A Study regarding the Implementation of Corporate Governance Principles in the Public Enterprises in Romania

By Ursacescu, Minodora; Cioc, Mihai | Management Research and Practice, June 2012 | Go to article overview

A Study regarding the Implementation of Corporate Governance Principles in the Public Enterprises in Romania


Ursacescu, Minodora, Cioc, Mihai, Management Research and Practice


1. INTRODUCTION

In the global economy, in which the performance's and competition's equation is determined by the amplification of the competition and by the raise of the foreign and national investments, the enterprises continue to seek after solutions for consolidating the competitive advantage. It is often admitted that the insurance of a global economic climate, capable to generate the levers of an effective, efficient and responsible behavior of the organizations is based on the operationalization of a good governance.

The public enterprises represent in all European states a substantial category found in the GDP (Gross Domestic Product), exercising activities in the sphere of the services for local collectivities or in the infrastructure sectors like energy, transports, telecommunications, health and education. Taking into account that these enterprises' performances are important both for the population and for other enterprises categories, the governance of the economic agents in the public sector plays an essential role in guaranteeing the competition at national level. Furthermore, the State holds integral or majority shares in the public enterprises, which makes their liquidity, solvability and functionality to have a determinant influence on the macroeconomic stability. These considerations raise the need of streamlining the enterprises in the public sector by developing some new corporate governance mechanisms in addition to the ones existing in the companies with private capital.

In this context, in 2002 there has been established a working group, including representatives of the Organization for Economic Co-operation and Development (OECD) countries but also of the World Bank and of International Monetary Fund (MIF) as observers, that initiated debates on the corporate governance principles in the public enterprises. There has been highlighted that the logic of the State's participation in the public sector experienced a series of changes during the last decades under the influence of the economic globalization, of the technological evolution and of the financial market's role raise, all these variables leading to a restructuration of the public enterprises. The guidelines published in the (OECD, 2004) report refer to aspects specific for the corporate governance in the public enterprises, placing the State in the role of majority shareholder and focusing on the measures that have to be taken by the public power for insuring the governance's quality within the framework of the economic agents in the public sector.

We know that the public enterprises often have a monopoly status or have natural monopoly elements and at the same time they do not align to the sanction mechanisms in the market economy: the insolvent act and the control instruments. Moreover, while the shareholders might manifest, in the private organizations, regarding the sale of their shares or the change of a nonperforming managerial team, in the public enterprises, sometimes characterized by an excessive intervention of the State, the shareholders may not dismiss the board of directors, they cannot sell shares. In these circumstances, it is even more important to develop appropriate mechanisms that should guarantee the objectivity and transparency of the public enterprises' management.

From the perspective of the State's reform measures, Romania confronts--like many other countries--numerous difficulties in the public sector, which are translated into lack of transparency and responsibility, as well as into vaguely defined roles of the stakeholders. Beginning from this internal realities, in conjunction with the OECD guidelines regarding the corporate governance in the public enterprises, as well as with the Romanian Government Emergency Ordinance from 2011 (GEO 109/30.11.2011), regarding the standards and best practices in this domain, the study's contribution is double. Firstly, it is part of a wider research effort of the authors, which aims the realization of an impact analysis in managerial and organizational plan of the new corporate governance mechanisms in the Romanian public sector. …

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