Determinants of Enterprise Performance during Transition

This paper takes the form of a comparative study of the body of research upon enterprise performance and restructuring in established market economies and transition economies (TEs). We firstly examine issues related to empirical studies of enterprise performance and restructuring, including the influence of historical cost accounting, reverse causality, sample selection bias and transition specific factors. Subsequent analysis is sub-divided into three broad themes with separate sections examining the extent to which relations between performance and competition, ownership and finance respectively differ between established market economies and TEs. We find that evidence of the influence of competition is weak even in established market economies, and hence it is not surprising that this is equally true of TEs. By contrast, the influence of ownership has been well documented in the western literature, although TE evidence remains sparse at this stage. Finally, we note the strong influence of finance upon enterprise performance and restructuring. We therefore suggest that improved financial provision is of fundamental importance to encourage the microeconomic reform required to enable sustainable long-term macroeconomic development in TEs.