Introduction
State-owned enterprises are broadly defined as enterprises controlled and owned by governments. In recent years, economic liberalization, privatization and globalization processes are leading to transformation of the state-owned enterprises in different economies. This nature of transformation of state-owned enterprises has necessitated the need to adopt new frameworks to ensure their long-term survival and profitability. This paper will analyze the concept of new state-owned enterprise, discuss the need for new state-owned enterprise, examine the benefits of new state-owned enterprise, and discuss the ways to improve the performance of new state-owned enterprise.
Concept of New State-Owned Enterprise
The concept of new state-owned enterprise is based on the change in the nature of the state’s interference in the management of enterprises. The traditional state-owned enterprises are characterized by their heavily bureaucratic behavior, with the state exercising either complete or partial control over the management of the enterprise. It was believed that the state was the only one able to make the decisions that would benefit the enterprise and society as a whole.
The process of economic liberalization has changed this state of affairs and shifted the focus to achieving long term survival and profitability. It is believed that by giving managers of state-owned enterprises greater autonomy and responsibility, as well as providing them with better incentives to perform, can result in improved performance. Thus, the concept of new state-owned enterprise is based on providing more autonomy to managers and allowing them to have greater influence over the functioning of the enterprises.
Need for New State-Owned Enterprise
The main objectives of new state-owned enterprises are to foster economic growth and development, promote competition, ensure the protection of vital economic interests, and provide public services. The need for new state-owned enterprises is derived from the economic liberalization process. With the liberalization process aimed at enhancing the growth of the private sector, the role of state-owned enterprises has been downsized. The state has to recognize the need to focus more on the development of new state-owned enterprises, in order to maintain the state’s traditional role of promoting economic growth and development.
Benefits of New State-Owned Enterprise
New state-owned enterprises are beneficial in many ways as they provide public services, promote competition, and guarantee access to critical economic resources. New state-owned enterprises also provide a reliable source of government revenue in the form of taxes and royalties. Furthermore, by introducing efficient management systems, new state-owned enterprises can increase operational efficiency, reduce operational costs, and improve customer service. Also, new state-owned enterprises provide employment opportunities for the local population, thereby boosting economic growth and development.
Ways to Improve Performance of New State-Owned Enterprises
The performance of state-owned enterprises can be improved in various ways. By introducing incentive-based and performance-driven systems, new state-owned enterprises can create a work environment that encourages the managers to strive for higher performance. Furthermore, introducing modern technologies, such as automation and artificial intelligence, can help increase operational efficiency, reduce operational costs, and improve decision-making. Also, providing managerial autonomy and introducing cost-reduction measures can help improve the performance of new state-owned enterprises.
Conclusion
In conclusion, the concept of new state-owned enterprise has emerged in the wake of economic liberalization. Although the role of state-owned enterprises has been diminished, they still remain an important source of public services, economic growth and development, and revenue generation. By introducing efficient management systems, introducing new technologies, and providing managerial autonomy, the performance of new state-owned enterprises can be improved significantly.
