corporatization

The move towards neoliberal economic reform and New Public Management public service reform in the 1980s led to privatization of public functions in many countries.{{cite CiteSeerX |title=The 'New Public Management' in the 1980s: variations on a theme |author=Hood, Christopher |date=1995 |citeseerx=10.1.1.464.4899}} Corporatization was seen as a half-way house on the road to privatization. These state-owned enterprises are organized in the same manner as private corporations, with the difference that the company's shares remain in the ownership of the state and are not traded on the stock market. Corporatization is today often seen as an end in itself in order to introduce autonomy in organizations, hoping that this brings efficiency gains.{{cite journal|title=The efficiency and effectiveness of municipally owned corporations: A systematic review|journal = Local Government Studies|volume = 43|issue = 5|pages = 820–841 |author=Voorn, Bart |author2=Marieke L. Van Genugten |author3=Sandra Van Thiel |date=2017 |doi=10.1080/03003930.2017.1319360 |hdl = 2066/176125|s2cid = 157153401|url = https://repository.ubn.ru.nl/bitstream/2066/176125/1/176125.pdf|doi-access = free}}

The People's Republic of China implemented a large scale restructuring of state enterprises starting in the economic reforms initiated in 1978, where state enterprises were granted greater autonomy in their operations from economy-wide state planning. This culminated in a massive wave of corporatization between 1992 and 2002 with the adoption of a market economy and the opening of the Shenzhen and Shanghai stock exchanges. Corporatization involved restructuring state enterprises to operate as commercial and market entities while retaining state ownership or majority state ownership.{{cite journal|title=State-owned enterprises in China: A review of 40 years of research and practice|journal = China Journal of Accounting Research|volume = 13|issue = 1|pages = 31–55 |author=Karen Jingrong Lin |author2=Xiaoyan Lu |author3=Junsheng Yang |author4=Ying Zheng}}

Some argue that the trend towards corporatization has sped up due to the financial crisis,{{cite journal|title=New development: Corporatization of local authorities in England in the wake of austerity 2010–2016|journal = Public Money & Management|volume = 38|issue = 6|pages = 477–480 |author=Ferry, Laurence |author2=Rhys Andrews |author3=Chris Skelcher |author4=Piotr Wegorowski |date=2018 |doi=10.1080/09540962.2018.1486629 |s2cid = 158266874|url = http://dro.dur.ac.uk/24492/1/24492.pdf}} although there is evidence that there has been a trend towards corporatization since at least the start of the century.

Corporatization can be used to improve efficiency of public service delivery (with mixed successes), as a step towards (partial) privatization, or to alleviate fiscal stress.

A key purpose of corporatization is externalization.{{cite journal|title=Municipal corporatization in Germany and Italy|journal = Public Management Review|volume = 10|issue = 5|pages = 597–617 |author=Grossi, Giuseppe |author2=Christoph Reichard |date=2008 |doi=10.1080/14719030802264275 |s2cid = 153354582}} The effect of corporatization has been to convert state departments (or municipal services) into public companies and interpose commercial boards of directors between the shareholding ministers / city council and the management of the enterprises. Such externalization creates legal and managerial autonomy from politicians, which could potentially increase efficiency, as it safeguards the firm from political exploitation. However, corporatization can also fail to bring efficiency (or cause inefficiency), because this autonomy reduces the government's ability to monitor its management. Whether corporatization is beneficial may depend on the nature of the service that is corporatized, where autonomy may be less beneficial for more politicized and complex services.

Although corporatization is to be distinguished from privatization (the former involves publicly owned corporations, the latter privately owned ones), once a service has been corporatised it is often relatively easy to privatise or part-privatise it, for example by selling some or all of the company's shares via the stock market. In some cases (e.g. the Netherlands in regard to water supply) there are laws to prevent this.{{citation needed|date=March 2021}} Corporatization also can be a step towards the creation of hybrid forms of organization, such as institutional public-private partnerships or inter-municipal service organizations.

Corporatization is also a means to alleviate fiscal stress, as corporations can become standalone organizations that do not count towards municipalities' budgets.{{cite journal|title=Remapping the state: inter-municipal cooperation through corporatization and public-private governance structures|journal = Local Government Studies|volume = 39|issue = 2|pages = 208–234 |author=Citroni, Giulio |author2=Andrea Lippi |author3=Stefania Profeti |date=2013 |doi=10.1080/03003930.2012.707615 |s2cid = 153868382}}{{cite journal|title=Ten years after: revisiting the determinants of the adoption of municipal corporations for local service delivery|journal = Local Government Studies|volume = 43|issue = 5|pages = 697–706 |author=Antonio Tavares |date=2017 |doi=10.1080/03003930.2017.1356723 |hdl = 1822/74980|s2cid = 157982356|hdl-access = free}}

