Struggling to survive: A case study of adjustment at a Russian enterprise

Europe - Asia Studies

Volumn 50, Issue 1, 1998, Pages 91-119

  Hendley, Kathryn ^a  

^a UNIVERSITY OF WISCONSIN MADISON   (United States)

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[No Author keywords available]

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EID: 0002550771     PISSN: 09668136     EISSN: None     Source Type: Journal    
DOI: 10.1080/09668139808412525     Document Type: Article

References (152)

1. See Anders Aslund, How Russia Became a Market Economy (Washington, DC, Brookings Institution, 1995). For a less sanguine view of Russian privatisation, see Igor Birman, 'Gloomy Prospects for the Russian Economy', Europe-Asia Studies, 48, 5, 1996, pp. 735-743.
2. See Anders Aslund, How Russia Became a Market Economy (Washington, DC, Brookings Institution, 1995). For a less sanguine view of Russian privatisation, see Igor Birman, 'Gloomy Prospects for the Russian Economy', Europe-Asia Studies, 48, 5, 1996, pp. 735-743.
3. Some economists question the success of macroeconomic stabilisation in Russia. E.g. Stefan Hedlund & Niclas Sundstrom, 'The Russian Economy after Systemic Change', Europe-Asia Studies, 48, 6, 1996, pp. 887-914.
4. E.g. Joseph R. Blasi, Maya Kroumova & Douglas Kruse, Kremlin Capitalism: Privatizing the Russian Economy (Ithaca, Cornell University Press, 1997); Aslund, How Russia Became a Market Economy, pp. 232-224, 269-271 ; Joseph Blasi & Andrei Shleifer, 'Corporate Governance in Russia: An Initial Look', in Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia: Insiders and the State (Budapest, Central European University Press, 1996), pp. 62-77; Maxim Boycko & Andrei Shleifer, 'Next Steps in Privatization: Six Major Challenges', in Ira W. Lieberman & John Nellis (eds), Russia: Creating Private Enterprises and Efficient Markets (Washington, DC, World Bank, 1995), pp. 76-78.
5. E.g. Joseph R. Blasi, Maya Kroumova & Douglas Kruse, Kremlin Capitalism: Privatizing the Russian Economy (Ithaca, Cornell University Press, 1997); Aslund, How Russia Became a Market Economy, pp. 232-224, 269-271 ; Joseph Blasi & Andrei Shleifer, 'Corporate Governance in Russia: An Initial Look', in Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia: Insiders and the State (Budapest, Central European University Press, 1996), pp. 62-77; Maxim Boycko & Andrei Shleifer, 'Next Steps in Privatization: Six Major Challenges', in Ira W. Lieberman & John Nellis (eds), Russia: Creating Private Enterprises and Efficient Markets (Washington, DC, World Bank, 1995), pp. 76-78.
6. E.g. Joseph R. Blasi, Maya Kroumova & Douglas Kruse, Kremlin Capitalism: Privatizing the Russian Economy (Ithaca, Cornell University Press, 1997); Aslund, How Russia Became a Market Economy, pp. 232-224, 269-271 ; Joseph Blasi & Andrei Shleifer, 'Corporate Governance in Russia: An Initial Look', in Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia: Insiders and the State (Budapest, Central European University Press, 1996), pp. 62-77; Maxim Boycko & Andrei Shleifer, 'Next Steps in Privatization: Six Major Challenges', in Ira W. Lieberman & John Nellis (eds), Russia: Creating Private Enterprises and Efficient Markets (Washington, DC, World Bank, 1995), pp. 76-78.
7. E.g. Joseph R. Blasi, Maya Kroumova & Douglas Kruse, Kremlin Capitalism: Privatizing the Russian Economy (Ithaca, Cornell University Press, 1997); Aslund, How Russia Became a Market Economy, pp. 232-224, 269-271 ; Joseph Blasi & Andrei Shleifer, 'Corporate Governance in Russia: An Initial Look', in Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia: Insiders and the State (Budapest, Central European University Press, 1996), pp. 62-77; Maxim Boycko & Andrei Shleifer, 'Next Steps in Privatization: Six Major Challenges', in Ira W. Lieberman & John Nellis (eds), Russia: Creating Private Enterprises and Efficient Markets (Washington, DC, World Bank, 1995), pp. 76-78.
8. Blasi et al., Kremlin Capitalism, p. 179.
9. E.g. Barry W. Ickes & Randi Ryterman; 'Roadblock to Economic Reform: InterEnterprise Debt and the Transition to Markets', Post-Soviet Affairs, 9, 3, 1993, pp. 231-252: Simon Commander. Qimiao Fan & Mark E. Schaffer (eds), Enterprise Restructuring and Economic Policy in Russia (Washington, DC, The World Bank, 1996); Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia (Washington, DC: The World Bank, 1996); Blasi et al. Kremlin Capitalism.
10. E.g. Barry W. Ickes & Randi Ryterman; 'Roadblock to Economic Reform: InterEnterprise Debt and the Transition to Markets', Post-Soviet Affairs, 9, 3, 1993, pp. 231-252: Simon Commander. Qimiao Fan & Mark E. Schaffer (eds), Enterprise Restructuring and Economic Policy in Russia (Washington, DC, The World Bank, 1996); Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia (Washington, DC: The World Bank, 1996); Blasi et al. Kremlin Capitalism.
11. E.g. Barry W. Ickes & Randi Ryterman; 'Roadblock to Economic Reform: InterEnterprise Debt and the Transition to Markets', Post-Soviet Affairs, 9, 3, 1993, pp. 231-252: Simon Commander. Qimiao Fan & Mark E. Schaffer (eds), Enterprise Restructuring and Economic Policy in Russia (Washington, DC, The World Bank, 1996); Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia (Washington, DC: The World Bank, 1996); Blasi et al. Kremlin Capitalism.
