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The Handbook of Political, Social, and Economic Transformation$
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Wolfgang Merkel, Raj Kollmorgen, and Hans-Jürgen Wagener

Print publication date: 2019

Print ISBN-13: 9780198829911

Published to Oxford Scholarship Online: March 2019

DOI: 10.1093/oso/9780198829911.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 24 June 2021

Economic Restructuring

Economic Restructuring

Chapter:
(p.480) Chapter 46 Economic Restructuring
Source:
The Handbook of Political, Social, and Economic Transformation
Author(s):

Michael Fritsch

Publisher:
Oxford University Press
DOI:10.1093/oso/9780198829911.003.0046

Technological progress, competition and trade, relative prices fluctuations, and changes of the institutional framework may require companies, industries, regions, or the whole national economy to undergo a process of significant restructuring. The transformation of the centrally planned socialist economies of Central and Eastern Europe to market economies offers us a natural laboratory to investigate how a transformational shock impacts the restructuring process. This chapter focuses on two basic components of this process. First, adjustments made by incumbent organizations (‘top-down’), and second, the opportunity for new businesses and organizations that complement or compete with the incumbents, entry into the marketplace (‘bottom-up’ transformation). The chapter highlights a variety of causes that forced incumbent firms to make adjustments, and demonstrates that the bottom-up component holds significant importance in such a process. This is particularly true if changes in the framework conditions are abrupt, and adjustments on the side of the incumbents are slow.

Keywords:   restructuring, incumbent firms, new business formation, transformation, former socialist economies, East Germany, entrepreneurship

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