernachlässigt. Ebenso kümmert sich Warken<br />
nicht um die Frage, daß Banken als die größten Kreditgeber auch dann<br />
Einflußmöglichkeiten auf ihre Kreditnehmer haben, wenn sie weder über eine<br />
Beteiligung an diesen noch Stimmrechte Dritter verfügen. Eine weitere<br />
Möglichkeit der Unternehmenskontrolle wird überhaupt nicht diskutiert: Die<br />
Kontrolle durch einen einzelnen Großaktionär - in Transformationsstaaten mit<br />
ihrem Mangel an Kapital insbesondere ein ausländisches Industrieunternehmen.<br />
Jedoch zur Kritik im Detail: An der allgemein gehaltenen und den meisten<br />
Lesern nicht neuen Darstellung des Transformationsprozesses in Osteuropa im<br />
zweiten Kapitel der Arbeit ist im großen und ganzen nichts auszusetzen. Die<br />
Frage lautet nur: Wo ist der Zusammenhang zur übergeordneten Fragestellung<br />
der Dissertation? Für die Frage der Unternehmenskontrolle scheint diese<br />
Ausführlichkeit der rein beschreibenden Darstellung unnötig. Ärgerlich ist<br />
zudem, daß sich der Autor in seiner Gesamtbeurteilung des<br />
Transformationsprozesses zu unangebrachten Werturteilen hinreißen läßt. Die in<br />
dem Teilsatz “Überzogene Lohnforderungen und eine zu schnelle Ausweitung<br />
der sozialen Komponente” (S. 39) enthaltene Bemerkung zur Lohnentwicklung<br />
hat wohl nichts mit dem engeren Thema zu tun. Im dritten Kapitel wünscht sich<br />
der Leser dagegen etwas mehr an Information. Geht es hier doch um die<br />
“Principal-Agent-Beziehung in der Plan- und Marktwirtschaft” und der<br />
Transformation. Diese zentralen Inhalte werden auf gerade mal gut fünf Seiten<br />
abgehandelt. Das folgende vierte Kapitel zu “Corporate Control aus Sicht der<br />
Principal-Agent-Theorie” liefert noch immer nicht die gewünschten neuen<br />
Erkenntnisse. Eine knappere Darstellung der bekannten Themen im Text mit<br />
mehr Literaturhinweisen in den Fußnoten hätte den besseren Eindruck<br />
hinterlassen. Zumal die Präsentation nicht als gelungen betrachtet werden kann:<br />
Es wird zweifellos Stirnrunzeln beim Leser verursachen, wenn behauptet wird,<br />
es “muß ein neues Zentralbankensystem geschaffen werden, welches die<br />
Währung sichert, ..., die reibungslose Abwicklung des Zahlungsverkehrs<br />
gewährleistet, ... und ein funktionsfähiges Geschäftsbankensystem etabliert.” (S.<br />
65) Oder wenn der Autor ein “gerechtes Steuersystem” fordert “welches den<br />
Unternehmen einerseits als feste Kalkulationsgrundlage bei der Ermittlung des<br />
Absatzpreises dient und andererseits ... Unternehmensgewinne nicht bereits so<br />
hoch besteuert, daß der Gewinnanreiz ... im Keim erstickt wird.” (S. 68) In<br />
einem anderen Abschnitt weist der Autor mit Recht darauf hin, daß die Gefahr<br />
der Unternehmensübernahme bei ineffizienter Ressourcenverwendung und der<br />
damit oft verbundene Austausch der Unternehmensführung die Manager dazu<br />
anhält, nur Investitionen zu tätigen, die den Aktienkurs hoch halten.<br />
Unwidersprochen mag so mancher Leser wohl nicht hinnehmen, wenn es in<br />
diesem Zusammenhang heißt: “Somit können Manager, um einen langfristigen<br />
Erfolg sicherzustellen, keine kurzfristigen Verluste mehr in Kauf nehmen.<br />
JEEMS 1/ 19<strong>98</strong> 81
Book Reviews<br />
Langfristige Investitionen würden dann nicht mehr getätigt.” (S. 76) Vom<br />
positiven Einfluß langfristig rentabler Projekte auf den Aktienkurs, die<br />
kurzfristig zu Bilanzverlusten führen, scheint Warken noch nie gehört zu haben.<br />
Derlei gewagte Thesen lassen sich überall in der Arbeit finden. Diese<br />
inhaltlichen Schwächen legen die Vermutung nahe, daß hier schnell ein Werk<br />
beendet werden sollte. Diese Hast bei der Erstellung der Arbeit läßt sich auch an<br />
anderer Stelle wiederfinden. So schreibt Warken ständig “Akerhof” (S. 121 und<br />
im Literaturverzeichnis S. 186) und meint damit den Wissenschaftler George<br />
Akerlof.<br />
Die Schlußbemerkung soll die Ergebnisse der Arbeit zusammenfassen. Dem<br />
oben genannten Ziel, “der Erarbeitung von Vorschlägen für die Gestaltung der<br />
Rahmenbedingungen eines effizienten Unternehmensmanagements” wird sie<br />
nicht gerecht. Die Handlungsempfehlungen ähneln in ihrer normativen Art eher<br />
dem Kommentar eines besserwissenden Journalisten in einer Tageszeitung als<br />
wissenschaftlich fundierter Politikberatung. Weltbewegende Erkenntnisse<br />
werden hier ohnehin nicht präsentiert. Symptomatisch für die ganze Arbeit<br />
scheint neben Mengen an Tipp- und Rechtschreibfehlern das<br />
Abkürzungsverzeichnis zu sein: Hier wird gleich zweimal erläutert, was “bzw.”<br />
und “z. Bsp.” bedeuten, während für die Europäische Entwicklungsbank die<br />
falsche Abkürzung EIB angegeben wird.<br />
Fazit: Von der Lektüre des Buches ist abzuraten.<br />
Winfried Liedtke, Lehrstuhl Finanzwirtschaft und Bankbetriebslehre, TU<br />
Chemnitz<br />
•••<br />
Mariano R. Viola: Reputationsbildung und Auslandskapital: Entwicklung der<br />
Transformationsländer Ungarn und Polen, Gabler <strong>Verlag</strong>, Deutscher Universitä<br />
ts<strong>Verlag</strong>, Wiesbaden 1996<br />
Die seit dem Ende der 80-er Jahre ablaufenden revolutionären gesellschaftlichen<br />
und wirtschaftlichen Änderungen in den ex-sozialistischen Ländern berührten<br />
mehr oder minder alle mittel- und osteuropäischen Bürger. Die Veränderungen<br />
in der Wirtschaft und dem persönlichen Leben der Leute vollziehen sich bis<br />
heute, der Beginn und die ersten Jahren der Wende gelten aber immer mehr als<br />
Vergangenheit und Geschichte. Viele Politiker, Theoretiker und praktische<br />
Fachmänner versuchten in vielen Dimensionen, die Ereignisse und das<br />
Geschehen des Transformationsprozeßes in den Staaten des ehemaligen<br />
