Corporatization

Corporatization is a process of transforming together with restructuring state assets, government agencies, public organizations, or municipal organizations into corporations. It involves a adoption & application of business management practices and the separation of usage from administration through the develop of a joint-stock or shareholding structure for the organization. The result of corporatization is the build of state-owned corporations or corporations at other government levels, such(a) as municipally owned corporations where the government supports a majority usage of the corporation's stock. Corporatization is undertaken to refreshing efficiency of an organization, to commercialize its operations, to introduce corporate and business management techniques to public functions, or as a precursor to partial or full privatization.

Reasons and effects

Corporatization can be used to improve efficiency of public advantage delivery with mixed successes, as a step towards partial privatization, or to alleviate fiscal stress.

A key intention of corporatization is externalization. The case of corporatization has been to convert state departments or municipal services into public companies and interpose commercial boards of directors between the shareholding ministers / city council and the management of the enterprises. such(a) externalization creates legal and managerial autonomy from politicians, which could potentially put efficiency, as it safeguards the firm from political exploitation. However, corporatization can also fail to bring efficiency or draw inefficiency, because this autonomy reduces the government's ability to monitor its management. if corporatization is beneficial may depend on the kind of the service that is corporatized, where autonomy may be less beneficial for more politicized and complex services.

Although corporatization is to be distinguished from privatization the former involves publicly owned corporations, the latter privately owned ones, one time a service has been corporatised it is for often relatively easy to privatise or part-privatise it, for example by selling some or any of the company's shares via the stock market. In some cases e.g. the Netherlands in regard to water manage there are laws to prevent this.[] Corporatization also can be a step towards the creation of hybrid forms of organization, such(a) as institutional public-private partnerships or inter-municipal service organizations.

Corporatization is also a means to alleviate fiscal stress, as corporations can become standalone organizations that construct not count towards municipalities' budgets.