ABSTRACT
As the task of this book is to examine those forces that affect the likelihood of a formerly state-owned enterprise (FSOE) to restructure its activity, it is essential to investigate the degree to which FSOEs are distinct from their counterpart firms in functional market economies. Restructuring FSOEs requires knowledge of four elements: how far the FSOE mix of output deviated from that of a similar market-oriented firm; the stock of managerial and physical capital relative to that of a similar market-oriented firm; the flexibility, or asset specificity, of that physical and human capital; and the external pressures on the FSOE, such as domestic and foreign competition and threat of bankruptcy, to restructure. 1 Knowledge of these four elements would permit, in principle, identification of an enterprise’s restructuring propensity—the likelihood that a given enterprise will undertake proactive restructuring—as it undergoes the transition to market economy.
