Privatization, organizational change and performance: evidence from Indonesia

Purpose – The purpose of this paper is to examine the relationship between privatization of state‐owned enterprises (SOEs), organizational change and performance. It explores the processes by which privatization affects corporate performance through the internal changes within organizations in a developing country context. Design/methodology/approach – The methodology involved the use of a survey questionnaire. Responses were obtained from 86 managers in 86 organizations, comprised of SOEs, privatized firms and private enterprises in Indonesia. Findings – Cross‐sectional analysis shows that there had been a statistical significant difference across the types of ownership pertaining to organizational elements that were expected to change. The evidence suggested that privatization brought about important alignments among the organization's goals, design elements and resources and between the organization and its competitive environment. Practical implications – The implications of the study are discussed in relation to the organizational changes that take place in the transition from public to private sector ownership. The study contributes to our understanding about the relationship between ownership‐performance by providing an organizational change perspective on the examination of privatization‐performance effect. Originality/value – The paper provides insights into how privatization processes alter the behavior, incentives and performance of formerly SOEs in Indonesia.