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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

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

Michael Fritsch

Oxford University Press

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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