The corporate administration issue in Macedonian companies has been brought frontward during the recent few old ages. The chief ground is the fact that the denationalization procedure completion of socially-owned and partially state-owned endeavors has put accent to the challenge to reasonably modulate relationships established within companies on one manus, and relationships between companies and larger society on the other. All market economic systems, including those with longest tradition, have faced this sort of challenge so far.

Corporate administration becomes an progressively of import issue for the Macedonian economic system. It is being taken with greater consideration by the companies, regulators and authorities. The strong moving ridge of denationalization plans from mid-90 ‘ have resulted in an altered concern environment, and new legal and institutional models have been established. Indeed, corporate administration contributes to sustainable economic development by heightening the public presentation of companies and increasing their entree to external beginnings of capital.

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In this paper we will do effort to analyse the prevailing factors that create fecund corporate administration environment in two footings ; a ) micro degree and macro degree.

JEL Categorizations: G30, G32, G38 ; L33 ; O11 ; P31

Keywords: administration, corporate administration, direction scheme, passage, Southeast Europe, Macedonia

Recognitions: I would wish to thank Prof. Nicola Bellini for the uninterrupted support, every bit good as, the PhD Program in Management and MAIN Lab of Scuola Superiore Sant’Anna, Pisa, Italy


This paper is concerned with corporate administration and endeavor restructuring through a step of direction ‘s capablenesss to move in the best involvement of stockholders, every bit good as, the mechanisms that trigger managerial behaviour needed to augment the wealth of the endeavor i.e. the stewardship and endeavor dimensions. The specific features of the economic systems in passage give research land for different theoretical accounts analysing the effects of administration and organisational capablenesss for restructuring. The economic system of Macedonia has been characterized by high degree of alterations in the ownership construction and concern environment turbulency. There are surveies that specifically analyze the alterations in the ownership construction and concern environment turbulency, which will be used in this article ( Uhlenbruck and Castro 1998 ; Hoskisson, Eden et Al. 2000 ) .

The already established passage economic theory gives grounds that the denationalization of once state-owned companies is non fallowed with public presentation betterments as default warrant ( Megginson and Netter 2001 ) . Further, the literature suggests that it is needed replacing of the direction and debut of several administration mechanisms, if wanted grater public presentation of freshly privatized endeavors ( Cuervo and Villalonga 2000 ) . Indeed, the surveies analysing administration and endeavor restructuring in passage economic systems suggest that germinating corporate administration is important for the result of house restructuring ( Filatotchev, Buck et Al. 2000 ; Djankov and Murrell 2002 ) . Therefore, it is apparent that different methods of denationalization ( management-employee buyouts, gave-aways, binding to strategic foreign investors, etc. ) require different administration.

Due to the nature of the passage procedure these markets have different scenes and properties when compared to developed national economic systems ( Hoskisson, Johnson et Al. 2006 ) . The larning procedure of the corporate administration in post-communist economic systems is characterized by the demand of developing the monitoring systems, every bit good as, tuning directors to esteem and fulfill the demands of the stockholders ( Filatotchev, Hoskisson et Al. 1996 ) , which is making new ‘rules of the game ‘ ( North 1990 ; North 1994 ) . Hence, the weight of transmutation and endeavor restructuring falls on the quality of directors and their capablenesss to larn the new regulations of the game ( Lyles and Salk 1996 ; Steensma and Lyles 2000 ) .

The research hypotheses are:

1st Hypothesis i.e. Micro Level: domestic versus foreign proprietors, companies are driven by foreign proprietors ;

2nd Hypothesis i.e. Macro Level: administration and endeavor restructuring is influenced by gross domestic merchandise and foreign direct investings kineticss.

Theoretical and literature model

1. The passage economic system literature

The planned economic systems ‘ direction based on the rules of theoretical land of the political political orientation at that clip when national economic systems were characterized by state-owned belongings bring oning acute inefficiencies of houses, therefore besides on overall macro degree ( Kornai 1992 ) . This resulted with incapableness to increase efficiency of the houses and do their merchandises competitory in regional and international concern environment ( Sachs, Warner et Al. 1995 ) . The procedure of denationalization was imposed as to present sociopolitical alteration and better macroeconomic benefits, every bit good as, ‘restart ‘ the state-owned companies by enforcing market managerial mechanisms ( Megginson and Netter 2001 ) .

