Comparative organizational characteristics of Indian state-owned enterprises

This article evaluates the organizational characteristics, defined as retur ns to scale and most productive scale size, for a sample of 67 Indian state -owned enterprises in comparison with 63 private and 27 foreign-owned enter prises. State-owned units suffer from decreasing returns to scale with dise conomies being associated with their large size. The average most productiv e scale size of the state-owned firms is considerably smaller than average actual size, establishing the need for a break-up of existing units into ma ny smaller units so as to gain efficiencies. A policy of restructuring thes e organizations before privatization will enable privatization to be eventu ally more successful.