Exploring effective factors on privatization, firm performance and export development: Evidence from steel industry

Article history: Received December 5, 2014 Received in revised format February 16 2016 Accepted July 1 2016 Available online July 3 2016 Privatization means establishing a new system based on the market mechanisms and consequently making a change, alteration in different aspects of economy and is a process in which the government can examine the possibility of transferring the duties and facilities to the private sector on any level and if necessary, exerts such transfer. On the other hand, exports in industry sector can be a noticeable point for the economic growth of any country. Enhancing the exports of the steel industry of the country can have a principal role in the economic pursuit of the country’s non-oil products. Such an enhancement brings about a positive effect in the efficiency of the stocks within the financial markets by developing the steel industry. Researchers of this field claim that privatization in the steel industry results in the further development of the steel stock market and exports. This paper presents a comprehensive survey on factors influencing on privatization of the firms in steel industry. The study has designed a questionnaire in Likert scale and distributed it among some experts who worked for Mobarakeh steel producer in Iran. Using principle component analysis, the survey has concluded that export activities were influenced the most by six major factors including creativity, technological limitation, opportunities and challenges, being up to date, customer orientation and financial sanction. Moreover, firm performance was influenced by two major factors of stakeholder’s satisfaction and organizational culture. Finally, two factors of rationalism and market orientation influenced the most on privatization. Growing Science Ltd. All rights reserved. 7 © 201


Introduction
Privatization is a process in which the government examines the possibility of transferring the duties and facilities to the private sector on any level and if needed exerts such transfer (Seyedaliakbar et al., 2016).In fact, privatization is a trend for improving the function of the economic activities by the method of increasing the role of the market factors.The privatization policy is exerted in different countries in accordance with the economic programs and the general strategies of the respective country and since the economic plans of the countries are different and the strategies are also various, privatization is also preferred due to several reasons.The main objective of executing the privatization policy is yielding the economic activities to the private sector, creating a competitive organization for the desired activities with the possibility of utilizing motivation process and controlling the private sector in the economy which would be achievable through fulfilling the two issues of enhancing the efficiency and improving the sources allocation.One of the critical and sensitive aspects of the privatization issue is improving the economic status of any society.One of the ways to accomplish such objective is to pay more attention on the issue of steel exporting and the efficiency of stocks in the financial markets and the strategies to enhance it.Privatizing the governmental agencies will lead to the active exporting by means of improving optimization and the positive impact on the stocks efficiency and reduces the financial and credit limitations and from the other side increases the number of competitive exports, improves export decisions and augments the agency size.Romero-Martínez (2010) performed an investigation and reported whether state-owned enterprises (SOEs) could increase their levels of corporate entrepreneurship after privatization.They applied agency theory to find out why SOEs yield little entrepreneurial behavior and how privatization may alter this circumstance by changing firms' systems of controls and incentives.They also applied a sample of Spanish companies for its empirical research and reported that corporate entrepreneurship could increase after privatization when companies were in highly competitive industries, either because competition was bigger after privatization or because the firm was already in a highly competitive industry.In other words, corporate entrepreneurship in privatized companies appeared to be favored by two factors, a change of ownership and competition.Todo et al. (2014) examined whether privatizing Chinese state-owned enterprises could possibly increase exports and determine the factors generating such an effect based on firm-level data for the Chinese manufacturing sector from 2000 to 2007.They reported that privatization positively influenced on a firm's productivity, size, and decision to export, whereas they also determined that it negatively influenced on the level of a firm's long-term debt.They also determined that Chinese companies were able to export mode when the productivity level, firm size, or the level of long-term debt improved.They concluded that privatization positively influenced on the likelihood that an organization would export by improving productivity and increasing firm size, whereas it negatively influenced on such a likelihood by reducing the long-term debt level of the companies.Nevertheless, a quantitative analysis disclosed that the impacts of privatization that happened through these three channels were only slight.Therefore, they concluded that the positive effect of privatization on the likelihood of exporting was mainly the result of unobservable factors, which were most likely associated with changes in attitude about the profits and risks related to privatization.Horwitz and Currie (2007) investigated the relative failure of reform in South Africa in the context of internal South African politics.Wang and Chen (2011) investigated the effect of foreign penetration on privatization in a mixed oligopolistic market and reported that government should increase the degree of privatization along with increasing proportion of domestic ownership of multinational companies.In addition, they reported that an increase in domestic ownership of multinational companies could also increase all domestic private firms' profit and social welfare, while it could either increase/decrease public organization's profit.Ślusarczyk et al. (2013) reported that the main factors which caused steel market consolidation include mass privatization and restructuring of enterprises, liberalization of the regulations conducive to market competition, investment requires in steelworks and trends to generate free markets in world market.Todshki and Ranjbaraki (2016) performed a survey on the effects of Iran's macroeconomics variables including Gross National Product, Global Oil price, Population and domestic steel production on steel export and import over the period 1975-2011.They found positive and significant relationship between crude steel export and all mentioned variables.SeyedAliAkbar and Zaripour (2016) presented an empirical investigation to determine essential factors on development of export in Iran and determined five important factors including human resources development, productivity management, marketing management, creating competitive environment and building necessary infrastructures.

