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Asia Pacific Journal of Management, 21, 49–74, 2004 c 2004 Kluwer Academic Publishers. Manufactured in The Netherlands. Ownership and its Impact on Coping with Financial Crisis: Differences in State-, Mixed-, and Privately-Owned Enterprises in Thailand HUGH M. O’NEILL Hugh [email protected] DENNIS A. RONDINELLI dennis [email protected] The Kenan-Flagler Business School, The University of North Carolina at Chapel Hill, Campus Box 3490, McColl Building, Chapel Hill, NC 27599-3490, USA TIBORDEE WATTANAKUL Tibordee [email protected] State Enterprise Policy Office, Ministry of Finance, Royal Thai Government, Bangkok, Thailand Abstract. Corporate turnarounds have been studied widely in Western contexts, but few empirical studies detail turnaround experience in non-western countries, especially those undergoing or recovering from financial crisis. An assumption in recent privatization policies has been that change in ownership triggers a form of performance reversal or turnaround. Here, we compare firms with three different forms of ownership two years after the financial crisis in Thailand. This study assesses the impact of ownership differences on the level of corporate entrepreneurship, human resource management practices, and worker effort among state-, mixed- and privatelyowned enterprises in Thailand. The results suggest cautious optimism about changes in ownership as a potential means for triggering organizational changes that lead to increased productivity for threatened economies. Mixed ownership may be an effective substitute for private ownership or, alternately, an effective transitional form of restructuring state enterprises in preparation for private ownership. Keywords: privatization, corporate entrepreneurship, corporate turnaround Introduction The 1990s may justifiably be remembered as a period when emerging market countries in Asia underwent serious and sometimes unanticipated financial and economic crisis. International organizations such as the World Bank and the International Monetary Fund prescribed privatization as a means of transforming centrally managed and state-dominated economies into viable market systems and as a means by which countries in crisis could regain economic stability. The use of privatization as an instrument of economic and organizational reform spread rapidly through Europe and Asia. (Ramamurti, 1992; Rondinelli and Yurkiewicz, 1996). One observer described privatization as the opening of the floodgate (Ramamurti, 1992) that, like many faddish strategies, may have diffused the process too widely (Abrahamson, 1996; O’Neill, Pouder and Buccholtz, 1998). One result of the spread of privatization was the increased influence of international money flows on Asian economies and increased turbulence in domestic markets. Asian miracles 50 O’NEILL, RONDINELLI AND WATTANAKUL became Asian nightmares almost overnight, for example, as the Thai Baht collapsed in 1997. In this study, we compare three different types of firms in the postcrisis period in Thailand. Our interest is in finding whether privatized firms are more or less crisis responsive than state-owned firms or firms under mixed ownership. An implicit assumption in IMF policies promoting privatization has been that privatized firms are more adaptable and crisis responsive than state-owned enterprises. While there is some support for that assumption, the support is equivocal. Anderson et al. (1997) reviewed data on 6,000 privatized firms in Central and Eastern Europe and found that between 1992 and 1995 their average labor productivity grew by 7.3 percent while state owned firms had on average −0.2 percent growth. Yet, Arens and Brouthers (2001) found that privatized firms are not more adaptable than state-owned firms in Romania. Meggison and Netter (2001) note that most studies of privatized firms—but not all studies—show an improvement in performance. In reviewing the research, Meggison and Netter (2001) also note that few studies identify the specific firm level behaviors that account for the improved performance. What is a “crisis responsive” firm? We use literature about organization decline, corporate turnaround, and corporate transformation to describe the characteristics of adaptable, or crisis responsive, firms. We argue that crisis responsive firms will have high levels of corporate entrepreneurship, effective human resource policies, and high levels of work effort. We demonstrate that firms under privatized forms of ownership are more crisis responsive than state-owned enterprises. We focus on the differences between state-owned enterprises (SOEs), mixed-ownership enterprises (MEs) in which both government and private investors hold shares, and private enterprises (PEs), in an attempt to understand the impact of crisis on these different forms in Thailand. Thailand offers a good venue for the study because the economy has been under pressure since late 1996 (Rondinelli and Priebjrivat, 2000). In mid-1997, financial panic caused severe capital outflows from Thailand, and a free fall in currency and stock markets. The International Monetary Fund pressured the Thai government to restructure the country’s economy after the financial crisis and, in response, the government committed Thailand to a Master Plan for State Enterprise Sector Reform. The master plan provided guidelines for increasing private sector participation in sectors previously under government control, privatizing SOEs, and establishing regulatory and institutional reforms that would improve the efficiency of the market. The master plan included an action program for the reform and privatization of 59 SOEs primarily in the energy, telecommunications, water, and transportation sectors. We present the study in four sections. First, we discuss the potential differences expected in the response of state and private enterprises to crisis. Second, we describe a study that investigates whether those differences actually exist among firms with different forms of ownership in Thailand, a country with many years of experience with a mixed economy. Third, we present the statistical results of the study. Fourth, we consider the implications of the study for privatization and turnaround strategies in Thailand and elsewhere, and we discuss the application of corporate turnaround theories in this Asian context. OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 51 Literature review and research hypotheses In theory, organizations are goal-directed, boundary-maintaining, activity systems (Aldrich, 1979). At this level of abstraction, SOEs and PEs share similar functions. Yet these two forms of organization are quite different in their specific goals, boundary issues, and activity systems, and one would also expect differences among them in strategic and operational behaviors. The nature and characteristics of government, mixed-ownership, and privately-held enterprises Organizational theory points out many differences between government-owned enterprises and private firms that can affect their ability to respond to crisis and turn around their performance. SOEs and PEs differ, for example, in the clarity of their goal structure. SOEs are directly embedded in government, and as a result, their goals are strongly influenced by political objectives (Moore, 1992). Because many political groups influence government organizations, their goals are diverse and frequently inconsistent. While the SOE seeks to satisfice on a number of ambiguous goals, a private firm clearly seeks to maximize profits. To be sure, SOEs face financial constraints and PEs must frequently balance other goals against profit maximization, but profits clearly have a super-ordinate role in private firms, especially in those that are publicly traded. Economic theory claims that market forces lead to the removal of non-profitable managers and the dissolution of non-profitable firms. The sources of discipline faced by SOE managers are more diffuse (when they operate at all) and, as a result, their goal structures differ from managers of private firms. SOEs and PEs also differ in boundary-maintaining systems. The organizational boundary of private entities is quite clear, whereas for SOEs it can be quite vague. Cyert and March (1998) argued that both business and government enterprises are complex decision-making organizations, but they differ in the character of their relations with external control groups, leading to differences in the process by which they make decisions. Rainey (1989) suggested that public managers often face more constraints (rules and procedures), external political contacts, and interruptions compared to business managers. Finally, SOEs and PEs have different activity systems, that is, sets of interdependent role behaviors and routines. Aldrich (1999) defined routines as the rules, procedures, and strategies around which organizations are constructed and through which they operate. SOEs are empowered through the law and (theoretically) are held accountable to the state for administering the law in pursuing their goal of public service. As part of government, state enterprises have different roles than private firms in a market economy. Compared to business organizations, SOEs have more extensive procedures and more formal specifications and controls designed to insure public accountability. The strategic behavior of SOEs is strongly influenced by constraints specific to their form. These constraints include goal conflict engendered by differing and shifting coalitions controlling the government and lack of strategic flexibility due to the limited domains and charters, politics, and bureaucratization. Property rights theorists note the differences in behavior of managers of SOEs and PEs stemming from ownership differences (Alchian and Demsetz, 1973). The 52 O’NEILL, RONDINELLI AND WATTANAKUL non-transferability of ownership inhibits capitalization of SOEs and reduces the owners’ (i.e., the government’s) incentives to monitor managerial behavior in SOEs. SOEs and private firms represent points on a continuum, with mixed enterprises at a mid-point between the two anchors. MEs include various combinations of government and private joint equity participation (Boardman, Eckel and Vining, 1986). The term “mixedenterprise” specifically excludes wholly state-owned enterprises, joint ventures between two government-owned firms, and contractual joint ventures in which the private partner does not have equity. MEs enable the government to maintain control at less cost than is required for complete ownership. As a result, MEs are less embedded in government and can avoid some of the costly accountability procedures and other governmental restrictions and controls found in SOEs. The ME potentially offers a cost-minimizing method for government to satisfy both profitability objectives and social goals. In a ME, private shareholders monitor profit making and efficiency and the government monitors social goal achievement. Our interest is in undestanding how well SOEs, MEs and PEs respond to crisis. One school of thought holds that organizations are basically inert (DiMaggio and Powell, 1983; Hannan and Freeman, 1984; Staw, Sandelands and Dutton, 1981). A second school of thought is more optimistic about organizational adaptability. Proponents of this second school argue that firms are capable of strategy change and organizational learning (Barker and Duhaime, 1997; Beer and Nohria, 2000; Hambrick and Schecter, 1983; Kelley and Amburgey, 1991; Miles, 1997). Change capable organizations exhibit high levels of corporate entrepreneurship (Stopford and Baden-Fuller, 1994), effective human resource management practices (Pfeffer, 1998) and effective worker effort (O’Neill and Lenn, 1995). Given the differences among SOEs, MEs, and PEs, one way to assess the adaptability of different ownership forms is to observe and compare their level of corporate entrepreneurship, their human resource practices, and the level of worker effort. Organizational responses to crisis may be multi-facted across time. For example, in early stages of a crisis, the response is often a reactive one, lacking comprehensive analysis of the cause of the response. In this early stage, the response generally includes increased rates of centralization, rigid forms of behavior, and scapegoating (Cameron, Whetten and Kim, 1987). The organization’s focus, at this stage, is on cutting costs and working harder (Barker and Duhaime, 1997; Hofer, 1980). These initial recovery efforts are a necessary, but insufficient response to the crisis. Effective long term recovery may require more variety in response, and a new strategy (Robbins and Pearce, 1992; Barker and Duhaime, 1997). As March (1990) notes, processes refining exploitation (that is, cost cutting) are likely to be effective in the short run but destructive in the long run. High levels of worker effort are necessary at both stages of the response to crisis. Effective response, in the long term, also requires high levels of effective human resource practices and high levels of corporate entrepreneurship. The effective human resource practices facilitate the firm’s transition through the varied cost cutting programs. These human resource practices lessen the likelihood of firm members becoming excessively rigid, as predicted by theories of inertia (Staw, Sandelands and Dutton, 1981). In turn, high levels of corporate entrepreneurship foster the creation of new strategies. In sum, the presence of human resource practices and corporate entrepreneurial behavior help firms respond to environmental jolts and discontinuous change (Meyer, Brooks and Goes, 1990). OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 53 Corporate entrepreneurial behavior One measure of an organization’s adapatability and responsiveness to external crisis is its ability to create new resources through corporate entrepreneurial behavior. Corporate entrepreneurship is a dimension of strategic posture represented by a firm’s risk-taking propensity; that is, its tendency to act in competitively aggressive, proactive ways and its reliance on frequent and extensive product innovation (Covin and Slevin, 1991). Corporations practice entrepreneurship by entering new markets or by developing new goods and services for established markets (Lumpkin and Dess, 1996). Autonomy, innovativeness, risk-taking, proactiveness, and competitive aggressiveness are present when a firm enters new markets. Private firms can be expected to be entrepreneurial because three primary requisites of entrepreneurship are freedom to put ideas into effect, freedom to enjoy the fruits of success or the penalties of failure, and freedom from intervention by the government to encourage or frustrate an enterprise (Livesay, 1982). Private firms generally have fewer restrictions on behavior and afford their managers more freedom than SOEs to innovate and obtain rewards for innovation (World Bank, 1995). Therefore, we expect PEs to have higher levels of corporate entrepreneurship than SOEs. Another reason to expect higher levels of corporate entrepreneurship in PEs is the influence of property rights (Alchian and Demetz, 1973). Owners can act to replace managers if a private firm’s value declines. This influences managers to anticipate the future value of their current decisions and, more importantly, to consider the difference between the present and future values of those decisions. At the point that the future value of current decisions is presumed to be less than the current value of those decisions, the managers are prompted to search for new alternatives based on their fear of the owners’ negative reaction if returns decline. Theoretically, at least, the fear of job loss will induce PE managers to search for new markets and new ways to maintain profits. This search is the essence of corporate entrepreneurship. Similar pressures are either not found, or are less pervasive, in SOEs. March (1991) notes that firms can develop two styles of learning: exploration and exploitation. Exploration is a search for new alternatives, while exploitation