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Hardening a Soft Budget Constraint through ‘Upward Devolution’ to a Supranational Institution: The Case of the European Union and Italian State-Owned Firms

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Ownership and Governance of Enterprises

Part of the book series: Studies in Development Economics and Policy ((SDEP))

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Abstract

A firm’s budget constraint is soft when financial discipline is relaxed, refinancing is easily obtainable when needed and bankruptcy is an unlikely threat. The soft budget constraint syndrome (SBCS) was identified by Kornai (1998) as a characteristic of state-owned enterprises (SOEs) in planned economies. Recent studies have formalized its theoretical underpinnings and explored its implications for firms in transitional economies.1

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Authors
  1. Elisabetta Bertero
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  2. Laura Rondi
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Editor information

Editors and Affiliations

  1. School of Oriental and African Studies, University of London, UK

    Laixiang Sun

  2. International Institute for Applied System Analysis, Laxenburg, Austria

    Laixiang Sun

  3. Guanghua School of Management, Peking University, Beijing, China

    Laixiang Sun

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© 2003 United Nations University

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Bertero, E., Rondi, L. (2003). Hardening a Soft Budget Constraint through ‘Upward Devolution’ to a Supranational Institution: The Case of the European Union and Italian State-Owned Firms. In: Sun, L. (eds) Ownership and Governance of Enterprises. Studies in Development Economics and Policy. Palgrave Macmillan, London. https://doi.org/10.1057/9781403943903_5

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