There has been fluctuation of different manners of denationalization that were imposed while reconstituting from planned to functional market economic systems, and there is sufficient literature bases that suggest different manner of denationalization lead to different administration results ( EBRD 1994-2009 ; Estrin and Wright 1999 ; Wright, Hoskisson et Al. 2000 )

2. Problems of administration in passage economic systems

There are surveies that link enterprise restructuring with administration characteristics, such as board attributes and ownership construction ( for illustration, ( Bethel and Liebeskind 1993 ; Johnson, Hoskisson et Al. 1993 ; Bergh 1995 ; Djankov and Murrell 2002 ) . The specificities of each separate state contribute to accounts of endeavor restructuring, such as development of market establishments, authorities engagement, ownership forms, industry constructions and enforcement of concern Torahs ( North 1994 ; La Porta, Lopezaˆ?deaˆ?Silanes et Al. 1998 ; Chang and Hong 2000 ) . During the reconstituting stage of import intercrossed organisational signifiers took topographic point i.e. alleged ‘recombinant belongingss ‘ , which represent recombination of belongings, therefore falsifying the boundary between public and private ownership ( Peng and Heath 1996 ; Stark 1996 ; Spicer, McDermott et Al. 2000 ) . The fluctuations in endeavor restructuring results could be caused by managerial self-interests which are non controlled by the proprietors ; hence this is likely to be a effect of board composing, legal enforcement ( the deficiency of it ) and weak capital market ( Wright, Buck et Al. ; Filatotchev, Buck et Al. 2000 ) . Therefore, the administration jobs most frequently are caused by unequal monitoring of directors or because they have acquired excessively much ownership due flexing the passage procedure ( Morck, Shleifer et Al. ; Whitley and Czaban 1998 ; Newman 2000 ) .

3. Apprenticing and competencies

One of the most of import jobs that passage economic systems are faced with is the deficiency of capital and new ways of geting fundss, furthermore because the capital markets are non good developed and there is no sufficient protection to foreign and minority investors ( EBRD 1994-2009 ) . Consequently, the endeavor restructuring in all its organisational features turns around larning and munition of market competences ( Lyles and Salk 1996 ; Uhlenbruck, Meyer et Al. 2003 ) .

The ‘ability to alter ‘ as a map of i¬?rm ‘s resources is indispensable to enterprise restructuring ( Barker Iii and Duhaime 1997 ) , particularly in an environment where they have really limited absorbent capacity i.e. the ability ‘to acknowledge the value of new information, assimilate it, and use it to commercial terminals ‘ ( Cohen and Levinthal 1990 ) . This is rather critical as it provides houses with strategic flexibleness to presume good places in invariably altering and disruptive passage environment ( Puffer, McCarthy et Al. 2001 ) .

Indeed, the absorbent capacity and the ability to follow and farther physique competitory capacities depends on anterior cognition, which in passage economic systems is estimated to be significantly low ( Newman 2000 )

4. Administration and ascent of competencies

The constrains that inflict endeavor restructuring are normally lack of effectual administration mechanisms, every bit good as, managerial inability to follow to alterations ( Mahoney 1995 ) . However, it is apparent that managerial abilities may acquire better due clip, but these betterments are normally dawdling behind the gait of alteration in the concern environment. Therefore, effectual corporate administration can act upon directors to better and increase the overall strategic flexibleness of the house towards set abouting the necessary restructuring ( Hoskisson, Johnson et Al. 1994 ; Johnson 1996 ; Hitt, Ireland et al. 2009 ) .

In the analytical model used by Filatotchev, Wright, Hoskisson et al. there are two basic dimensions of administration manners: insider and foreigner administration manners ( Filatotchev, Wright et al. 2003 ) .