The proposed study
This paper presents a comprehensive survey on factors influencing on privatization of the firms in steel industry.The study has designed a questionnaire in Likert scale and distributed it among some experts who worked for Mobarakeh steel producer in Iran.The current research is a practical and applicable type of research.It is also descriptive and inferential in terms of collecting data, which describes the features of the sample and generalizes these features to the statistical population.In this study, the descriptive research has been used in survey type, because the means of collecting data (questionnaires) has been distributed and then collected in the samples of statistical population.The methods of collecting data in this research is of library and field operation kind.Thus, it can be generally stated that this study is a practical descriptive survey research of correlation type which has been analyzed by using exploratory function analysis and by the helping of SPSS application.Due to the fact that this is a case study and related to Isfahan Sepahan Mobarake steel industries, the statistical population of this study is of accessible type in sampling method including the present managers, experts and employees and the volume of the samples for explorative function analysis 5×q<X<15×q and "q" stands for the number of questions in questionnaires.At first, the effective variables of the structures in the first step of Delfi were identified by the experts and then the effective variables were added from the sources including articles and the books after being collected.The common items of sources and elites were omitted and in the second step of Delfi elites, 75 effective variables of structures were ranked between the scales of 1 and 10 and 80 percent of the variables with high ranking were kept and the others were deleted and ultimately, "q" as the number of questions in questionnaires was designed equal to 60 effective variables in Likert scale between 1 and 5 and its content validity was confirmed the experts and the thesis supervisors and thesis advisors.The sample volume n=435 is considered between the minimum of 300 and maximum of 900.The questionnaires are distributed among the experts and managers and employees and in the final step, the questionnaires were collected and the entering of information and reforming the lost data by means of the median method were carried out (Draycott, & Kline, 1994).The questionnaire of this survey was designed in Likert scale and consist of three parts of factors influencing on exports with 31 questions, firm performance with 18 questions and privatization with 10 questions.Cronbach alphas were determined as 83, 88 and 79 percent for these items, respectively.

Personal characteristics of the participants
In our study, 300 man and 135 women participated in our survey who were all experts of Mobarakeh Steel industry.This firms is the biggest steel producer in Middle East and Northern Africa and it is the quality producer of more than 50% of Iran's steel in all major markets including automotive, construction, household appliances, and packaging.Mobarakeh Steel operates in 7 industrial complexes and more than 20,000 people in various parts of Iran are working for this firm.

Age
Years of education Years of job experience As we can observe from the results of Fig. 1, 75 percent of the respondents were middle-aged people, 92% had some university educations and 86% had well over 10 years of job experience.Kaiser-Meyer-Olkin Measure of Sampling Adequacy and Bartlett's Test for three parts of the survey, namely, export, efficiency stocks and privatization are summarized on Table 1  .000.000 .000 The proposed study of this paper uses principle component analysis (PCA) to extract the factors influencing on development of export, firm performance and privatization.Table 2, Table 3 and Table 4 demonstrate total variance explained.Moreover, Fig. 2 shows the results of Scree plot.     2 and Fig. 2, there are nine factors representing 75% of the changes on expert activities.Moreover, for there are two factors representing 60% and 76% of the changes on firm performance and privatization, respectively.Table 5 shows the results of PCA after rotation happens.

Table 5
The results of PCA after Varimax rotation for export activties Advertising in the scientific and high profile international magazine .779Holding international seminars inviting the chief consumers of steel .729Promoting the vocational education of the staff -.789 In addition, Table 6 presents the results of PCA after rotation for firm performance.