is learning to engage in historical alternatives more skillfully. Under pressures of job loss, especially in the early crisis stages, it is possible that, propelled by fear of job loss, the managers will try to exploit previous skills. The tendency to do this lessens the learning ability of organizations in turbulent environments. In the presence of turbulence, learning is better served by exploration and the creation of options. The owners of PE will monitor the progress of learning, and act more quicky to replace the managers who do not exhibit adaptive behaviors. March (1991) shows that turnover increases the ability of organizations to respond to turbulence. In addition to the motivation provided by fear of loss, PE managers are frequently motivated by opportunity for gain. The opportunity for gain exists because the interests of the manager and the owner are aligned through specific payment systems, which include salary at risk and options for ownership. In contrast, payment systems in SOEs are frequently based on civil service rules, which traditionally limit the amount of pay at risk (if any) 54 O’NEILL, RONDINELLI AND WATTANAKUL to levels much lower than that found in PEs. SOEs generally maintain similar pay levels across similar ranks in different units of the organization, with less regard to the strategic importance or recent performance of those units. In addition, there are no options for ownership in SOEs, so it is more difficult to reward risk-taking behavior. Indeed, risk-taking in SOEs may be punished rather than rewarded (Downs, 1967). Risk-taking is an important component of corporate entrepreneurship and, therefore, given their advantage in aligning owner and manager incentives, PEs should have higher levels of corporate entrepreneurship than SOEs. Knowledge of the environment and opportunities for change may be more important than incentives in encouraging change in organizations (Kanter, 1983). Once again, private firms should have advantages over SOEs. The PE competes for resources within a defined group of suppliers, competitors, funders, and customers. By comparison, the SOE’s competitors for resources are more diffuse—a wide variety of government agencies and political interest groups—and more difficult to monitor. To the extent that the environment provides clues about opportunities to change, it must be scanned and monitored. The PEs’ environment may be easier to scan because relationships with suppliers, funders and the like are more direct. In sum then, the PE appears more suited to the requirements of corporate entrepreneurship than SOEs. However, not all PEs display higher levels of corporate entrepreneurship. Consider, for example, Schumpeter’s (1934) description of entrepreneurship as “creative destruction,” a term that contains a potential attraction-aversion paradox. Most rational actors might be attracted to creative behavior, while at the same time avoiding destructive behavior. Cyert and March (1992) argue that organizations tend to evince norms of rationality. It would appear, then, that the balance between the two forces depends on the risk profiles of decision makers in organizations. Risk-averse decision makers would avoid destructive behavior, while risk-neutral or risk-seeking individuals would be more inclined to engage in it. Comparing PEs and SOEs with respect to levels of corporate entrepreneurship, then, requires estimating the risk profiles of managers in private firms. Compared to incentives and environmental influences discussed earlier, predictions based on risk profiles are more equivocal. Schumpeter’s definition can be applied to either individuals starting new businesses or to corporations starting new ventures. But once established, all organizations develop some degree of inertia that favors past activities over new ventures. In reality, corporate entrepreneurship may be more an anamoly than a norm even for PEs (Burgelman, 1988; Kanter, 1983). Other processes also contribute to the conservatism of PEs. Stinchcombe (1965) described the early stages of an organization’s existence as one of “imprinting.” The individuals who form an organization seek solutions to problems. As the organization succeeds and grows, the tasks become sub-divided and differentiated, and firm members become more and more specialized in unique and highly differentiated tasks. Knowledge about the tasks is passed across cohorts or generations of workers, and as the organization grows and ages, the routines of the organization gain an institutional character. The forces described by Stinchombe contribute to a high level of inertia in all organizations (DiMaggio and Powell, 1983; Hannan and Freeman, 1984). Hannan and Freeman OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 55 define organizational inertia as a rate of change less than that occuring in the environment. To the extent that inertia exists, organizational forms will change slower than the environments around them, and eventually be supplanted by other forms. This process suggests that higher levels of entrepreneurship can be expected in newer organizations than in older ones, and that the incidence of corporate entrepreneurial behavior is a function of the corporation’s age. Older PEs, then, may not have higher levels of corporate entrepreneurship than younger SOEs. The evidence about the presence of inertia in organizations is mixed (Kelly and Amburgy, 1992). Two different streams of work suggest that forces do produce what appear to be inertial reactions in organizations. Meyer and Zucker (1989) describe “permanently failing organizations”—marginally profitable or marginally successful organizations that persist despite low levels of performance. These organizations “yield benefits that motivate investment in and maintenance of them, but these benefits often accrue to those who are in one way or another dependent on organizations rather than to those who legally own or control them” (1989: 45). This concept explains why SOEs survive for so long even as loss-makers. Where dependent actors have power, organizations persist even in the presence of poor performance. But the same concept also explains inertia in private firms. We argued earlier that poor performance would cause managers to search for new opportunities in private firms. That suggestion implicitly presumed that these managers served the interests of the owners, and had power over the organization. Each assumption can be questioned. For example, agency theory studies of implementation (Guth and MacMillan, 1986; Jensen and Meckling, 1976) contain many illustrations of misalignment between manager and owner interests. Studies of technological change also support the inertial perspective. Cooper and Schendel (1976) found that, frequently, technological change fails to attract the interest of industries most directly influenced by those changes. Christensen (1997) describes how innovators, once successful, will find that marginal returns to investments in their successful products will surpass the returns to investments in potential substitute products. The substitute products, in turn, are then developed by new entrants. These new entrants become well established and may eventually surpass the incumbents. The Christensen thesis suggests that the ability of managers to anticipate the success of new products is flawed. This ability, though, is at the foundation of predictions that private firms would be inherently more entrepreneurial then SOEs. Clearly, then, the relationship between ownership or governance (PE versus SOE) and corporate entrepreneurship is not absolute. Private firms sometimes exhibit inertial forces that may be stronger than incentives for entrepreneurship. Similarly, it is possible to identify conditions that might lead to higher than expected levels of entrepreneurship in SOEs. Indeed, Kornai (1992) points out that SOE managers in communist and socialist countries often displayed a great deal of entrepreneurship in bartering, negotiating, and evading rules in order to meet state planning targets. Similarly, Kale