Organizational Transformation in Transitional Economies: Resource-based and Organizational Learning Perspectives

The capitalist and socialist societies of the 20 century assigned firms different roles within their economic systems. Enterprises transforming themselves from socialist to market economies thus face fundamental organizational restructuring. Many former state-owned firms in the transitional economies of Central and Eastern Europe failed, so far, at this task. Firms pursued primarily defensive downsizing, rather than forward-looking strategic restructuring as a result of both internal and external constraints on restructuring strategies. Building on the organizational learning and resource-based theories, we analyze strategies available to management in privatized, former state-owned enterprises in transitional economies to restructure their organization. Both internal forces promoting or inhibiting the restructuring process, and external constraints arising in the transition context are taken into account. A model and testable propositions are developed that explain post-privatization performance. Implications of our research point to the ways in which firms should manage and develop their resource base to transform themselves to competitive enterprises.