12. E.g. Barry W. Ickes & Randi Ryterman; 'Roadblock to Economic Reform: InterEnterprise Debt and the Transition to Markets', Post-Soviet Affairs, 9, 3, 1993, pp. 231-252: Simon Commander. Qimiao Fan & Mark E. Schaffer (eds), Enterprise Restructuring and Economic Policy in Russia (Washington, DC, The World Bank, 1996); Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia (Washington, DC: The World Bank, 1996); Blasi et al. Kremlin Capitalism.
13. Other Western scholars have written about SAZ. My work can be distinguished because it is based on long-term sustained contact with, and field research at, SAZ. In 1992 I spent two weeks at SAZ in January as part of a delegation from Stanford University, and in March I participated in a one-week seminar for SAZ managers held near Washington DC. In 1993 I spent March-May in Saratov. The general director then visited Madison WI for a week in September, and I spent much of November in Saratov. In 1994 I was in Saratov for two weeks in March and, from June through November, spent much of my time in Saratov. In 1995 I spent the summer in Saratov and met the general director in Moscow in November. In 1996 I spent a week in Saratov in March and returned for several weeks in June. In 1997 I spent most of April in Saratov. My time at SAZ has been spent talking with managers at all levels, attending meetings of managers (including board of directors meetings and annual shareholders' meetings), and reviewing corporate documents, contracts and copies of the in-house newspaper. While not in Saratov, I have kept in close contact with SAZ through telephone conversations and telex, fax and e-mail communication. The authors of some of the other 'case studies' had not conducted independent research at the plant, e.g. Philippe Aghion, Olivier Blanchard & Robin Burgess, 'The Behaviour of State Firms in Eastern Europe, Pre-Privatization', European Economic Review, 38, 6, 1994. pp. 1327-1349. Still others have based their conclusions on brief visits to the plant in the early years of the transition, with no follow-up investigation of subsequent changes, e.g. John A. Battilega, 'A Case Study of Russian Defense Conversion and Employee Ownership', in Michael McFaul & Tova Perlmutter (eds), Privatization, Conversion, and Enterprise Reform in Russia. (Boulder, Westview Press, 1995), pp. 169-188; David Binns, 'Combining Defense Conversion and Privatization: The Saratov Aviation Plant', in John Logue, Sergey Plekhanov & John Simmons (eds), Transforming Russian Enterprises: From State Control to Employee Ownership (Westport, CT, Greenwood Press, 1995); Michael McFaul, 'The Allocation of Property Rights in Russia: The First Round', Communist and Post-Communist Studies, 29, 3, 1996, pp. 295-297.
14. Other Western scholars have written about SAZ. My work can be distinguished because it is based on long-term sustained contact with, and field research at, SAZ. In 1992 I spent two weeks at SAZ in January as part of a delegation from Stanford University, and in March I participated in a one-week seminar for SAZ managers held near Washington DC. In 1993 I spent March-May in Saratov. The general director then visited Madison WI for a week in September, and I spent much of November in Saratov. In 1994 I was in Saratov for two weeks in March and, from June through November, spent much of my time in Saratov. In 1995 I spent the summer in Saratov and met the general director in Moscow in November. In 1996 I spent a week in Saratov in March and returned for several weeks in June. In 1997 I spent most of April in Saratov. My time at SAZ has been spent talking with managers at all levels, attending meetings of managers (including board of directors meetings and annual shareholders' meetings), and reviewing corporate documents, contracts and copies of the in-house newspaper. While not in Saratov, I have kept in close contact with SAZ through telephone conversations and telex, fax and e-mail communication. The authors of some of the other 'case studies' had not conducted independent research at the plant, e.g. Philippe Aghion, Olivier Blanchard & Robin Burgess, 'The Behaviour of State Firms in Eastern Europe, Pre-Privatization', European Economic Review, 38, 6, 1994. pp. 1327-1349. Still others have based their conclusions on brief visits to the plant in the early years of the transition, with no follow-up investigation of subsequent changes, e.g. John A. Battilega, 'A Case Study of Russian Defense Conversion and Employee Ownership', in Michael McFaul & Tova Perlmutter (eds), Privatization, Conversion, and Enterprise Reform in Russia. (Boulder, Westview Press, 1995), pp. 169-188; David Binns, 'Combining Defense Conversion and Privatization: The Saratov Aviation Plant', in John Logue, Sergey Plekhanov & John Simmons (eds), Transforming Russian Enterprises: From State Control to Employee Ownership (Westport, CT, Greenwood Press, 1995); Michael McFaul, 'The Allocation of Property Rights in Russia: The First Round', Communist and Post-Communist Studies, 29, 3, 1996, pp. 295-297.