and Mulherin (1997) found that formerly private state-owned firms maintain their historic patterns of behavior. However, notwithstanding the forces for conservatism in PEs, the incentives for corporate entrepreneurship and the observed rate of corporate entrepreneurship should be higher in private firms. In turn, the inertial institutional forces and the constraints of nested networks and rules should be higher in SOEs. Therefore, 56 O’NEILL, RONDINELLI AND WATTANAKUL Hypothesis 1. PEs have higher levels of corporate entrepreneurship than SOEs. MEs have less government controls and managerial constraints than SOEs but are not as flexible as private firms. The freedom in MEs can create an entrepreneurial climate. Compared to SOEs, MEs seek to attain more profits and place less emphasis on political considerations, allowing them to develop more innovative and proactive strategies. Therefore: Hypothesis 2. MEs have higher levels of corporate entrepreneurship than SOEs. Hypothesis 3. PEs have higher levels of corporate entrepreneurship than MEs. Human resource management practices effectiveness Strategic contingency theory suggests the importance of role positions—the roles that individuals fill in an organization should be defined by its strategy (Gupta and Govindarajan, 1984). The importance of role positions should determine the quality of the incumbent, the salary structure, and the incentive system. Therefore, one measure of effective human resource administration is the ability of an organization to match its human capital needs to its strategy. Clear strategic direction should facilitate this task and ambiguities in strategic direction should complicate it. Given the differences in the clarity of strategy between SOEs and private firms, the latter should be more effective in assessing their human capital needs. Human resource management practices, in turn, influence the competitive posture of organizations (Pffefer, 1998) through their effects on the human capital (Huselid, 1995; Huselid and Jackson, 1997). As noted earlier, Pfeffer (1998) identified seven HRM practices of successful organizations: employment security, selective hiring, self-managed teams, incentive pay, extensive training, extensive information sharing, and reduced status barriers. Each of these practices can be an important source of competitive success (Schuler and MacMillan, 1984; Schuler, 1992; Pfeffer, 1994, 1998). To the extent that an ownership form is consistently more effective at one or more of these roles, that form should then have an enduring performance advantage. PEs may have an advantage over SOEs in several of these areas. Human resources are generally managed in SOEs through government civil service systems. These systems foster high levels of formalization and standardization, which reflect strong norms for equitable treatment. Those norms find expression in programs like standardized testing, standardized pay rates for specific jobs, and system-wide rules for promotion and removal. This institutionally-driven standardization limits the flexibility that SOE managers can employ in responding to the specific needs of their organizations. Changes in personnel rules or policies tend to cover all government agencies rather than specific SOEs. As a result, an SOE has limited ability to reward unique roles or unique performers. Also, SOE managers have limited incentives to use technology to make labor more productive because managers will not share in the gain derived from reducing the number of workers. They may even suffer some loss of prestige or rank (and pay) as a unit gets smaller or incur criticism from political leaders or politically influential labor unions fearful of unemployment. Put differently, rational behavior is defined in terms of the rules imposed by the civil service rather than by the strategic needs of the SOE. Because the rules of the OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 57 civil service system must fit a large number of different types of units, the chances of misfit with any single unit are high. In addition, single units are limited in their responsiveness to changes that are not perceived by a large number of other units. In contrast, human resource management (HRM) practices in business firms are more malleable than those found in SOEs, and can be more easily matched to the demands of business. The CEO of the private firm is the prime determinant (within the limits of law and past contracts) of HRM, with no oversight by a civil service department and no need to match programs to those found in other organizations. The CEO and the management team have some chance to share in any gains that accrue from good HRM practices. Gainsharing opportunities encourage the adoption of labor-saving or labor- substituting devices. Importantly, managers in these firms have some freedom to share these gains with workers, further improving the chances for successful change. The differences between SOEs and PEs give advantages to the latter on five of the seven HRM practices identified by Pfeffer. First, PEs are more capable of providing selective hiring, as they are less bound by civil service and political constraints and can quickly respond to specific market needs. Second, PEs are sufficiently flexible to engage in the definition of specific assignments and reward structures necessary for self-managed teams. Third, PEs can use incentive pay more easily. Fourth, PEs can re-assign workers more frequently as they substitute labor-saving technology, and provide technological training for workers. Fifth, PEs driven by the chance to gain from information-induced changes, are more motivated to engage in information sharing about required changes. A firm’s level of human resource effectiveness is one predictor of how the firm will respond to crisis. HRM practices influence firm member behaviors around such crisis related issues as downsizing (McKinley, Zhao and Rust, 2000), survivor guilt, restriction of information (Cameron, Whetten and Kim, 1987), and employee learning (Sutton and D’Aunno, 1992). An organization engaged in effective human resource management will have well formed protections around the issues that create ineffective responses to decline. For example, norms of security would decrease the possibility of excessive downsizing, while norms around hiring and incentive pay would assure some form of performance link in the selection of downsized personnel. For two of Pfeffer’s HRM practices, SOE’s may have some advantage. Given the norms of equity and the employment goals of government, protected (and subsidized) SOEs may offer more employment security. In addition, given their focus on stand ardization in selection, reward, and promotion routines, SOEs may be more capable of reducing status barriers than PEs. Given the overall pattern of HRM advantages, PEs should have more effective HRM systems than SOEs. As in the case of corporate entrepreneurship, we expect that the use of mixed forms of ownership will facilitate the use of better HRM practices for the ME, although it may still be bound by some of the ties associated with state ownership. Therefore: Hypothesis 4. PEs have more effective HRM practices than SOEs. Hypothesis 5. MEs have more effective HRM practices than SOEs. Hypothesis 6. PEs have more effective HRM practices than MEs. 58 O’NEILL, RONDINELLI AND WATTANAKUL Work effort Motivation is defined as the psychological process that energizes, directs and sustains behavior (Mitchell, 1982; Perry and Porter, 1982). With respect to work-related behaviors, motivated employees work harder. The issue of work effort is related to crisis response because crisis can induce rigidity (Staw, Sundelands and Dutton, 1981) and withdrawal from work related efforts (O’Neill and Lenn, 1995). If one organizational form has an advantage over another with respect to its ability to influence worker motivations, then that form should evince higher levels of work effort, and more consistent work effort in response to crisis. In order to understand differences in work