sozialistischen Blockes zu interpretieren, zu erklären.<br />
82<br />
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Book Reviews<br />
Mariano R. Viola tut das in dem auf seiner Dissertation basierenden Buch „<br />
Reputationsbildung und Auslandskapital: Entwicklung der Transformationslä<br />
nder Ungarn und Polen” in spezifischer und sehr interessanter Weise. Die<br />
Analyse bezieht sich auf zwei Länder und die Jahren 1990-94. Die<br />
Grundgedanken können aber auch derzeit und in anderen Staaten dieses Teils<br />
Europas gültig - und beherzenswert sein.<br />
Die Begriffe Reputation und Kapital bestimmen die Leitfaden der Arbeit. Nach<br />
der Anfangshypothese und der zentralen Behauptung des Buches kommt „der<br />
Reputation eines Landes bei der Gewinnung von Kapital für seine interne<br />
Entwicklung und sein Wachstum große Bedeutung” zu (1.). In der Dissertation<br />
zeigen sich die beiden Länder als bewußte und zielstrebige Beteiligte der<br />
Transformation: der Autor präsentiert neben der Theorie - die Modellierung der<br />
Reputation wird von den beiden Disziplinen Vertragstheorie und Spieltheorie<br />
verwirklicht - reiches empirisches Material welches zeigt, wie und wieviel<br />
Ungarn und Polen in ihre Reputation investiert hatten, und wie die auslä<br />
ndischen Investoren darauf reagierten.<br />
Das erste Kapitel formuliert den theoretischen Rahmen für Reputationsbildung.<br />
Zuerst geht es um die Investitionsumgebung, um die makroökonomischen und<br />
die mikroökonomischen Risikofaktoren der Länder. Nach den in dem Buch<br />
zitierten Forschungen waren die Investoren hinsichtlich des Risikoniveaus<br />
damals der Meinung, daß Ungarn im allgemeinen weniger riskant sei als Polen.<br />
Aus den Umfragen stellte sich heraus, daß das größte Hindernis für ausländische<br />
Investoren in den beiden Ländern die komplizierten bürokratischen Vorschriften<br />
zur Gewerbeanmeldung waren. Das Kapitel erklärt auf diesem Basis auch,<br />
welche Maßnahmen bei den gegebenen Risikofaktoren für Investitionen<br />
notwendig sind. Das Hauptziel ist es, die Ungewißheit mit Hilfe von impliziten<br />
bzw. expliziten Verträgen zu reduzieren (die Vertragsungewißheit zu<br />
vermeiden) und die Transaktionskosten zu minimieren. Die Reputation spielt<br />
eine wichtige Rolle zur Verhinderung von Vertragsverletzungen. Zur Senkung<br />
der ex ante Transaktionskosten war es laut der Empfehlung zum Beispiel<br />
dringend erforderlich, daß Ungarn und Polen die Quantität und Qualität der<br />
Datenerhebung verbessern und diese den Investoren zugänglich machen.<br />
Der Autor stellt uns die Stabilisierungsprogramme von Ungarn und Polen als<br />
Strategien zur Vertrauensbildendung dar, und stellt fest, daß diese erfolgreich<br />
waren - demzufolge gewannen die Länder das Vertrauen von Investoren und<br />
Kreditgebern. Am Ende des Kapitals zeigt der Autor die Zusammenhänge<br />
zwischen der Reputation und strategischem Verhalten auf, und erklärt, wie die<br />
Reputation mit Hilfe der Spieltheorie modelliert werden kann.<br />
Ungarn und Polen stöhnten Ende der 80-er Jahre schon unter einem sehr hohen<br />
Schuldenstand. Das zweite Kapitel untersucht, wie die beiden Länder ihre<br />
Glaubwürdigkeit auf den Schuldenmärkten verbessern konnten. Wir lernen die<br />
JEEMS 1/ 19<strong>98</strong> 83
Book Reviews<br />
Entwicklung des Schuldenstandes, die Liquiditäts- und die Solvenzlage von Jahr<br />
zu Jahr sowie die Strategien und Maßnahmen der Staaten genau kennen.<br />
Nach der Behauptung des Autors ist es Ungarn gelungen, einen im Vergleich zu<br />
anderen osteuropäischen Ländern eindeutig besseren Zugang zu den auslä<br />
ndischen Kapitalmärkten zu erreichen. Viola entwickelt ein Modell für den<br />
Aufbau der Rückzahlungsreputation für Ungarn, bzw. erklärt, wie die Banken<br />
und die institutionellen Investoren auf Ungarns Anstrengungen reagiert haben.<br />
Polen hat einen anderen Weg beschritten, und hat neben der Umsetzung eines<br />
Stabilisierungsprogrammes mit einer erfolgreichen Umschuldung seine<br />
Glaubwürdigkeit zurückgewonnen. Die Teilnehmer werden auch hier in einen<br />
spieltheoretischen Rahmen eingesetzt.<br />
Das dritte Kapitel stellt die Reaktionen der Investoren auf die ungarischen und<br />
polnischen Reformmaßnahmen dar. Zuerst werden die möglichen Formen der<br />
ausländischen Direktinvestitionen präsentiert, dann werden die tatsächlichen<br />
Motive der in Ungarn und in Polen tätigen Investoren und die Verteilung der<br />
durchgeführten Investitionen gezeigt. Der Autor analysiert die Vor- und<br />
Nachteile des oft bevorzugten Joint Ventures als Eigentumsform.<br />
Unter Enteignungsrisiko wird das Risiko der Verstaatlichung, der<br />
unerwartenden Änderungen der Steuersätze und der Devisenkontrolle<br />
verstanden. In Ungarn und Polen war das Gewinnabführungsrisiko und die<br />
Gefahr, daß der Staat in die Unternehmensplanung- und entscheidungen<br />
interveniert, besonders hoch. Nach der Untersuchung des Enteignungsprozesses<br />
und der Direktinvestitionen präsentiert Viola ein Enteignungsspiel, wo mit Hilfe<br />
eines Reputationmodelles die endogenen Komponenten des Enteignungsrisikos<br />
analysiert werden.<br />
In dem vierten Kapitel wird vor allem auf die Bedeutung der impliziten Verträge<br />
zwischen den Investoren und den Agenten der privatisierten Unternehmen<br />
eingegangen. Nach der Analyse der Verknüpfungen des Staates und der auslä<br />
ndischen Investoren sowie des Tempos, des Umfanges und der Kontrolle der<br />
Transformation des staatlichen Vermögens in den beiden Ländern, geht es um<br />
die strukturellen Probleme: die Schwierigkeiten bei der Bewertung von Staatsunternehmen,<br />
die Mängel in der Corporate Governance während der spontanen<br />
