ABSTRACT
Stephen King's provides a critical analysis of corporatisation and questions the wisdom and implications of inducing government business enterprises (GBE) to behave more like private firms. The chapter provides a number of perceptive observations concerning corporatisation, including the following: If poorly designed, corporatisation can provide an incentive for public sector managers to manipulate the reporting of GBEs' financial performance. Corporatisation can thus encourage wasteful activities by GBE managers, aimed at improving the apparent performance of GBEs at the cost of improving their true performance. Efforts by GBE managers to increase the short-term reported value of GBEs are likely to be detrimental to their long-term value. John Quiggin suggests that, because of public disenchantment with microeconomic reform, it is now unlikely that 'large-scale privatisations will be a politically feasible policy in the foreseeable future'. He mentions there are significant practical problems involved with the definition, quantification and measurement of the nonfinancial objectives of GBEs.
