State-owned Enterprises Between Autonomy and Dependency

Abstract

ABSTRACTThe relationship between the state and its own enterprises may be analyzed at three different levels: a rational-economic level, where what is good for the state-owned enterprise may oppose what is good for the state as a whole; an organizational level, where such conflicts are aggravated by a power struggle; and a political level, where the arbitrating authority is seen as an individual member of the government. If state-owned enterprises are to serve national goals and be efficiently managed, their relationship with the state must be improved. First, the state should set the state-owned enterprise's general objectives, approve its proposed strategy, and refrain from intervening any further in its management. Second, the state-owned enterprise should report to one authority only for an approval, and submit to effective strategic control. Third, political interventions should be few, and should consist of middle-range agreements signed between a member of government and the state-owned industry's top manager, avoiding partisan or too detailed considerations.