Privatisierungsperiode in Ungarn und Polen, die Anreize und das ineffiziente<br />
strategische Verhalten des Managements und der Gewerkschaften in den<br />
Unternehmen. Daran anschließend wird untersucht, auf welcher Weise die<br />
Anreizsysteme im Rahmen impliziter Verträge zu effizienterem Verhalten der<br />
Manager und der Gewerkschaften führen können. Der ausgewählte Verstä<br />
rkungsmechnismus ist die Drohung der Eigentümer, die Manager und die<br />
Arbeitnehmer zu entlassen, wenn sie gegen den Interessen der Inhaber oder der<br />
Firma verstoßen. Der Autor präsentiert ein Entlassungsspiel, das den<br />
Reputationsverlust der Manager und Arbeiter auf dem Arbeitsmarkt modelliert.<br />
84<br />
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Der effiziente Bankensektor ist eine wichtige Voraussetzung für die<br />
Glaubwürdigkeit eines Staates auf den Kapitalmärkten. Das letzte Kapitel besch<br />
äftigt sich deshalb mit den Problemen des Bankensystems, bzw. damit, wie die<br />
Reputation zu einem effizienteren Bankensektor führen kann. Was die<br />
strukturellen Probleme in den beiden Länden betrifft, hebt der Autor die hohe<br />
Konzentration der Einlage- und Kreditmärkte, die starke Segmentierung und die<br />
Solvenzprobleme, die durch die hohe Anzahl der uneinbringlichen Forderungen<br />
verursacht wurden, hervor. Unter den systemischen Problemen werden die<br />
schwachen Anreizstrukturen, die die Banken dazu veranlassen, sich als Glä<br />
ubiger passiv zu verhalten, und der Rückgang der Rentabilität der Banken in<br />
Ungarn und Polen erwähnt und analysiert. Viola zeigt, mit welchen Maßnahmen<br />
und Strategien Ungarn („der zentralisierte Ansatz”) und Polen („der<br />
dezentralisierte Ansatz”) ihre Banken umstrukturiert und privatisiert haben. In<br />
dem letzten Abschnitt des fünften Kapitels des Buches spielt wieder die<br />
Reputation als verstärkender Mechanismus die Hauptrolle: zuerst stellt ein<br />
Modell (Bankenschließungsspiel) dar, wie die Reputation des Staates als eine<br />
strenge Aufsichtsbehörde das Management der Banken beeinflußt, dann wird die<br />
Auswirkung der Reputation, die Glaubwürdigkeit der Schließungsdrohung des<br />
Staates untersucht.<br />
Die Arbeit von Mariano R.Viola „beleuchtet die zentralen Probleme des<br />
Transformationsprozeßes und der Kapitalbildung bzw. Kapitalattraktion”, und<br />
ihr „kommt exemplarischer Charakter zu” - schreibt Professor Dr. Dr. h.c.<br />
Joachim Starbatty, der Doktorvater des Autors, am Anfang des Buches in<br />
seinem Geleitwort.<br />
László Lázár, Lehrstuhl für Führung und Organisation, Wirtschaftsuniversität<br />
Budapest<br />
JEEMS 1/ 19<strong>98</strong> 85
News / Information<br />
News / Information<br />
13. Leipziger Weltwirtschaftsseminar<br />
Das 13. Leipziger Weltwirtschaftsseminar, zu dem das Zentrum für<br />
Internationale Wirtschaftsbeziehungen für den 27. und 28. November 1997 an<br />
die Universität Leipzig eingeladen hatte, stand unter dem Thema Mittel- und<br />
Osteuropa als Produktionsstandort und Absatzmarkt für Westeuropa.<br />
Den Auftakt zur ersten Session "Produktionsverlagerungen von West- nach<br />
Osteuropa" gab Hubert Gabrisch (Institut für Wirtschaftsforschung Halle).<br />
Gabrisch betrachtet das rasche Anwachsen der Produktionsverlagerungen aus<br />
Deutschland und den EU-Ländern nach MOE als Teil des allgemeinen<br />
Globalisierungsprozesses. Anlaß zur Sorge gebe aber, daß der Kapitalfluß in<br />
diese Länder weit hinter den ursprünglichen Prognosen zurückgeblieben ist und<br />
die Gefahr besteht, daß sich die MOE-Länder trotz liberalisiertem<br />
Kapitalverkehr in der Falle arbeitsintensiver Produktion gefangen finden. Toni<br />
Philipp (Verbundnetz Gas AG, Leipzig) sprach über den Privatisierungsprozeß<br />
der Energie- bzw. der Gaswirtschaft in Mittel- und Osteuropa, der in den<br />
meisten Ländern langwierig verläuft. Da aus politischen oder<br />
wirtschaftspolitischen Gründen bisher keine kostendeckenden Energiepreise<br />
bestehen, dienten die Direktinvestitionen vorrangig der Einflußsicherung auf<br />
einem zukünftigen Wachstumsmarkt. Mit der raschen Ausweitung des Passiven<br />
Lohnveredlungsverkehrs zwischen Mittel- und Osteuropa und den EU-Ländern<br />
befaßte sich Uta Möbius (Deutsches Institut für Wirtschaftsforschung Berlin).<br />
Der Löwenanteil des westeuropäischen wie auch des deutschen<br />
Lohnveredelungsverkehrs entfällt auf die Textil- und Bekleidungsindustrie, was<br />
nicht zuletzt durch die handelspolitische Begünstigung der westeuropäischen<br />
Textil- und Bekleidungsindustrie (Ursprungsregeln, Quoten in den Europa-<br />
Abkommen) erklärt wird. Ca.<br />
20 % der Lohnveredelung der deutschen Textil- und Bekleidungsindustrie<br />
stammen laut Umfragen inzwischen bereits aus eigenen Betrieben in den<br />
entsprechenden Ländern. In der Session "Handelsströme und Handelsstruktur<br />
zwischen dem westeuropäischen Wirtschaftsraum und den MOE-Ländern"<br />
untersuchte Klaus Werner (Institut für Wirtschaftsforschung Halle) die Exporte<br />
der mitteleuropäischen Länder nach Westeuropa seit 1990. Zwar gelang es<br />
diesen Ländern, ihren Handel binnen kürzester Zeit auf den westeuropäischen<br />
Absatzmarkt umzuorientieren und dabei andere, meist außereuropäische<br />
Anbieter zu verdrängen. Bisher konnte aber nur Ungarn das bisherige Muster<br />
der internationalen Arbeitsteilung, das durch ein niedriges Technologieniveau<br />
und durch Erzeugnisse mit hoher Ressourcen- und Arbeitsintensität in den<br />
MOE-Ländern gekennzeichnet war, deutlich verbessern. Matthias Lücke<br />
(Institut für Weltwirtschaft Kiel) wies anhand ökonometrischer Modelle nach,<br />
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News / Information<br />
