Performance effects of privatisation: an empirical analysis of telecommunication companies in Germany and Romania

The privatisation of state-owned companies is still on the agenda of many governments worldwide. One often stated goal in the privatisation process is the increase of efficiency of the company.

The question is which factors do lead to an increase in efficiency and performance of a privatised company. Where are the fundamental differences between public and private companies in this respect? One goal of this paper is also to determine if other or additional variables influence the efficiency of privatised companies in transitional countries - in contrast to developed economies. Based on the research literature, a model was developed that displays all major forces and effects in the privatisation process. Two case studies of telecommunications companies in Germany and Romania are utilised to verify the model. It is expected that privatisation will lead to an increase of efficiency, but that the main thrust derives from competition. Regulation and organisational change will typically also increase the efficiency of the company. The variables “laws and policies” and “economic condition” are of special importance for privatisations in transition economies.