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Organizational status and efficiency: The case of the Spanish SOE `Paradores´

Magda Cayón () and Joaquim Vergés-Jaime

No 705, Working Papers from Departament Empresa, Universitat Autònoma de Barcelona

Abstract: Purpose of this paper The purpose of this paper is to provide new evidence on the issue of the effect on public enterprises economic performance of the introduction of some given changes in organisational status and management practices, while keeping the enterprises under public control. Approach Our approach is case study type and relies on comparative efficiency literature. We identify relevant changes on the organisational status of a State owned large hotel group along a period of twenty years, next we measure its annual efficiency indicators, and then evaluate to which extent the observed changes in economic performance can be attributable to the corresponding management reforms carried out. Findings As a result we find that the formally more relevant change in organisational status (the enterprise passing to be a Limited Company), which implied a substantial increase in the enterprise autonomy, did not produce a significant improvement in its economic performance; a finding contrary to what we expected according to agency theory. However, a second relevant organisational change –five years later- when both the principal (government) and the agent (fir m’s CEO) changed is consistently related to a significant improvement in economic performance. Research implication As a research implication we abide for use more precise agency theory statements; and as a practical implication we argue here that potentialities of improvement brought about by a formal-legal change in the status of the enterprise may require also –in order to actually improve firm’s efficiency- some changes in the firm’s key personal positions: supervisor (principal) and CEO (agent), in the sense that a change to a greater-autonomy for the enterprise it seems should come together a parallel new ‘management culture’. Practical implications Management good practises to apply to other public enterprise’s restructuring in order to improve their efficiency. Original paper It’s the first study on organizational changes and efficiency for an important Spanish public enterprise.

Keywords: State owned enterprise; Organisational status refo rms; Efficiency measurement; Agency theory; Management control; Hotel sector . (search for similar items in EconPapers)
Pages: 25 pages
Date: 2007-10, Revised 2007-10
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Published in Working Papers at the Department of Business, Octuber 2007 pages 1-25

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