daß das Handelswachstum, daß sich aus der Transformation und der<br />
Umorientierung der ehemaligen RGW-Länder ergeben hatte, inzwischen<br />
weitgehend erschöpft sei. Ein weiteres Wachstum der deutschen Exporte könne<br />
nur als Folge aufholenden Wirtschaftswachstums erwartet werden, sei allerdings<br />
wegen der niedrigen gesamtwirtschaftlichen Investitionsquoten in den<br />
Transformationsländern nicht übermäßig hoch zu veranschlagen. In der Session<br />
"Perspektiven der wirtschaftlichen Zusammenarbeit der EU mit den MOE-<br />
Ländern" analysierte Tomas Kalinowski (Danziger Institut für Marktwirtschaft)<br />
Entwicklung und regionale Verteilung der ausländischen Direktinvestitionen in<br />
Polen. Bevorzugte Standorte sind außer Warschau immer noch traditionelle<br />
Wachstumszentren, wie Kraków, Wroclaw, Katowice, Lodz. Der vor zwei<br />
Jahren gestartete Versuch einer Investitionslenkung mittels<br />
Sonderwirtschaftszonen könne bisher noch nicht zuverlässig beurteilt werden.<br />
Andrea Szalavetz (Institut für Weltwirtschaft Budapest) untersuchte die Rolle<br />
von Produktionsverlagerungen westlicher Unternehmen für die Modernisierung<br />
der ungarischen Volkswirtschaft. Westliche Produktionsverlagerungen sichern<br />
zwar eine rasche und umfassende technologische Erneuerung in den<br />
ungarischen Tochterunternehmen und einen problemlosen Absatz in<br />
Westeuropa, reduzieren die Tochterunternehmen allerdings sehr häufig auf eine<br />
Zulieferrolle. Die Auswirkungen der wirtschaftlichen Zusammenarbeit mit<br />
Mittel- und Osteuropa auf den deutschen und westeuropäischen Arbeitsmarkt<br />
diskutierte Dieter Schumacher (Deutsches Institut für Wirtschaftsforschung,<br />
Berlin). Dem tendenziellen Absinken der Löhne und tendenziellen Ansteigen<br />
der Arbeitslosigkeit in den arbeitsintensiven Industrien Westeuropas stehen<br />
dauerhafte Erträge in den humankapitalintensiven Sektoren gegenüber, so daß<br />
die EU-Länder grundsätzlich in der Lage sein müßten, diesen Strukturwandel zu<br />
bewältigen. Waltraut Urban (Wiener Institut für Internationale<br />
Wirtschaftsvergleiche) wies nach, daß seit 1993 in der Branchenstruktur der<br />
MOE-Länder die Spezalisierungsmuster aus der RGW-Zeit allmählich abgelöst<br />
werden durch die Einbindung in eine umfassendere internationale<br />
Arbeitsteilung. Dabei sanken außer in Rumänien überraschenderweise auch die<br />
Anteile der arbeitsintensiven Textil- und Bekleidungsindustrie.<br />
In der lebhaft geführten, vom Veranstalter Meinhard Miegel immer wieder<br />
bewußt auf die strittigen Punkte gelenkten Diskussion war man sich über die<br />
Vorteile der bisherigen wirtschaftlichen Zusammenarbeit für die EU-Länder und<br />
insbesondere Deutschland nahezu einig. Dagegen wurden die Ergebnisse,<br />
besonders aber die Prognosen für die mittel- und osteuropäischen Länder eher<br />
kontrovers diskutiert. Vorherrschend blieb dabei die Besorgnis über die<br />
steigenden Handelsbilanzdefizite, ungünstige, sich kaum verbessernde<br />
Handelsstrukturen, ungenügende Kapitalzufuhr und die nur langsame<br />
Restrukturierung der Industrie. Wie schon in den vergangenen Jahren erwies<br />
sich das Seminar als ein streitbares Forum, auf dem unterschiedliche<br />
wirtschaftstheoretische Ansätze, ostmitteleuropäische und westeuropäische<br />
JEEMS 1/ 19<strong>98</strong> 87
News / Information<br />
Perspektiven, aber auch die Einsichten von Wirtschaftspraktikern in einen<br />
anregenden Dialog mündeten. Die Konferenzmaterialien erscheinen 19<strong>98</strong> im<br />
Band 8 der Reihe "Transformation. Leipziger Beiträge zu Wirtschaft und<br />
Gesellschaft”.<br />
Cornelia Kunze, Zentrum für Internationale Wirtschaftsbeziehungen,<br />
Universität Leipzig<br />
•••<br />
Summer University in Budapest<br />
As a part of the CEU Summer University in July in Budapest, there will be a<br />
special course on Ethics of Capitalism directed by Laszlo Zsolanai, Business<br />
Ethics Center, Budapest University of Economic Sciences.<br />
The summer course is focusing on the moral foundation of capitalism in the<br />
context of the late 20th century realities. The legitimacy of purely profit-seeking<br />
activities has been questioned on various ground.<br />
The stakeholder theory is central in examining the issue. The main message of<br />
the theory is that in corporate and public policy-making every individual, group<br />
or organisation, which can be affected by the policy, should be respected but<br />
also their moral rights. Corporate decision makers and public administrators<br />
have primary duties and obligations concerning the well-being of their<br />
stakeholders. Hence the ideal of Kantian capitalism emerges.<br />
To discuss the moral foundation of capitalism is especially important in Central<br />
and Eastern Europe where the legitimacy of the market economy is weak and<br />
vulnerable: Privatisation and restitution schemes have presented difficult social<br />
and ethic issues. The trade-off between economic efficiency and social security<br />
produces hard choices for politicians and business managers day by day. The<br />
success of the economic transition in the region depends not only on material<br />
pay-offs for the people but also on the social and ethical acceptability of the<br />
transforming process.<br />
The goal of the course is to get together leading scholars from the USA and<br />
Europe for providing a fair picture about the new directions of capitalism and its<br />
relevance and applicability in Central and Eastern Europe.<br />
The deadline for application for the course was February 1, 19<strong>98</strong>.<br />
For further information please contact:<br />
CEU Summer University, Nador u. 9, Budapest, Hungary<br />