Table 6
The results of PCA after Varimax rotation for firm performance Finally, Table 7 shows the results of PCA for factors influencing on privatization.As we can observe from the results of Fig. 3, export activities consists of six major factors including creativity, technological limitation, opportunities and challenges, being up to date, customer orientation and financial sanction.Stakeholder satisfaction and organizational culture are believed to be the most important factors influencing on firm performance (stock efficiency) and finally, rationalism and market orientation are two important factors influencing on privatization.In summary, we present details of our findings in Fig. 3 as follows,

Fig. 3. The summary of factors influencing on exports, firm performance and privatization
In terms of the factors influencing on export activities, creativity is the first factor.Table 8 shows the ranking of the factors on creativity.According to the results of Table 8, credit sales insurance is the most important factor followed by transportation insurance, ISO certificate, having a good research and development department and innovation.Technological limitation is the second factor influencing on export activities with six factors summarized in Table 9 as follows, The results of Table 9, we can observe that limitation on the number of suppliers is the first important technological factor followed by sanction posed to Iran's transportation insurance, etc. Opportunities and challenges are the other factors influencing on export activities with six sub-factors summarized in Table 10 as follows, .499 3 Cronbach alpha = 0.729 The results of Table 11 indicate that having good information about the economic events of exporting is the most important factor followed by enhancing technological development and having reliable information on technology for exports.Customer orientation is the fifth item in our survey with three components indicated in Table 12 as follows,

Table 12
The summary of customer orientation factors influencing on creativity

Variables Factors load Rank
Information about the level of connections and the customer's requirement .756 1 Information in the direction of understanding the efficient parameters in the exporting .712 2 Advertising in the scientific and high profile international magazine .562 3 Cronbach alpha = 0.775 The results of Table 12 have indicated that Information about the level of connections and the customer's requirement is the most important factor followed by Information in the direction of understanding the efficient parameters in the exporting and advertising in the scientific and high profile international magazine.Finally, financial activities are the last important factors influencing on export activities with three factors summarized in Table 13 as follows, According to the results of Table 15, social responsibility is the first important factor influencing the most on firm performance followed by being competitive and protectionism.
Finally, two factors of rationalism and market orientation influence on privatization.Rationalism consists of six sub-components listed in Table 16 as follows, According to the results of Table 16, surcharge fee plays the most important role on privatization followed by creation of competition and getting rid of monopoly and knowledge management.Also, in terms of market orientation, three factors influence the most on privatization, which are listed in Table 17 as follows, As seen in Table 16, having a good communication with customer plays the most on the privatization followed by offering distinctive product and enhancing good quality service for customer.

Conclusion
In this paper, we have presented a comprehensive survey on factors influencing on privatization of the firms in steel industry.The study has designed a questionnaire in Likert scale and distributed it among some experts who worked for Mobarakeh steel producer.Using principle component analysis, the survey has concluded that export activities were influenced the most by six major factors including creativity, technological limitation, opportunities and challenges, being up to date, customer orientation and financial sanction.Moreover, firm performance was influenced by two major factors of stakeholder's satisfaction and organizational culture.Finally, two factors of rationalism and market orientation influenced on privatization.The results of this survey are somehow consistent with other findings in the literature in terms of privatization (Fiorentino et al., 2009;Sheinbaum et al., 2010;Naguib, 2012).

Fig. 1 .
Fig. 1.Personal characteristics of the participants

Fig. 2 .
The results of Scree plot for three parts of the survey According to the results of Table

Table 1
as follows, The summary of Kaiser-Meyer-Olkin Measure of Sampling Adequacy and Bartlett's Test

Table 2
The summary of PCA for factors influencing on exports

Table 3
The summary of PCA for factors influencing on firm performance

Table 4
The summary of PCA for factors influencing on privatization

Table 7
The results of PCA after Varimax rotation for privatization

Table 8
The summary of the creativity factors influencing on creativity

Table 9
The summary of the technological limitation factors influencing on creativity

Table 10
The summary of the opportunities/challenges factors influencing on creativity According to Table10, subsidies are the most important factors followed by management commitment, trading sanction.Having a good sales representative in destination countries, sanction posed on export activities and exporting consortium.Having a reliable and good information on export activities is the other factor with three sub-factors summarized in Table11as follows,

Table 13
The summary of customer orientation factors influencing on creativityStakeholder satisfaction is the first factor influencing on firm performance with eight sub-factors listed in Table14as follows,As we can observe from Table14, rewarding system is the most important factor, which could please stakeholders.Organizational culture is another factor influencing on stakeholder satisfaction with three factors listed on Table15as follows,

Table 16
The summary of rationalism factors influencing on privatization

Table 16
The summary of market orientation factors influencing the privatization