Privatization and corporate culture 21 Journal of Managerial Psychology, Vol. 17 No. 1, 2002, pp. 21-49. # MCB UP Limited, 0268-3946 DOI 10.1108/02683940210415915 Received March 2001 Revised August 2001 Accepted August 2001 Does privatization affect corporate culture and employee wellbeing? Rita C. Cunha Universidade Nova de Lisboa, Faculdade de Economia, Lisbon, Portugal and Cary L. Cooper University of Manchester Institute of Science and Technology, Manchester School of Management, Manchester, UK Keywords Privatization, Organizational culture, Employees Abstract This article analyses how privatization influences corporate culture and employee wellbeing in the privatized companies. We hypothesized that the change process initiated with privatization and preparation for privatization would lead to a change in corporate culture and also to an increase in employees' perceptions of occupational stress and symptoms of mental and physical ill health, as well as a decrease in job satisfaction. In the long term, these symptoms should be reversed. The study was carried out in three companies, one of them with two data collections, which allowed for a cross-sectional analysis and a quasi-longitudinal one. The two types of analyses supported most of the hypotheses. In general, corporate culture changed towards a greater emphasis on performance and people orientation and on organizational integration. Occupational stress was found to be higher and job satisfaction lower before privatization. Mental and physical ill health, however, were found to be higher in the companies that had already been privatized for some time. Introduction Privatization was one of the economic policies that characterized the late 1980s and the 1990s. Since the decision to privatize has been mainly driven by political and economic reasons, the economic and financial impact of privatization has been reported in a considerable number of studies (e.g. Goodman and Loveman, 1991; Megginson et al., 1992; Parker, 1992; Bishop et al., 1994; Bishop and Thompson, 1994; GAFEEP, 1995). However, the literature is scarce on how organizational cultures and individual employees in the privatized companies are affected by this change. The objective of this paper is to assess the impact of privatization on the human element. More specifically, this study is based on the premise that privatization unleashes a major change process in the companies' internal organization, with the objective of increasing effectiveness, efficiency and shareholder's value, ultimately leading to a change in the corporate culture. This major change process has an impact on employee wellbeing, since it is associated with increased uncertainty, and therefore produces increased perceptions of The research register for this journal is available at http://www.emeraldinsight.com/researchregisters The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/0268-3946.htm The first author gratefully acknowledges the financial support of Junta Nacional de Investigac Ëa Äo Cientõ Âfica e Technolo Âgica, JNICT, Portgual.