Tel.: +361 327 3069, Fax: +361 327 3124, Email: summeru@ceu.hu<br />
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News / Information<br />
BUCKINGHAMSHIRE BUSINESS SCHOOL<br />
Centre for Research into East European Business<br />
-CREEB-<br />
FOURTH ANNUAL CONFERENCE<br />
23 and 24 June 19<strong>98</strong><br />
Convergence or Divergence: Aspirations and Reality in Central and<br />
Eastern Europe and Russia<br />
CALL FOR PAPERS<br />
The scope of the conference will combine keynote speakers, paper and poster presentation,<br />
discussion, etc. The themes will include:<br />
Socio-economic convergence/ divergence<br />
Benchmarking: aspiration and reality<br />
Institutional transformation<br />
Ownership and governance<br />
Management development<br />
Research issues: philosophy, methodology and practice.<br />
Venue: Newiend Park, Chaffont St Gifes, Bucks, UK<br />
Abstracts of proposed papers should be submitted by Monday, 23 February 19<strong>98</strong><br />
Completed papers for publication in the conference proceedings must be submitted by<br />
Monday, 18 May 19<strong>98</strong><br />
Conference fee (including accommodation, meals and conference proceedings): £140<br />
(research students: £85) Non-residental fee: £110 (research students: £65)<br />
For further details, contact:<br />
Margaret Levell<br />
CREEB, Buckinghamshire Business School, Buckinghamshire University Collage<br />
Newland Park, Goreland Lane, Chalfont St Giles, Bucks, HP8 4AD, UK<br />
Phone: +44 1494 603159 Fax. +44 1494 874230<br />
e-mail: creeb@buckscol.ac.uk http://www.bucksol.ac.uk<br />
JEEMS 1/ 19<strong>98</strong> 89
News / Information<br />
Center for East European Studies (CEES) - Copenhagen Business School (CBS)<br />
INTERNATIONAL WORKSHOP:<br />
”Transition and Enterprise Restructuring in Eastern Europe”<br />
Call for Papers<br />
The international workshop will be held in Copenhagen in Denmark, August 20-22, 19<strong>98</strong><br />
The following themes will be discussed at the workshop:<br />
Corporate Governance:<br />
privatization and the establishment of a market based system of corporate governance<br />
comparison of different ownership structures and institutional environment (legislation,<br />
financial institutions etc.)<br />
evolution of ownership pattern over time and its implications<br />
Internationalization of Business:<br />
entry of foreign investors<br />
alternative forms of international cooperation<br />
access to international production networks and markets<br />
Management in transition:<br />
organizational change<br />
change in management methods<br />
development of key functions such as marketing, accounting, finance, HRM etc.<br />
strategic repositioning and entry into new markets<br />
Deadlines: Abstracts of proposed papers should be submitted by April 1, 19<strong>98</strong>.<br />
Completed papers for publication in the workshop proceedings (together with<br />
disk) must be submitted by August 1, 19<strong>98</strong>.<br />
Workshop fee: The workshop fee (including meals and workshop proceedings):<br />
1.000 DKK (approximately 150 US$).<br />
For further information, please contact:<br />
Administrator Christina Pind, or Associate Professor Niels Mygind<br />
Center for East European Studies, Copenhagen Business School<br />
Dalgas Have 15, DK-2000 Frederiksberg, Denmark<br />
Phone: +45 3815 3030; Fax +45 3815 3037, Email:cp.cees@cbs.dk,<br />
http://www.econ.cbs.dk/institutes/cees<br />
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The International Economic Relations Department and The Scientific Research<br />
Institute at D.Tsenov Academy of Economics in Svishtov<br />
International scientific conference on:<br />
INTERNATIONALIZATION AND GLOBALIZATION OF BUSINESS<br />
(Emerging Markets)<br />
Call for papers<br />
May 18 - 19, 19<strong>98</strong>, Svishtov, Bulgaria<br />
TOPIC AREAS:<br />
1. Theories of International Business Development (including transition<br />
economies)<br />
2. International Marketing in the Emerging and Dynamic Markets<br />
3. International Corporate Finance<br />
4. Formal and Informal Networks in International Business<br />
5. Civilization, Culture and Business Systems<br />
6. Strategic Alliances between Companies in Developed and Emerging Markets<br />
7. Internationalization and Small Business Development<br />
PAPERS: The conference committee wishes to invite you to send a short<br />
description of your intended presentation on the topics of the conference. Two<br />
unpaged lazer print-outs of abstracts of papers, max.5 standard pages, plus a<br />
disk (Word for Windows) should be sent by April 1, 19<strong>98</strong>.<br />
Fees for attendance and accommodation: There are no fees for attending the<br />
Conference. Participants will be staying at the University Hotel and will pay for<br />
lodging and meals.<br />
Deadline for submission: March 1, 19<strong>98</strong>.<br />
For further information, please contact:<br />
Conference Committee<br />
International Economic Relations Department, D.Tsenov Academy of<br />
Economics<br />
2 E. Chakarov st., 5250 Svishtov, Bulgaria<br />
Tel: (++359631) 24978, E-mail: uircomm@comm.uni-svishtov.bg<br />
JEEMS 1/ 19<strong>98</strong> 91
News / Information<br />
Further workshops and conferences in 19<strong>98</strong>:<br />
Center for Eastern European Studies at the Copenhagen Business School<br />
"Transition and Enterprise Restructuring in Eastern Europe"<br />
we expect to focus on three areas:<br />
Corporate Governance,<br />
Internationalization of Business<br />
Management in Transition.<br />
Date: August 20-22, 19<strong>98</strong>.<br />
Deadline for submission of abstracts: April 1, 19<strong>98</strong><br />
For further details please contact:<br />
Christina Pind, Email: cp.cees@cbs.dk<br />