The insider administration manner is characterized by administration mechanisms imposed by dominant ownership direction and employees and outsider administration manner is associated to laterality of ownership from investors outside of the house ( chiefly foreign investors ) ( Hoskisson, Eden et Al. 2000 ; Puffer, McCarthy et Al. 2001 ; Hitt, Ireland et al. 2009 ) . The other two dimensions are low or high absorbent capacity that indicate the capableness of the house to upgrade its competencies due clip and competitory force per unit areas ( Filatotchev, Wright et al. 2003 ) :

Figure I. Corporate administration and acquisition capacity

Insider administration

Foreigner administration


absorbent capacity

Quadrant 1: Stuck denationalization

Organizational features:

Managerial inducements reduced in absence of purchase

Low managerial turnover

Resistance to outside board members

Entrenchment of traditional webs

Low acquisition and weak administration

Strategic results:

Likelihood of low corporate restructuring effectivity

Quadrant 2: Denationalization to domestic establishments

Organizational features:

Managerial inducements but hapless wealth variegation lead to low hazard behaviour

Monitoring by outside investors

Limited entree to outside webs

Important function of bank-led financial-industrial groups bring forthing fiscal reallocation but besides private appropriation

Equivocal efficiency of administration, may be traded off for low acquisition

Strategic results:

Likelihood of moderate corporate restructuring effectivity


absorbent capacity

Quadrant 3: Denationalization buy-outs

Organizational features:

Managerial inducements

Passive monitoring by moneymans

Limited entree to outside webs

High acquisition is traded off for weak administration

Strategic results:

Likelihood of moderate corporate restructuring effectivity

Quadrant 4: Denationalization to foreign investors

Organizational features:

Effective boards

Managerial turnover

Break-out from traditional webs

High larning complements high efficiency administration

Strategic results:

Likelihood of high corporate restructuring effectivity

Analytic Model

1. Sample choice and Data

The first premise will be analyzed on the bases of a study on stockholders in Macedonia, with an accent on their rights ( the degree of recognition of their rights, the degree and mode of practising of their rights, their engagement in the company ‘s determination devising ) , conducted by USAID/Business Environment Activity ( BEA )[ 1 ].

Since there has been a major development of the capital market in Macedonia, addition of the cognition of investors and the broader public, this study is a more comprehensive research and provides a more general image of the stockholders ‘ construction, with an accent on ( the degree of ) incorporation of good Corporate Governance patterns in the companies, particularly the Joint Stock Companies. The principal participants are the stockholders, direction and the board of managers.

The 2nd appraisal is based on informations provided by the information bases of the European Bank for Reconstruction and Development ( EBRD ) Transition study series ( EBRD 1994-2009 ) , the World Bank Database[ 2 ]and the National Bank of the Republic of Macedonia[ 3 ]and Macedonian Stock Exchange[ 4 ]. The index of GDP is mensurating growing in existent GDP ( in per cent ) for the clip period of 1989 to 2009 ( with exclusions for the old ages where information was non available, which is minor ) and the index of FDI ‘s is mensurating foreign direct investing as net influxs recorded in the balance of payments.

2. Model and Econometricss

a ) First hypothesis analytical model

The first hypothesis is that companies are driven by foreign proprietors which puts domestic versus foreign proprietors, and it is tightly connected with the 2nd hypothesis. In order to acquire good consequences and more complete research, this first hypothesis is analyzed qualitatively. Therefore, the attack taken is concerned with the micro degree of Macedonian economic system i.e. scrutiny on the beginning of dominant proprietors and the impact each class has to directing the house construction hence giving favourable results.

B ) Second hypothesis analytical model

The econometric theoretical account ( Freedman 2005 ) that is used for the 2nd hypothesis is a arrested development theoretical account where we have estimated the fallowing equation:

( 1 )

( 2 )

Therefore, applied to our research this theoretical account has the fallowing form:

( 4 )

where the dependant variable, , shows administration and endeavor restructuring ;

the independent variables, are as follows:

gross domestic merchandise ;

foreign direct investings ;

A is aA p-dimensionalA parametric quantity vector ;

A is theA error term orA noise.

