Role of strategic investors in Polish companies: Catalysts for organizational change or opportunists?

The entry of large activist (or so-called 'strategic') investors has become a prevalent phenomenon in transforming economies, such as the Polish one. This paper investigates the relationship between firm performance and the likelihood of a strategic investor entry, as well as the changes firms undergo under control of an activist investor. Theoretical predictions and empirical analyses of 211 Polish companies in the period of 1994-2000 allow us to conclude that strategic investors are more likely to buy stakes in firms of higher labor productivity, and tend to catalyze changes in poorly performing firms. There is also some evidence that investors refrain from committing resources to restructuring the target firms before seizing significant control over them. European Management Review (2004) 1,145-156, advance online publication, 26 November 2004 doi: 10.1057/palgrave.emr.1500019