5th conference of the European Association for<br />
Comparative Economic Studies<br />
Economists and related academics focusing on transition economies are meeting<br />
in September at the Bulgarian sea resort of Varna.<br />
Date: 10.-12.9.<br />
Deadline for submission of abstracts: March 1st<br />
For further details please contact:<br />
Xavier Richet at Universite Marne la Vallee, Email: richet@univ-mlv.fr..<br />
The annual Vienna conference on<br />
"Marketing Strategies for Central & Eastern Europe”<br />
Date: December 2 to 4, 19<strong>98</strong> Vienna, Austria<br />
For further details please contact:<br />
Prof. Dr. Reiner Springer, Wirtschaftsuniversität Wien, Althanstr. 51, 1090<br />
Wien, Austria,<br />
Phone: + 43-1-313 36/4371, FAX: + 43-1-313 36/751,<br />
Email:springer@isis.wu-wien.ac.at<br />
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News / Information<br />
Prof. Dr. Petr Chadraba, DePaul University, Chicago,<br />
Email: pchadrab@wppost.depaul.edu.<br />
IV CHEMNITZ EAST FORUM<br />
Business Ethics in Central and Eastern Europe<br />
This international conference will be organized from March 3-5, 1999, by the Faculty of<br />
Economics and Business Administration, Chemnitz University of Technology. Scientists as<br />
well as practitioners are invited to share their experiences. Empirical and conceptual<br />
submissions are welcome on a wide variety of topics, such as<br />
<br />
<br />
<br />
<br />
general problems of business ethics in the transformation process (e.g. legal structures,<br />
traditional values, business criminality, public opinion on ethics, institutional forms of<br />
business ethics),<br />
ethical basis of corporate culture in CEE countries (e.g. ethical aspects of corporate<br />
governance, consequences for industrial relations, ethical activities and practices),<br />
Entrepreneurship: ethical values and attitudes,<br />
ethical issues in East-West co-operation (e.g. forms of co-operation and their<br />
consequences, processes of market entry decisions).<br />
The conference languages are English and German. The deadline for abstract submission is<br />
August 31, 19<strong>98</strong>; full papers will be due November 30, 19<strong>98</strong>.<br />
For more information please contact: Prof. Rainhart Lang, Chemnitz University of<br />
Technology, Faculty of Economics and Business Administration, P.O. Box 964, 09107<br />
Chemnitz, Germany. Phone: +49-371-531 41 52; fax +49-371-531 39 87; Email:<br />
R.Lang@wirtschaft.tu-chemnitz.de.<br />
IV. CHEMNITZER OSTFORUM<br />
Wirtschaftsethik in Mittel- und Osteuropa<br />
Die Konferenz wird von der Fakultät für Wirtschaftswissenschaften der Technischen<br />
Universität Chemnitz organisiert. Sie findet vom 3. bis 5. März 1999 in Chemnitz statt.<br />
Wissenschaftler wie Praktiker sind zum Erfahrungsaustausch eingeladen. Theoretische und<br />
Empirische Beiträge sollten sich mit folgenden Themen befassen:<br />
Wirtschaftsethik im Transformationsprozeß (z.B. Rechtsstruktur, Traditionelle Werte,<br />
Wirtschaftskriminalität, Institutionelle Formen der Wirtschaftsethik),<br />
Ethische Grundlagen von Unternehmenskultur in Mittel- und Osteuropa (z.B. Ethische<br />
Aspekte der Unternehmenskontrolle, Konsequenzen für die industriellen Beziehungen,<br />
Ethisch orientierte Handlungen und Praktiken),<br />
<br />
<br />
Unternehmertum: Ethische Werte und Einstellungen,<br />
Ethische Probleme von Ost-West Kooperationen (z.B. Formen der Kooperation und ihre<br />
Konsequenzen, Entscheidungsprozesse bezüglich des Markteintritts).<br />
Die Konferenzsprachen sind Englisch und Deutsch. Abstracts sind bis zum 31. August 19<strong>98</strong>,<br />
die vollständigen Beiträge bis zum 30. November 19<strong>98</strong> einzureichen.<br />
JEEMS 1/ 19<strong>98</strong> 93
News / Information<br />
Weitere Informationen erhalten Sie von: Prof. Rainhart Lang, Technische Universität<br />
Chemnitz, Fakultät für Wirtschaftswissenschaften, PSF.: 964, 09107 Chemnitz, Deutschland.<br />
Tel.: +49 371 531 4152; Fax: +49 371 531 3<strong>98</strong>7; Email: R.Lang@wirtschaft.tu-chemnitz.de.<br />
Pin-Board<br />
Belarus: Message from Juri Starenkov:<br />
Erlauben Sie uns, Ihnen unsere Organisation vorzustellen. Sie heißt<br />
“Gesellschaft der Wissenschaftler und Erfinder der Republik ‘Weißrußland’ und<br />
besteht seit Anfang 1997. Wir befassen uns mit der Entwicklung von neuen<br />
Technologien in verschiedenen Bereichen der Wissenschaft und Technik.<br />
Außerdem vertreten wir die Interessen der Wissenschaftler, die Mitglieder<br />
unserer Organisation sind.<br />
Zur Zeit suchen wir eine Partnerorganisation zur Organisation eines Seminars<br />
zum Thema: “Intellektuelles Eigentum bei der Lösung von wissenschaftlichen,<br />
technischen, ökologischen und wirtschaftlichen Problemen der modernen Welt”.<br />
Das Seminar wird in Minsk (Weißrußland) durchgeführt. Die Finanzierung des<br />
Seminars erfolgt über das TACIS- Programm.<br />
Für weitere Informationen wenden Sie sich bitte an:<br />
Juri Starenkov, Postfach 6, 220018 Minsk, Weißrußland,<br />
Tel.: +375-017 254-45-27, Fax: +375-017 258-69-67, Email: star@cit.org.by<br />
New working papers published by the Center for East European Studies:<br />
No. 9, January 19<strong>98</strong>: Snejina Michailova / Graham Hollinshead: Developments<br />
in the Management of Human Resources in Eastern Europe - The Case of<br />
Bulgaria<br />
No. 10, February 19<strong>98</strong>: Klaus Meyer / Inger Bjerg Møller: Managing Deep<br />
Restructuring: Danish Experiences in Eastern Germany<br />
No. 11, February 19<strong>98</strong>: Patrick Arens: Strategic Decision Making in the<br />
Transitional Economy of Romania: The Case of TAMIV S.A.<br />
