Ž . Intern. J. of Research in Marketing 15 1998 367–381 The effects of privatization on marketing capability and activity in Poland David Shipley a , Graham Hooley b, ) , Tony Cox b , Krzysztof Fonfara c a The Business School, Trinity College, UniÕersity of Dublin, Dublin, Ireland b Aston Business School, Aston UniÕersity, Birmingham, B4 7ET, England, UK c Weilkopolska Business School, UniÕersity of Economics, Poznan, Poland Received 6 February 1995; accepted 12 March 1998 Abstract Privatization has been a major element of reform in Central and Eastern Europe, however its effects on firm marketing capability and performance are unclear. This study tests a number of hypotheses concerning the effects of privatization on marketing capability, activities and performance in Poland. The main conclusions are that privatization leads to enhanced marketing capability, to more pro-active marketing activities, such as the adoption of longer term priorities, to an emphasis on delivering superior quality to customers and to more active new product development. On both financial and market-based criteria, the privatized firms are seen to outperform their state-owned counterparts. q 1998 Elsevier Science B.V. All rights reserved. Keywords: Marketing capability; Privatization 1. Introduction Conventional wisdom holds that the privatization of industry is necessary for a successful transition from central planning to the free market in Central Ž and Eastern Europe Arendarski et al., 1994; Buck- ley and Ghauri, 1994; Estrin, 1994a; Ewing et al., 1993; Hare, 1994; Krawczyk and Lopez-Lopez, . 1993 . Under the former socialist system, excess demand was endemic and state-planned industrial policies centred on the achievement of production Ž . targets by protected state-owned enterprises SOEs . ) Corresponding author. Tel.: q44-121-359-3611; fax: q44- 121-333-4313; e-mail: g.j.hooley@aston.ac.uk. Conversely, it is expected that liberalization and privatization will engender radical shifts in company orientations, practices and performances and, through these, major long-term improvements in national in- Ž come and economic well-being Hare, 1993; Healey, 1994; Naor, 1994; Tovias, 1994; Estrin, 1994a; . Lieberman, 1993 . Indeed, the destinies of many countries in Central and Eastern Europe are currently dependent on the realization of these expected out- comes. The reforms have already facilitated free trade with attractive Western countries and incen- tivised Western foreign direct investment to enhance transfers of capital, technology, managerial expertise Ž and labour skills Frydman et al., 1993; Glowacki, 1991; Lyles and Baird, 1994; Neimans, 1993; Wright . et al., 1993 . 0167-8116r98r$19.00 q 1998 Elsevier Science B.V. All rights reserved. Ž . PII: S0167-8116 98 00005-6