Consequences and Effectss

1. Consequences on the first hypothesis i.e. Micro Level

The Numberss taken from the IFC ‘s Corporate Governance Manual for Macedonian companies and the study of USAID/Business Environment Activity ( BEA )[ 5 ]are valid until 2008 and were retrieved from the Central Depositary[ 6 ]. The figure of Joint Stock Companies at that clip was 577, with entire figure of stockholders 174 870. Therefore, largest type of holders is the domestic persons ( 95.64 % ) , followed by domestic legal entities ( 2.43 % ) . The foreign persons form a group of 1.43 % and the smallest is the group of foreign legal entities with 0.45 % of portions in the Macedonian articulation stock companies ( IFC 2008 ) .

On the other manus, if we observe the figure of portions that are owned by assorted types of proprietors we get wholly different image, which confirms the first hypothesis in this survey. Hence, more than half ( 56.68 % ) of the portions in the Macedonian articulation stock companies are owned by the foreign legal entities. This group is followed by domestic legal entities which own 34.23 % of all portions in the state, and at the terminal there are domestic and foreign single proprietors who hold in entire less than 10 % of the portions in the Macedonian articulation stock companies ( IFC 2008 ) .

These values are good portrayed in the figures below, where it is found grounds for the first hypothesis i.e. most of the valuable and of import Macedonian articulation stock companies, that in kernel signifier the Macedonian economic system, are so driven by foreign proprietors.

The fact that more than half of the portions in the Macedonian articulation stock companies are owned by foreign legal entities is connected to the motions in foreign direct investing and therefore to the 2nd hypothesis. Furthermore, it is grounds of scattering of shareholding by domestic proprietors against concentration of control of foreign entities. This besides shows that most of the endeavor restructuring, larning and apprenticing of new capacities and capablenesss, therefore bettering corporate administration and administration of the economic system in general, comes from foreign input.

Figure I. Percentage of portions by type of holder

Figure I. Percentage of the figure of portions by type of holder

2. Consequences on the 2nd hypothesis i.e. Macro Level

The consequences on the 2nd hypothesis are shown in the tabular arraies below. The 2nd hypothesis assumes that administration and endeavor restructuring is influenced by gross domestic merchandise and foreign direct investings kineticss. Further, the survey produced correlativity matrix and OLS arrested development analysis consequences.

Figure I. Correlation Matrix on GOV for GDP and FDI – Macedonia

Figure I. OLS on GOV for GDP and FDI – Macedonia

The OLS analysis is instead basic and it has the intent to bespeak and back up the first hypothesis. The consequences of the OLS arrested development explicating the nexus between GOV and GDP, FDI are given in the figures describe the relationships and motions between these variables.

The GDP consequences are important for both GDP and FDI ( P & lt ; 0.01 ) . It is clear from the figures that administration and endeavor restructuring is positively influenced by gross domestic merchandise and particularly foreign direct investings kineticss.

However, it must be said that deeper econometric analysis might convey different visible radiation to the manner separate sections of these variables contribute to administration and endeavor restructuring. Hence, the concern facet of analysis introduced to this paper gives instead satisfactory image of the positive impact that foreign investings give to the concern environment, every bit good as, their laterality in ownership shareholding which finally impacts the procedure of acquisition, capablenesss edifice and apprenticing from foreign boards and investors.

Figure I. GDP in GOV – Macedonia

Figure I. FDI in GOV – Macedonia


The first analysis gave consequences that more than half of the portions in the Macedonian articulation stock companies are controlled by the foreign legal entities. The analysis of the 2nd hypothesis showed to be important for foreign direct investings. Hence, it can be said that the ownership construction is connected to the motions in foreign direct investing and therefore to the 2nd hypothesis. This besides confirms the premiss that domestic ownership is dispersed and the control is given to foreign entities, where the inflow of new capacities and capablenesss pushed by foreign ownership increases the acquisition and apprenticing procedure of the house.

The basic scrutiny of foreign direct investing variable, gross domestic merchandise variable and administration and endeavor restructuring variable indicates that administration and endeavor restructuring is positively influenced by gross domestic merchandise and particularly foreign direct investings kineticss.

The format of survey and the concern facet of the research give acceptable consequences of the impact that foreign investing to the concern environment, every bit good as, the laterality of ownership shareholding which finally impacts the procedure of acquisition, capablenesss edifice and apprenticing from foreign boards and investors.