Denmark: Message from Klaus Meyer:<br />
The Thunderbird International Business Review has announced a special issue<br />
on "Economic Transition in Central and Eastern Europe: A Decade of Change".<br />
For further Information or submission please contact the special issue editors:<br />
Professors Michael Czinkota and Ilkka Ronkainen at Georgetown University<br />
Email: czinkotam@gunet.georgetown.edu / ronkaii@gunet.georgetown.edu<br />
94<br />
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Column<br />
Qualität managen - eine erstrangige Führungsaufgabe<br />
Höchste Produkt- und Dienstleistungsqualität ist weltweit für die Unternehmen<br />
zum Wettbewerbsfaktor Nr. 1 geworden. Qualität entsteht aber nicht im<br />
Selbstlauf, Qualität muß gemanagt werden. Darüber ist schon viel geschrieben<br />
und gesprochen worden. Nach wie vor tun sich aber auch die ehemaligen<br />
Lehrmeister in Sachen Qualität - die deutschen Unternehmen - schwer, den<br />
internationalen Höchststand auf diesem Gebiet wieder zu erreichen. Über viele<br />
Jahre erzielte Erfolge haben selbstzufrieden gemacht. Und Selbstzufriedenheit<br />
ist bekanntlich kein Ansporn für Höchstleistungen. Wer zu den Weltmeistern in<br />
puncto Qualität gehören will, muß fleißig trainieren, um “Medaillenruhm” zu<br />
erringen.<br />
Die jungen MOE- und NUS-Staaten, die sich gegenwärtig in einem<br />
komplizierten Transformationsprozeß von der Planwirtschaft zu einer<br />
marktorientierten Wirtschaft befinden, sind dabei, die Kunden wieder als<br />
Maßstab für unternehmerisches Handeln zu entdecken. Aber dieser Prozeß ist<br />
sehr kompliziert und steinig, insbesondere, wenn es darum geht, den Zugang zu<br />
Märkten in Europa oder auf anderen Kontinenten zu finden, auf denen die<br />
Anbieter im Prinzip noch weitgehend unbekannt sind. Viele Unternehmen in den<br />
neuen Bundesländern kämpfen bekanntlich heute noch mit sehr großen<br />
Schwierigkeiten, sich auf dem nationalen und internationalen Markt zu<br />
behaupten. Gewisse Erfolge und Lichtblicke sind aber auch nicht zu übersehen.<br />
Marktanteile werden keinem Unternehmen geschenkt. Sie müssen erworben und<br />
gegen härteste Konkurrenz verteidigt werden.<br />
Unter diesem Blickwinkel werden spätestens mit dem Eintritt einiger<br />
osteuropäischer Staaten in die EU ähnliche Anpassungsprobleme wie in<br />
Ostdeutschland auch in diesen Ländern entstehen.<br />
Deshalb ist es von größter Bedeutung, daß in den Transformstaaten sehr intensiv<br />
und zielstrebig darin gearbeitet wir, die Produkt- und Dienstleistungsqualität zu<br />
erhöhen. Diese Aufgabe kann nur gelingen, wenn das Management in den<br />
Unternehmen die Bedeutung des Faktors Kundenzufriedenheit und den<br />
entscheidenden Einfluß der Qualität erkennt, der nur durch ein zeitgemäßes<br />
Management in den Unternehmen entwickelt werden kann. Die entsprechenden<br />
europäischen und internationalen Standards sind als Minimalforderungen zu<br />
verstehen. Sie sind gewissermaßen die “Eintrittskarte” für den europäischen<br />
Binnenmarkt.<br />
Die Zertifizierung von Qualitätsmanagementsystemen nach den Normen EN<br />
ISO 9000 ff. sowie die CE-Kennzeichnungspflicht für bestimmte Produkte sind<br />
wichtige erste Schritte, die vom Management in diesen Unternehmen veranlaßt<br />
werden müssen. Je schneller, desto besser. Auch wenn diese Arbeiten in vielen<br />
Unternehmen erst am Anfang stehen, sollte der Blick auch heute schon darauf<br />
gerichtet werden, welche Managementstrategie in der heutigen Zeit und in der<br />
JEEMS 1/ 19<strong>98</strong> 95
Column<br />
Zukunft den fortgeschrittenen Unternehmen zum Erfolg verhilft: Total Quality<br />
Management - TQM. Die besten Unternehmen Europas können mit dem<br />
European Quality Award ausgezeichnet werden, der einmal im Jahr von der<br />
European Foundation for Quality Management E.F.Q.M. vergeben wird.<br />
Viele Führungskräfte in den Unternehmen osteuropäischer Staaten haben das<br />
auch bereits erkannt. Sie bemühen sich in ganz besonderer Weise, zum Standard<br />
Westeuropas aufzuschließen. Bei diesen Bemühungen sollten wir auch weiter<br />
mit spezifischem Managementknow-how Unterstützung leisten. Insbesondere<br />
geht es dabei um die Hilfe zur Selbsthilfe. Diese Hilfe ist auch nur dann sinnvoll<br />
und willkommen, wenn die landestypischen Besonderheiten in größtmöglichem<br />
Maße berücksichtigt werden. An die Berater werden deshalb sehr hohe<br />
Anforderungen gestellt. Nach Möglichkeit sollten Sie über gute<br />
Landeskenntnisse und Kenntnisse der entsprechenden Landessprache verfügen.<br />
Das Bildungsniveau in den osteuropäischen Ländern ist bekanntlich hoch und<br />
moderne Managementmethoden fallen allgemein auf einen fruchtbaren Boden.<br />
Qualität ist nicht alles - aber ohne Qualität ist alles nichts!<br />
Claus Morgenstern<br />
96<br />
JEEMS 1/ 19<strong>98</strong>
Guideline for Authores<br />
Guideline for Authors<br />
Please notice the following requirements:<br />
Size<br />
Articles, reports and other contributions to the journal should be submitted in<br />
English or German. Articles should not exceed 25 pages with 60 stops per line<br />
and 35 lines, including graphics and bibliography; reply or discussion papers,<br />
conference reports, book reviews etc. should have not more than 5 pages.<br />
Send the article in 2 copies to the editor. Add a disc with the article, if possible<br />
in Microsoft Word for Windows format.<br />
Abstract<br />
The articles should include an abstract of 100 or fewer words. As far as possible<br />
the abstract should be written in english and german language.<br />
Paragraphs, Type size etc.<br />
Please use only ”Times New Roman”as type.<br />
Use simple spacing.<br />
Do not use automatic or manual word division.<br />
