Performance in the US telecommunication services industry : An analysis of the impact of deregulation

The impact of deregulation on the performance of firms in the US telecommunication services industry is examined, using extant ideas to suggest that deregulation has differing impacts on different dimensions of firms' performance. The performance of the top 39 local exchange companies is measured over the period 1981-1987 using a multi-period, multi-output ratio analysis model which enables disaggregation of gross performance measures into several detailed components. The findings indicate that deregulation has a significant impact on different dimensions of firms' performance in general, and it is also found that individual firms display different patterns of response in each of these dimensions of performance.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/30080/1/0000451.pd

Market liberalization and the psychology of firm performance

In this paper we study whether the progressive liberalization of the U.S. telecommunications industry has altered the psychology of firms' behavior and led to performance changes. A detailed theoretical framework is developed, based on extension of the postulates of x-efficiency theory. Such an extension of x-efficiency theory enables us to make predictions regarding the direction of performance changes and whether among the various measures of performance there are likely to be cross-sectional differences, even as these different measures change over time. Two performance measures are computed. The first measures the ability of firms to maximize revenues, given their resources; the second measures their ability to reduce costs given the level of outputs generated. We find that market liberalization has significantly impacted the internal psychology within firms, in encouraging both entrepreneurially-oriented and productivity-oriented behavior. However, over time as the market gets more and more liberalized it is the entrepreneurially-oriented behavior that is dominant. We also examine whether ownership differences cause divergences among the firms studied in behavior and performance. We find that erstwhile AT&T-owned firms are always superior to independents in revenue-maximizing skills, but in an era of monopoly were not cost minimizers. In a liberalized environment their cost minimization skills are also superior to the independent firms.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/31370/1/0000282.pd

The Impact of Size and Age on Firm-Level Performance: Some Evidence from India

Using contemporary data for an extensive sample of 1020 Indian firms, this paper investigates the impacts that size and age of firms have on firm-level productivity and profitability. In India older firms are found to be more productive and less profitable, whereas the larger firms are, conversely, found to be more profitable and less productive. These performance differences are explained as arising from the market-restricting industrial policies that have been followed in India over the past three decades.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/43576/1/11151_2004_Article_108931.pd

Assessing comparative efficiency of the state-owned mixed and private sectors in Indian industry

This paper evaluates performance differences between government owned, mixed sector and private sector enterprises in India for the period 1973–1974 to 1988–1989. The results establish that enterprises owned by the central government and state governments are less efficient than mixed or private sector enterprises, while mixed sector enterprises are less efficient than those in the private sector. The results contradict extant evidence finding no performance differences between government-owned and private firms in India. There have, however, been inter-temporal efficiency gains for the sector as a whole, perhaps resulting from reforms undertaken towards improving government-owned enterprises' performance.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/45522/1/11127_2004_Article_106981.pd

An Assessment of the Performance of Indian State-Owned Enterprises

We examine the determinants of performance of 68 Indian state-owned enterprises in the manufacturing sector for a five-year period: 1987 to 1991. Relative performance is determined using data envelopment analysis, with variations in performance patterns subsequently explained using regression analysis. We note that the performance of firms in the Indian state-owned sector is characterized by both, low performance, as well as significant and systematic variations in the performance parameters. Size is positively associated and age negatively associated with efficiency. Further, economic liberalization and reforms aimed at improving the performance of state-owned firms induces efficiency gains over time. This heterogeneity within the state-owned sector has policy implications, which we discuss. In countries which have privatized large numbers of their state-owned firms, it is often the larger establishments which have been sold to the public. The state-owned firms in the manufacturing sector that can be candidates for privatization are the smaller and older manufacturing firms. These firms may also be easier to dispose of to private investors. This finding reinforces our central thesis that firm-level analysis within the state-owned sector is useful and important for generating pragmatic policy guidelines.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/47575/1/11123_2004_Article_154532.pd

Foreign Ownership and Profitability: Property Rights, Strategic Control and Corporate Performance in Indian Industry

This study examines the influence of foreign ownership on the performance of fmtis operating in India. Foreign ownership is categorized according to the control exercisable at different levels of ownership. These categories are, in turn, determined by the institutional structure of the Indian environment which helps define define the property rights accruing at different levels of ownership. Firms' performance is measured as return on sales and return on assets. The results show that, after controlling for a variety of fin-n and environment-specific factors, only when property rights devolve to foreign owners, at ownership levels providing unambiguous control at 51 percent, do firms in which there is foreign ownership display relatively superior performance. Implications for managers of foreign firms contemplating investments, either de-novo or augmenting already-existing stakes, in India and for policy are also discussed.http://deepblue.lib.umich.edu/bitstream/2027.42/39454/3/wp64.pd

Capital structure and performance: Evidence from a transition economy on an aspect of corporate governance

This paper examines the relationship between the levels of debt in the capital structure and performance for a sample of Indian firms. Existing theory posits a positive relationship; however, analysis of the data reveals the relationship for Indian firms to be significantly negative. The structure of capital markets in India, where both short-term and long-term lending institutions are government-owned, is hypothesized to account for the finding of this relationship, and it asserted that corporate governance mechanisms which work in the West will not work in the Indian context unless the supply of loan capital is privatized.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/45524/1/11127_2004_Article_133280.pd

On the Sequencing of Privatization in Transition Economies

This paper presents an empirical criterion for establishing privatization priorities for state owned enterprises. The approach uses firm performance as the basis for deciding the sequence in which firms are privatized. Sequencing is relevant because the order in which a group of state enterprises are taken up for privatization has efficiency implications, and an appropriate sequence based on efficiency considerations can be beneficial. Privatizing inefficient enterprises before efficient ones is a superior sequence as compared to one which reverses this order, and the size of the firms to be privatized is an important contingency. An improvement index is constructed for individual firms, and the index makes possible a comparison of multiple firms, thus, facilitating the construction of a priority schedule. This approach is demonstrated using a sample of Indian service sector firms, and the approach can aid policy-makers in transition economies as they undertake the privatization of state-owned enterprises.

Optimal Local Exchange Carrier Size

Optimal firm size and patterns of returns to scaleamong the local exchange companies in the U.S.telecommunications industry are estimated for theyears: 1975, 1978, 1981, 1984, 1987 and 1990. Theindependent companies display increasing returns toscale, while the Baby Bells display constant ordecreasing returns to scale. The independentcompanies operate at a scale smaller than optimalsize, while the Baby Bells operate at a scale greaterthan optimal size. Efficiencies can be gained byindustry restructuring, by allowing independents toexpand their size while the Baby Bells can bedownsized to create smaller units.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/43578/1/11151_2004_Article_142043.pd