Government as Venture Capitalist? The Role of Organizational Structure and Contract Design in Germany's Privatization Process

Posted: 19 Oct 1998

See all articles by I. J. Alexander Dyck

I. J. Alexander Dyck

University of Toronto - Rotman School of Management

Karen H. Wruck

Ohio State University - Fisher College of Business, Department of Finance

Abstract

This paper examines the role that organization structure and contract design played in resolving economic and political problems that arose during Germany's privatization process. We find that German officials structured organizations and contracts in a way that made credible the government's commitment to rapid privatization. This credibility served to protect the process from political and social opposition. In addition, it enabled Germany to attract talented private sector managers to its privatization effort. This began with the establishment of an independent privatization agency, the Treuhand. It culminated with the creation of another set of independent organizations called Management KGs, to which the Treuhand outsourced part of its restructuring, management and privatization work.

JEL Classification: G22, G38, L22, P52

Suggested Citation

Dyck, I.J. Alexander and Wruck, Karen H., Government as Venture Capitalist? The Role of Organizational Structure and Contract Design in Germany's Privatization Process. European Financial Management, Vol. 5, No. 1, March 1999. Available at SSRN: https://ssrn.com/abstract=137048

I.J. Alexander Dyck (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S 3E6
Canada
416-946-0819 (Phone)

Karen H. Wruck

Ohio State University - Fisher College of Business, Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-292-4330 (Phone)
614-292-2418 (Fax)

HOME PAGE: http://https://fisher.osu.edu/people/wruck.1

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