Paragraphs should be connected without blank spacing.<br />
Abbreviations, if not used internationally, should be avoided.<br />
Titles<br />
Main titles should be printed in bold types, secondary titles in bold types and<br />
italics, tertiary only in italics.<br />
Quotations in the Text<br />
mentioning of author: Name (Year)<br />
quotation of authors: (Name/ Name Year:Page)<br />
quotation of different sources (Name Year; Name Year:Page)<br />
more than 2 authors: Name of 1st author et al. (Year:Page)<br />
Footnotes<br />
Footnotes should be kept shortly. They should not be used for citing references<br />
Tables and figures<br />
Tables as well as Firures should be numbered consecutivly (arabic numerals)<br />
and contain a short title.<br />
Table [Number]: [Titel] resp. Figure [Number]: [Titel]<br />
In order to refer to tables or figures within the text only the number should<br />
mentioned<br />
As it can be seen in Table [Number] resp. (see Fig.[number])<br />
JEEMS 1/ 19<strong>98</strong> 97
Guideline for Authors<br />
The size of tables should not, the size of figures must not exceed one page (A4:<br />
(210 X 297 mm]). The spacing and lettering should allow for subsequent<br />
reduction to the size of JEEMS page (A5)<br />
Tables and Figures which are not yet embedded in the text, should be sent in a<br />
separate file with indication of the program used.<br />
References<br />
Vedin, B.-A. (ed.) (1994): Management of Change and Innovation, Aldershot et<br />
al.<br />
Madhavan, R./ Fogel, D.S. (1992): In Support of Reform: Western Business<br />
Education in Central and Eastern Europe, in: Review of Business, No. 4,<br />
pp 4-9.<br />
Short biography<br />
For a short biography of the author, please state the following items:<br />
Surname, Christian name, year of birth, academic titles, institution, department,<br />
main research topics.<br />
Assessment procedure<br />
All papers will be screened by a member of the editorial board and blindly<br />
reviewed by East resp. West European members of the corresponding board. For<br />
further communication send the full address and if possible the e-mail address.<br />
<strong>98</strong><br />
JEEMS 1/ 19<strong>98</strong>
Richtlinien für Autoren<br />
Richtlinien für Autoren<br />
Bitte beachten Sie folgende Anforderungen:<br />
Art und Umfang<br />
Artikel, Berichte und andere Beiträge für JEEMS sollten in deutscher oder<br />
englischer Sprache verfaßt sein. Die Artikel sollten einen Umfang von max. 25<br />
Seiten mit 60 Anschlägen und 35 Zeilen pro Seite, einschließlich Abstract,<br />
Grafiken und Literatur, haben; alle anderen Beiträge sollten einen max. Umfang<br />
von 5 Seiten haben.<br />
Der Artikel sollte in 2 Exemplaren an den Herausgeber geschickt werden.<br />
Beigefügt werden sollte eine Diskette mit dem Artikel, wenn möglich im Format<br />
Microsoft Word für Windows.<br />
Abstract<br />
Artikel sollten ein Abstract von höchstens 100 Worten, wenn möglich in<br />
deutscher und englischer Sprache enthalten<br />
Schriftart, Absätze etc.<br />
Der Artikel ist vollständig in der Schriftart “Times New Roman” zu verfassen<br />
Der Text sollte im einfachen Zeilenabstand geschrieben werden.<br />
Silbentrennungen sind nur mittels bedingtem Trennstrich vorzunehmen.<br />
Absätze sollten nicht durch Lerzeilen getrennt werden.<br />
Abkürzungen, soweit sie nicht international gebrächlich sind, sollten vermieden<br />
werden.<br />
Überschriften<br />
Hauptüberschriften sollten fett, Überschriften 2. Ordnung fett/kursiv und<br />
Überschriften 3. Ordnung kursiv geschrieben sein.<br />
Zitate im Text<br />
Erwähnung des Autors:<br />
Name (Jahr)<br />
Zitieren von Autoren:<br />
(Name/ Name Jahr:Seite)<br />
Hinweise auf verschiedene Autoren: (Name Jahr; Name Jahr:Seite)<br />
mehr als 2 Autoren:<br />
Name des ersten Autors et al.<br />
Fußnoten<br />
Fußnoten sollten kurz gehalten werden. Sie sind nicht für Literaturangaben zu<br />
nutzen. Fußnoten sollten am unteren Rand der Seite stehen, auf der sie gebraucht<br />
werden.<br />
JEEMS 1/ 19<strong>98</strong> 99
Richtlinien für Autoren<br />
Tabellen und Grafiken<br />
Tabellen und Graphiken sollten jeweils eigene durchgehende Nummerierungen<br />
(arabisch) haben und mit einem Kurztitel versehen sein.<br />
Tabelle [Nummer]: [Tilel] bzw. Abbildung [Nummer]: [Titel]<br />
Verweise auf Tabellen oder Graphiken im Text sind nur mit der Nummer zu<br />
versehen.<br />
Wie Tabelle [Nummer] zeigt bzw (siehe Abb.[Nummer])<br />
Tabellen sollten, Graphiken dürfen nicht größer als eine Seite sein. Es ist darauf<br />
zu achten, daß sie bei Reduzierung auf die Standardgröße von JEEMS (A5)<br />
lesbar bleiben<br />
Tabellen/ Grafiken die nicht im Text eingebettet wurden, sollten in einer<br />
separaten Datei gesendet werden, mit dem Namen des Programms in dem diese<br />
erstellt wurden.<br />
Literaturverzeichnis<br />
Meissner, B./ Loeber, D./ Levits, E. (Hrsg.) (1992): Die Wirtschaft der<br />
baltischen Staaten im Umbruch, Köln.<br />
Stratemann, I. (1994): Personalauswahl und -entwicklung in den neuen<br />
Bundesländern, in: Zeitschrift Arbeits- und Organisationspsychologie, Nr.<br />
1, S. 41-44.<br />
Kurzbiographie<br />
Für einen Kurzbiographie der Autoren sollten folgende Informationen beigefügt<br />
werden:<br />
Name, Vorname, Geburtsjahr, Titel, Institution, Abteilung, Forschungs-<br />
/Arbeitsschwerpunkte.<br />
Bewertung<br />
Alle Beiträge werden von einem Mitglied des Herausgeberrates überprüft und<br />
von einem ost- resp. westeuropäischen Mitglied des Mitarbeiterkreises<br />
rezensiert. Zur Erleichterung der weiteren Kommunikation ist die komplette<br />
Adresse des Autors - wenn möglich mit E-Mail Adresse - erforderlich.<br />
100<br />
JEEMS 1/ 19<strong>98</strong>