Corporatization of state enterprises and collectively owned enterprises was a major component of the economic restructuring program of formerly communist nations, most notably the People's Republic of China. China's contemporary socialist market economy is based on a corporatized state sector where state companies are owned by the central government but managed in a semi-autonomous fashion.{{cite web|url=http://www.worldbank.org/html/prddr/trans/n&d95/china.htm|title=Reform of China's State-owned Enterprises A Progress Report of Oxford Analytica|author=World Bank|archive-url=https://web.archive.org/web/20110604023901/http://www.worldbank.org/html/prddr/trans/n%26d95/china.htm|archive-date=2011-06-04|access-date=1 February 2013}} Corporatization has also been used in New Zealand{{citation needed|date=March 2016}} and most states of Australia{{citation needed|date=March 2016}} in the reform of their electricity markets, as well as in many{{vague|date=March 2016}} other countries and industries (e.g. Dutch water supply companies{{citation needed|date=March 2016}}).

On a national scale, major areas of services which have been corporatized in the past include:{{citation needed|date=March 2021}}

• National railroads, the initial impetus to corporatization of functions that had belonged to national and local governing bodies began in the sphere of national railroad construction in the mid-19th century.
• Corporatized highways, for example toll roads.
• Corporatized electricity
• Telecommunications

{{See also|Municipally owned corporation}}

On a local scale, major areas of services which have been corporatized include:{{cite web|url= https://www.researchgate.net/publication/327833751|title= Background, Autonomy, Steering, and Corporate Governance: Determinants of the Effectiveness of (Governance of) Municipal Corporations |author=Voorn, Bart |author2=Marieke van Genugten |author3=Sandra van Thiel |date=2018 |publisher=Lausanne: EGPA}}

• Corporatized water, for example, the Dutch water supply companies are publicly owned corporations (mostly by municipalities, but also by regional governments). For involvement of private corporations in water supply, see water industry and water privatization.
• Bus services
• Refuse collection
• Housing development
• State employment services
• Theaters and cultural institutions

{{Div col|colwidth=25em}}

• Corporatism
• Corporation
• Corporatocracy
• Corporate capitalism
• Liberalization
• Marketization
• Municipal corporation
• Municipally owned corporation
• Nationalization
• Neoliberalism
• Outsourcing
• Public ownership
• Publicly traded company
• Privatization
• Socialist market economy
• State capitalism
• State-owned enterprise

{{Div col end}}

Examples:

• New Zealand electricity market

{{reflist}}

• Transnational Institute, [http://www.tni.org/books/yearbook2005.htmPublic Services Yearbook 2005/6: Beyond the Market. The Future of Public Services]
• Ben Manski and John E. Peck, [https://web.archive.org/web/20060618020640/http://libertytreefdr.org/event.php?event_id=90 Corporatization in the US: An Internal Clash of Civilizations]
• Maude Barlow and Tony Clarke, Blue Gold: The Fight to Stop the Corporate Theft of the World's Water 2002.
• Sozzani, Joseph, [https://web.archive.org/web/20061110184425/http://www.bond.edu.au/law/blr/vol13-1/Sozzani.pdf Privatization in the United States and Australia: A Comparative Analysis of the Modern Privatisation Movement in Corrections]

• Citroni, G., Lippi, A., & Profeti, S. (2013). [http://www.tandfonline.com/doi/abs/10.1080/03003930.2012.707615 Remapping the state: inter-municipal cooperation through corporatization and public-private governance structures]. Local Government Studies, 39(2), 208–234.
• Ferry, L., Andrews, R., Skelcher, C., & Wegorowski, P. [https://www.tandfonline.com/doi/full/10.1080/09540962.2018.1486629 New development: Corporatization of local authorities in England in the wake of austerity 2010–2016]. Public Money & Management, 38(6), 477–480.
• Grossi, G., & Reichard, C. (2008). [http://www.tandfonline.com/doi/abs/10.1080/14719030802264275 Municipal corporatization in Germany and Italy]. Public Management Review, 10(5), 597–617.
• Tavares, A., & Camoes, P.J. (2007). [http://www.tandfonline.com/doi/abs/10.1080/03003930701417544 Local service delivery choices in Portugal: A political transaction costs network]. Local Government Studies, 33(4), 535–553.
• Voorn, B., Van Genugten, M.L., & Van Thiel, S. (2017). [http://www.tandfonline.com/doi/full/10.1080/03003930.2017.1319360 The efficiency and effectiveness of municipally owned corporations: a systematic review]. Local Government Studies, 43(5), 820–841.
• Voorn, B., Van Thiel, S., & Van Genugten, M.L. (2018). [https://www.tandfonline.com/doi/full/10.1080/09540962.2018.1527533 Corporatization as more than a recent crisis-driven development]. Public Money & Management, 38(7), 481–482.

Category:Economic policy

Category:Anti-corporate activism

Category:Privatization

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Category:Capitalism