effort between SOEs and other forms, we will review two basic models of motivation. Evans (1986) described four factors that have an influence on motivation: feedback on performance, the design of jobs, organizational norms, and group norms. An organization manipulates these factors to increase the level of motivation, and hence work effort. And if an organization faces constraints in its efforts to employ these factors, its level of motivation and work effort should be lower than that found in other forms. SOE’s, when compared to MEs or PEs, may have difficulties in providing feedback on performance. The difficulties arise from the ambiguities that exist in the goal structure of these governmental organizations and to the fact that many SOEs were required to employ as many workers as possible to keep unemployment rates low in centrally planned economies. To the extent that there are different goals to pursue and the need to maintain surplus employees, work efforts can become fractionated. To the extent that the goals pursued represent political or social goals, rather than those deemed strategic for the SOE, important work efforts are diluted. In addition, it is possible that the social goals and preferred SOE goals are incompatible. A government owner, for example, may insist on a goal of increased employment when a more effective strategy for the SOE would be to maintain stable levels or to shed surplus workers. Similarly, when compared to PEs, SOEs may have less freedom to design jobs. As noted earlier, SOEs generally submit to civil service regulations, which define the conditions of work, and through those definitions, influence the design of jobs. Continuing the same theme, SOE’s compared to PEs have less direct control over organization and group norms. The norms are influenced, at least in part, by the political and social goals of the governing body and historically, in many countries, were fixed by strong and politically-influential workers unions. Wages were set at low levels and supplemented by expensive social welfare benefit payments over which SOEs had little or no control. Employees knew that they would receive a standardized pay increase and could not easily be fired, no matter how much or how little they worked. In an approach similar to Evan’s work on motivation, Porter, Hackman and Lawler (1974) identified four categories of motivational variables: individual characteristics, job characteristics, work environment characteristics, and external environment characteristics. To the extent that an organization can manage the fit across these sets of characteristics, that organization should enjoy increased levels of motivation and hence, increased levels of work. Once again, compared to private firms SOEs may be at a disadvantage because they face more constraints in hiring, job design, and the design of the work environment. OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 59 Moreover, SOEs are generally buffered from the external environment and constrained in their ability to manage their external environments strategically. In reaching conclusions similar to ours, Perry and Porter (1982) argued that the difficulties of setting goals in government organizations appear substantial. The difficulties arise because government organizations have more exposure to external government influences and lack job clarity. As a result, Perry and Porter (1982) noted that government managers have difficulties in designating performance standards and evaluating performance. Therefore: Hypothesis 7. PEs have higher work efforts than SOEs. Hypothesis 8. MEs have higher work efforts than SOEs. Hypothesis 9. PEs have higher work efforts than MEs. The importance of the three variables may differ based on the stage or type of crisis, with higher levels of work effort ranking first in importance in early stages and in less dramatic crisis. For long-term discontinuous changes the three forms of response are necessary for adaptation (March, 1990; Meyer, Brooks and Goes, 1990). The financial crisis in Thailand did introduce discontinuous change, as evidenced by the dissolution of large numbers of financial firms, the high rates of corporate bankruptcy, the creation of a new stock market, and the adoption of new rules for investment monitoring. Research methods To test the hypotheses we surveyed 469 employees in 28 Thai firms, including 9 PEs, 11 SOEs, and 8 MEs. The survey was administered in mid-1999, well after the collapse of the Thai Baht and the subsequent financial crisis. Table 1 describes the surveyed firms. The sample includes a mix of industrial and service firms. We did not expect industry induced variance in the dependent variables, as previous studies of strategic turnarounds have found similarities in the ways industrial and service firms approach major attempts to reverse performance. The literature on turnaround studies has been reviewed elsewhere (Barker and Duhaime, 1997; Robbins and Pearce, 1992). The firms are a representative sample of large Thai firms, drawn from industries subject to the forces of privatization. As such, these firms share similarities with firms privatized in other countries (Ramamurti, 1992; Rondinelli, 1998). The characteristics of the respondents are summarized in Table 2. Respondents had a mean work experience of 8.54 years. Of 700 questionnaires distributed, 469 were returned and usable, yielding a response rate of 67 percent. We used Thai language questionnaires and applied a double translation approach to reduce interpretation errors. Scoring keys and questionnaire details and format are found at Appendix 1. Measures Three measures of internal organizational indicators of adaptiveness were used in the study: corporate entrepreneurship, human resources management, and worker motivation. Banking Banking Mass media UBC GS Bank Telecommunication TT&T GH Bank Banking Thai Military Bank Banking Banking Thai Farmer Bank EXIM Bank Telecommunication Telecom Asia Energy Petroleum EXXON EGAT Petroleum Caltex Telecommunication Petroleum BP CAT Banking Industry Bangkok Bank Company Financial services Financial services Financial services Electricity Post and telephone services. 3 1 2 9 3 10 87 Cable TV 19 11 7 8 11 3 9 9 Male 12 13 12 3 13 76 9 6 6 7 14 11 8 6 9 Female No. of Informants Sub total Telephone services Financial services Financial services Telephone services Oil Oil Lubricant Financial services Product and service Summary of informants of participating companies in Thailand. Government Private Type Table 1. 5.5 4.6 4.1 17.3 14.1 6.3 6.5 8.8 6.9 6.2 8.6 4.1 4.4 8.5 Averaged working experience with the current firm (years) Most respondents from research department. 4 respondents from managerial positions. 3 respondents from managerial positions. Most are accountants 7 respondents from managerial positions. Most respondents from credit department. 4 respondents from managerial positions. 50% of respondents from purchasing department. 3 respondents from managerial positions. 5 respondents from managerial positions. Remarks 60 O’NEILL, RONDINELLI AND WATTANAKUL Mixed Water Energy Banking Transportation Finance Finance East Water EGCO SCB Thai Airways SIFC SISC TOT Hotel Telecommunication PWA Bangkok International Hotel Water PTT Petroleum Petroleum MWA Bangchak Banking Water Krung Thai Bank Banking IFCT 46 188 Grand total 3 6 9 2 9 8 2 55 7 8 15 4 5 0 5 Sub total Financial services Financial services Air flight Financial services Electricity Water Accommodation Sub total Oil Telephone services Water Oil and Gas Water Financial services Financial services 281 76 12 7 10 10 6 9 13 129 9 10 13 13 15 15 10 8.0 9.0 9.8 4.3 6.1 3.1 5.4 5.7 13.5 14.2 9.7 20.4 10.9 5.5 10 of them are managers. Most respondents from finance department. Most respondents from credit department. 5 of them are managers. 50% from marketing department. 12 respondents from managerial positions. Most respondents hold master’s degree. 13 respondents from managerial positions. Most respondents from credit department. OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 61 62 Table 2. O’NEILL, RONDINELLI AND WATTANAKUL Results of confirmatory factor analysis. Item Innovativeness Your firm has marketed many new products or services within two years. Factor 1 Factor 2 Factor 3 Factor 4 0.52 Your firm has changed its products or services dramatically. 0.76 Your firm’s top managers favor a strong emphasis on R&D and technological leadership. 0.70 Your firm is very often the first business to introduce new products/services, administrative techniques, operating technologies, etc. 0.77 Proactiveness Your firm typically adopts a very competitive posture in dealing with competitors. 0.71 Your firm’s top managers have a strong proclivity for high-risk projects with chances of very high returns. 0.56 Your firm’s top managers believe that bold and wide-ranging acts are necessary to achieve the firm’s objectives due to the nature of the environment. 0.61 Your firm typically adopts a bold and aggressive posture in order to maximize the probability of exploiting potential opportunities when confronted with decision-making situations involving uncertainty. 0.51 Human Resource Management Effectiveness Your firm’s employee participation and empowerment are very effective. 0.75 Your firm’s employee and manager communications are very effective. 0.74 Your firm’s employee training is very effective. 0.66 Your firm’s performance appraisal is very effective. 0.80 Your firm’s compensation is very suitable. 0.63 Motivation Your firm’s people often do some extra jobs which are not really required of them. 0.54 Your firm’s people keep working harder than the other competitors. 0.78 Your firm’s people keep working for the whole day without time concerns. 0.82 OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 63 The levels of corporate entrepreneurship used for each ownership type were items developed by Knight (1997). The scale (ENTRESCALE) assesses two factors: (1) innovativeness, comprising four items, is defined as the extent to which an organization pursues creative or novel solutions to challenges, including the development of products and services and new administrative techniques; and (2) proactiveness, a four-item scale, measuring the extent to which an organization acts in anticipation of future problems, needs or changes. The alpha coefficients for the scales were 0.78 (innovativeness) and 0.69 (proactiveness). The effectiveness of human resource management practices was measured with a fiveitem scale. These five items were based on Pfeffer’s (1998) and Shuler’s (1994) descriptions of effective human resource management practices. The alpha coefficient for the HRM scale was 0.84. The study used three items to assess the level of worker effort: (1) extent to which workers took on jobs not formally mandated by their job descriptions; (2) perception of how hard employees work compared to those in competitor organizations; and (3) willingness of employees to work throughout the day without concern for formal time requirements. For the work effort scale, the alpha coefficient was 0.75. Analysis A confirmatory factor analysis (CFA) was performed for the 16 items measuring innovativeness-proactiveness, HRM effectiveness, and work motivation. Overall, results of this analysis indicated that the four-factor structure was a good fit to the data (RMSEA = 0.05, CFI = 0.958, GFI = 0.94, AGFI = 0.92, and RMSR = 0.04). All 16 item loadings are significant at the 0.05 level (see Table 2). The hypotheses were tested using standard regression analysis. We used dummy coding for categorizing the three kinds of organizations (state-owned, privately-owned, and mixed-ownership). We performed two sets of regression analysis: one adopting the mixedownership group as the reference and the other using state-owned enterprises as the reference. In the first regression, represented by models 1 to 4 on Table 5, privately held businesses and state-owned enterprises are compared to mixed-ownership companies. In the second regression, models 5 to 8, privately held and mixed-ownership organizations are compared to state-owned enterprises. In effect, then, the form of ownership is used to predict the level of innovativeness, proactiveness, human resource management effectiveness, and work effort existing in these enterprises. Results The descriptive statistics and correlations are reported in Table 3. All correlations between any two dependent variables are significant. Table 4 reports means of all four dependent measures across three types of organizations and Table 5 presents the results of standard regression analysis. Recall that Hypothesis 1 suggests that private firms’ corporate entrepreneurship is higher than that of SOEs. Significant positive signs of business-dummy 64 O’NEILL, RONDINELLI AND WATTANAKUL Table 3. Descriptive statistic and correlations. Variable Mean s.d. 1. Innovativeness 16.76 5.05 2. Proactiveness 14.49 4.64 0.66∗∗ 9.89 5.73 0.62∗∗ 0.58∗∗ 12.69 3.69 0.52∗∗ 0.48∗∗ 5. Private dummy 0.35 0.48 0.08 0.10∗ 6. SOE dummy 0.39 0.49 −0.08 7. ME dummy 0.26 0.44 0.02 3. HRM effectiveness 4. Motivation ∗p 1 2 3 4 5 6 0.47∗∗ −0.03 0.23∗∗ −0.04 −0.02 −0.31∗∗ −0.59∗∗ −0.02 0.07 0.09 −0.43∗∗ −0.48∗∗ < .05; ∗∗ p < .01. Table 4. Means of all four dependent variables. Type PEs Mean Number Std. Deviation SOEs MEs Innovativeness Proactiveness HRM effectiveness Work effort 17.33 15.10 19.70 13.85 163 162 162 163 4.92 4.37 5.86 3.31 16.13 14.05 19.63 11.24 Number 179 177 178 177 Std. Deviation 5.33 5.08 5.60 3.76 12.50 Mean 16.80 14.42 20.18 Number Mean 89 90 90 90 Std. Deviation 4.43 4.18 5.02 3.21 variable’s regression coefficients in model 5 and 6 support this hypothesis. Specifically, the mean level of innovative (17.33 vs. 16.13) and proactive behavior (15.10 versus 14.05) is higher for PEs than for SOEs. Hypothesis 2 predicts that ME’s corporate entrepreneurship is higher than that of government organizations. Results show that the mixed-dummy variable’s regression coefficients in model 5 and 6 are not significant. Consequently, Hypothesis 2 was not supported; however, positive signs of both regression coefficients are consistent with the proposed direction in Hypothesis 2. Hypothesis 3 states that private firms’ corporate entrepreneurship is higher than that of MEs. The private firm dummy variable’s regression coefficients in models 1 and 2 are not significant. Thus, the results were not consistent with Hypothesis 3. However, the positive signs of these two regression coefficients present do position the MEs between the PEs and the SOEs, as expected. For each of the measures “innovativeness” and “proactiveness,” SOE’s have the lowest levels, and MEs fall in the middle. This pattern of results is consistent with the idea that changes in private ownership are associated with increases in these entrepreneurial activities. 65 OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS Table 5. Results of standard regression analysis. Dependent variables Independent variables 1. MEs as the reference Innovativeness F-ratio β Proactiveness F-ratio β HRM effectiveness F-ratio β Work effort F-ratio β Model 1 Model 2 Model 3 Model 4 2.55 2.26 1.06 25.41∗∗ 16.93∗∗ 14.34∗∗ 20.54∗∗ 13.23∗∗ R-Square Constant .10 0.40 0.76 −0.84 0.62 −0.81 −0.29 −0.91 −1.99∗∗ Model 5 Model 6 Model 7 Model 8 2.55 2.26 1.06 25.41∗∗ 16.13∗∗ 14.05∗∗ 19.64∗∗ 11.24∗∗ Private dummy 1.21∗ 1.05∗ 0.06 2.60∗∗ ME dummy 0.81 0.29 0.91 1.99∗∗ Private dummy SOE dummy 2. SOEs as the reference R-Square Constant ∗p .10 < .05. < .01. ∗∗ p Hypothesis 4 suggests that private firms’ HRM effectiveness is higher than that of SOEs. As seen in model 7, the private firm’s regression coefficient is not significant. It is close to zero. The PEs do not differ from the SOEs in terms of HRM effectiveness. Similarly, the ME’s regression coefficient in model 7 is not significant. Consequently, Hypothesis 5, stating that ME’s HRM effectiveness is higher than that of government organizations is not supported. Hypothesis 6 states that private firms’ HRM effectiveness is higher than that of MEs. The private’s regression coefficient in model 3 is not significant. Thus, the results were not consistent with Hypothesis 3. Also, the negative sign of this regression coefficient is inconsistent with the hypothesized direction. Hypothesis 7 suggests that private firms’ work effort is higher than that of SOE’s. In model 8, a highly significant positive sign of the private firm dummy variable’s regression coefficients provides strong support for this hypothesis. The ME dummy variable’s regression coefficient in model 8 is also highly significant and positive. Consequently, Hypothesis 8, stating that ME’s work-effort levels are higher than SOE work level efforts, was strongly supported. Hypothesis 9 predicts that work motivation levels in private firms are higher than in MEs. The relevant regression coefficient in model 4 is not significant. Thus, the results were not consistent with Hypothesis 9. However, a positive sign of this regression coefficient is consistent with the hypothesized pattern. Once again, as in the case of corporate entrepreneurship levels, the PEs ranked first and the SOEs last in work effort levels. The MEs fell between the two extremes. This pattern is consistent with the idea that changing ownership form from state-owned to private is associated with significant changes in work effort levels in firms. 66 O’NEILL, RONDINELLI AND WATTANAKUL Discussion and conclusions Taken together, our findings support three conclusions about the impact of ownership structure on predictions of organizational adaptability and crisis response. In turn, these conclusions offer insight into some of the challenges involved in building more adaptable organizations in economies populated with current and former SOEs. As in all cases of empirical study, any discussion of the results needs to be tempered by an understanding of the limitations of the study. Conclusions of the study First, this study of organizations with different ownership structures in Thailand shows there are significant differences between privately-held enterprises and state-owned enterprises. These differences occurred in each measure of corporate entrepreneurial behavior (innovativeness and proactiveness) and in the measures of work efforts. For instance, the innovativeness and proactiveness of Telecom Asia Company and Bangkok Bank, both of which are PEs, are significantly higher than those of SOE’s such as the Provincial Waterworks Authority (PWA) and the Communication Authority of Thailand (CAT). Second, there are no significant differences between privately-held businesses and those of mixed ownership. The mixed ownership firms do have significantly higher levels of work effort than state-owned enterprises. As an illustration, the mixed enterprise firms Bangchak Petroleum and Thai Airways have higher work effort than the state-owned Communication Authority of Thailand (CAT) and the Telephone Organization of Thailand (TOT). With respect to the measures of corporate entrepreneurship, the mixed ownership enterprises place “in the middle.” Although they are not significantly higher than the state-owned enterprises in their levels of assessed entrepreneurial behavior, they are not significantly lower than the privately held firms in their scores on entrepreneurial behavior. Third, the three ownership forms do not differ with respect their levels of HRM effectiveness. The results concerning corporate entrepreneurship suggest cautious optimism about the potential role of privatization in transforming economies and the advantage privatized firms might have in responding to crisis. The results show that PEs indeed have higher levels of corporate entrepreneurship in a country that has long had a mixed economy and that is in the process of further macro-economic reform. Therefore, the expectation that privatizing SOEs can increase their level of corporate entrepreneurship does make sense. Our study— perhaps one of only a few empirical investigations in this area—is a direct test of this basic assumption, and the results are encouraging. With this data, we can not predict which of the three variables are more influential in helping an organization respond to crisis. We suspect that the relative importance of work effort and corporate entrepreneurship may vary in the short and long term, while human resource practices may have equal levels of importance in both the short and long term. At the organizational level the issue of evolution is also important. How does the stateowned enterprise evolve into a more entrepreneurial form? We suspect that the change occurs through the replacement of top management, and through changes in incentives that come with ownership and governance changes. There have been few studies that directly OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 67 assess the role of management during turnaround. In an early work, Hofer (1980) did note that strategic turnaround would require the replacement of top management. Walsh’s (1988) work on management turnover following acquisitions is one indicator that changes in control would lead to replacement of management. In a studies on privatization in the mature economies, Craggy and Dyck (1999) and Wolfrom (1998) found that compensation levels and pay-performance sensitivity influenced levels of productivity. Changes in these incentives likely influence the level of entrepreneurial behavior. While at the macro level the organization changes could be perceived as evolutionary changes, the managers undergoing replacement may see them differently. It is possible that the changes could take place without displacing large numbers of managers. This could occur if the SOEs already had effective management and some entrepreneurial traditions, or if incumbent managers are able to learn to new routines quickly. Our results do offer some evidence that the former condition is possible (because there was variance in the entrepreneurship scores across SOEs), but can offer no evidence about the later issue. The important implication here is that not all privatizations are the same. The path to increased entrepreneurship will vary based on the SOE’s past experience and how the privatization is carried out. Outright sale of an SOE to private investors, for example, is likely to bring greater change in entrepreneurship than employee-management buyouts, which tend to protect the jobs of existing managers (Nellis, 1999). Given the potential damage to incumbent management, it is possible that expected increases in entrepreneurship occur only after some period of turbulence within the firm. One interesting observation in our findings is that the SOEs did vary in their levels of corporate entrepreneurship, and some SOE’s could have had higher levels of entrepreneurship than some private firms. For example, Petroleum Authority of Thailand (PPT) scored relatively high on the corporate entrepreneurship measures. Apparently, factors other than ownership contribute to the level of entrepreneurship. Also, the requirements for entrepreneurship may differ by industry sector. These points further support the idea that some SOEs would be crisis responsive. Mixed-ownership is an intriguing issue for two reasons. First, the pattern in the results could infer that important organizational and behavioral changes occur as an evolutionary process from state ownership to mixed ownership to private ownership. The cross-sectional nature of the study cannot definitively support the idea of evolutionary stages. Most of the mixed enterprises have existed in that form for only a relatively short period of time. Some are still controlled by the government. However, to the extent that the “stage” of mixed ownership facilitates learning and adjustment in the SOE, the costs of displaced and disaffected personnel may be lower. Second, even if the notion of evolutionary stages is fanciful, the results lend support to the possibility that mixed ownership may be a reasonable substitute for full privatization for a short period of time until the SOE can adjust to private ownership. In particular, in those situations where neither the market nor government alone could provide sufficient capital to transform SOEs, mixed ownership may be the best solution. In a study of mixed ownership of former SOEs, Tain (2000) found that mixed ownership forms do not perform as well as private firms. Our results imply that mixed ownership firms do outperform SOEs on work effort, and appear to be moving closer to the performance of 68 O’NEILL, RONDINELLI AND WATTANAKUL privately held firms. Consistent with the theme developed earlier, this observation implies that there is no single answer to economic transformation. Effective privatization strategies can take different shapes and forms in different countries and under different conditions. Our findings that human resource management practices are not significantly different across the ownership structures may be a bit surprising in that we expected changes in human resource practices with higher levels of entrepreneurship and work effort. The lack of support for this hypothesis could be traced to two causes. First, in a relatively small and culturally homogeneous country like Thailand, HRM practices are often highly standardized and vary little across firms. The practices have an institutional and cultural component (Lawler, Atmiyanada and Zaidi, 1992). Second, our assessment of the HRM practices (training, performance appraisal, compensation, etc.) may not capture how specific practices may be used to achieve different goals in each type of organization. As noted earlier, the level of compensation and the proportions of pay at risk may be a key determinant (Cragg and Dyck, 1999; Wolfrom, 1998) of post-privatization performance. Our measures of HRM did not capture these specific forms of difference. The study has four important limitations. First, it is a small sample study in a single country. The economic conditions in Thailand and Southeast Asia are quite different from those elsewhere, and patterns observed in one country or region may not hold for others. In particular, the tradition of private enterprise in Thailand may have led to some crossfertilization of management practices between SOEs and PEs even before the government began pursuing privatization. The second limitation is based on the nature of the sample. While every effort was made to avoid respondent bias, and to obtain reliable respondents, the possibility of some forms of bias still remains. The third limitation deals with the cross sectional nature of the study, which makes it difficult to be certain about temporal dynamics. We infer here that the level of corporate entrepreneurship and work effort makes the privatized firm more adaptable. That inference requires direct testing in a time series study. We should see a higher rate of survival and growth within the PEs if our inferences are true. Finally, it is possible that different industries will vary in their response to privatization. Western research on turnaround strategies has prompted a debate as to whether firms can engage in strategic (major changes in strategy) rather than operating turnarounds (cost cutting). Barker and Duhaime (1997) find strategic turnarounds are possible, while Robbins and Pearce (1992) find evidence only for retrenchment-based strategies. Our results support Barker and Duhaime (1992). Western-based research implies that top management must be changed for turnaround to succeed. Our findings are ambiguous in this regard, and imply that further work is necessary. Finally, research on organizations in Western countries suggests a form of rigidity and dysfunctional behavior in managers at the time of decline (Cameron, Whetten and Kim, 1987). We expected systemic variance in HR practices, and would have used that variance as indirect evidence of the dysfunctional behaviors. More direct measures are necessary to confirm or disconfirm the management behaviors at the time of decline. Clearly, more research on this topic is needed. More detailed analysis is required to confirm the specific changes that occur in firms facing crisis, and on how to fine-tune turnaround OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 69 research into finely grained prescriptions for making all forms of firms: PEs, MEs and SOEs, more adaptive. More controlled research on these issues will hold important implications for theory and practice. Our exploratory findings in Thai enterprises indicate significant adaptive differences between SOEs and PEs. Change in ownership—even mixed ownership in which the government retains a controlling share—can be an effective instrument for gradually transforming state enterprises into more innovative, responsive, and proactive firms. Appendix: Questionnaire Scoring key Innovativeness 1. Your firm has marketed very many new products or services within two years. 4. Your firm has changed in products or services dramatically. 7. Your firm’s top managers favor a strong emphasis on R&D and technological leadership. 11. Your firm is very often the first business to introduce new products/services, administrative techniques, operating technologies, etc. Proactiveness 2. Your firm typically adopts a very competitive posture in dealing with competitors. 5. Your firm’s top managers have a strong proclivity for high-risk projects with chances of very high returns. 8. Your firm’s top managers believe that bold and wide-ranging acts are necessary to achieve the firm’s objectives due to the nature of the environment. 12. Your firm typically adopts a bold and aggressive posture in order to maximize the probability of exploiting potential opportunities when confronted with decision-making situations involving uncertainty. Human Resource Management Effectiveness 3. 6. 9. 13. 15. Your firm’s employee participation and empowerment are very effective. Your firm’s employee and manager communications are very effective. Your firm’s employee training is very effective. Your firm’s performance appraisal is very effective. Your firm’s compensation is very suitable. Motivation 10. Your firm’s people often do some extra jobs which are not really required of them. 14. Your firm’s people keep working harder than the other competitors. 16. Your firm’s people keep working for the whole day without their time concerns. 70 O’NEILL, RONDINELLI AND WATTANAKUL Questionnaire All your responses to the following questions are strictly confidential. Company Name: Personal Information: Title Career field (e.g. marketing) Working years in this current company Age Education Degree Sex Male Female The purpose of this questionnaire is to study organizational behaviors and attitudes of management practices. Please read each of the following statements carefully and circle the number that most represents your opinions. All items are measured on 7-point agree-disagree scale. It will only take you about 10–15 minutes to finish the questionnaire. Thank you for your cooperation. Strongly disagree 1. Your firm has marketed very many new products or services within two years. 2. Your firm typically adopts a very competitive posture in dealing with competitors. 3. Your firm’s employee participation and empowerment are very effective. 4. Your firm has changed in products or services dramatically. 5. Your firm’s top managers have a strong proclivity for high-risk projects with chances of very high returns. 6. Your firm’s employee and manager communications are very effective. 7. Your firm’s top managers favor a strong emphasis on R&D and technological leadership. 8. Your firm’s top managers believe that bold and wide-ranging acts are necessary to achieve the firm’s objectives due to the nature of the business environment. 9. Your firm’s employee training is very effective. Strongly agree 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 1 2 3 4 5 6 7 71 OWNERSHIP AND ITS IMPACT ON COPING WITH FINANCIAL CRISIS 10. Your firm’s people often do some extra jobs which are not really required of them. 11. Your firm is very often the first business to introduce new products/services, administrative techniques, operating technologies, etc. 12. 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