15. Other Western scholars have written about SAZ. My work can be distinguished because it is based on long-term sustained contact with, and field research at, SAZ. In 1992 I spent two weeks at SAZ in January as part of a delegation from Stanford University, and in March I participated in a one-week seminar for SAZ managers held near Washington DC. In 1993 I spent March-May in Saratov. The general director then visited Madison WI for a week in September, and I spent much of November in Saratov. In 1994 I was in Saratov for two weeks in March and, from June through November, spent much of my time in Saratov. In 1995 I spent the summer in Saratov and met the general director in Moscow in November. In 1996 I spent a week in Saratov in March and returned for several weeks in June. In 1997 I spent most of April in Saratov. My time at SAZ has been spent talking with managers at all levels, attending meetings of managers (including board of directors meetings and annual shareholders' meetings), and reviewing corporate documents, contracts and copies of the in-house newspaper. While not in Saratov, I have kept in close contact with SAZ through telephone conversations and telex, fax and e-mail communication. The authors of some of the other 'case studies' had not conducted independent research at the plant, e.g. Philippe Aghion, Olivier Blanchard & Robin Burgess, 'The Behaviour of State Firms in Eastern Europe, Pre-Privatization', European Economic Review, 38, 6, 1994. pp. 1327-1349. Still others have based their conclusions on brief visits to the plant in the early years of the transition, with no follow-up investigation of subsequent changes, e.g. John A. Battilega, 'A Case Study of Russian Defense Conversion and Employee Ownership', in Michael McFaul & Tova Perlmutter (eds), Privatization, Conversion, and Enterprise Reform in Russia. (Boulder, Westview Press, 1995), pp. 169-188; David Binns, 'Combining Defense Conversion and Privatization: The Saratov Aviation Plant', in John Logue, Sergey Plekhanov & John Simmons (eds), Transforming Russian Enterprises: From State Control to Employee Ownership (Westport, CT, Greenwood Press, 1995); Michael McFaul, 'The Allocation of Property Rights in Russia: The First Round', Communist and Post-Communist Studies, 29, 3, 1996, pp. 295-297.
16. Other Western scholars have written about SAZ. My work can be distinguished because it is based on long-term sustained contact with, and field research at, SAZ. In 1992 I spent two weeks at SAZ in January as part of a delegation from Stanford University, and in March I participated in a one-week seminar for SAZ managers held near Washington DC. In 1993 I spent March-May in Saratov. The general director then visited Madison WI for a week in September, and I spent much of November in Saratov. In 1994 I was in Saratov for two weeks in March and, from June through November, spent much of my time in Saratov. In 1995 I spent the summer in Saratov and met the general director in Moscow in November. In 1996 I spent a week in Saratov in March and returned for several weeks in June. In 1997 I spent most of April in Saratov. My time at SAZ has been spent talking with managers at all levels, attending meetings of managers (including board of directors meetings and annual shareholders' meetings), and reviewing corporate documents, contracts and copies of the in-house newspaper. While not in Saratov, I have kept in close contact with SAZ through telephone conversations and telex, fax and e-mail communication. The authors of some of the other 'case studies' had not conducted independent research at the plant, e.g. Philippe Aghion, Olivier Blanchard & Robin Burgess, 'The Behaviour of State Firms in Eastern Europe, Pre-Privatization', European Economic Review, 38, 6, 1994. pp. 1327-1349. Still others have based their conclusions on brief visits to the plant in the early years of the transition, with no follow-up investigation of subsequent changes, e.g. John A. Battilega, 'A Case Study of Russian Defense Conversion and Employee Ownership', in Michael McFaul & Tova Perlmutter (eds), Privatization, Conversion, and Enterprise Reform in Russia. (Boulder, Westview Press, 1995), pp. 169-188; David Binns, 'Combining Defense Conversion and Privatization: The Saratov Aviation Plant', in John Logue, Sergey Plekhanov & John Simmons (eds), Transforming Russian Enterprises: From State Control to Employee Ownership (Westport, CT, Greenwood Press, 1995); Michael McFaul, 'The Allocation of Property Rights in Russia: The First Round', Communist and Post-Communist Studies, 29, 3, 1996, pp. 295-297.
17. See Krylatye gody: ocherki istorii Saratovskogo aviatsionnogo zavoda (Saratov, 1981).
18. 'Mozhesh' sdelat' bol'she - delai', Ekonomika i zhizn', 1991, 16, reprinted in Aviastroitel', 29 April 1991, p. 2 (in-house SAZ newspaper); Aleksandr Kislov, 'Chto khuzhe - bez poluchki ili bez raboty', Izvestiya, 30 January 1996, p. 2.
19. 'Mozhesh' sdelat' bol'she - delai', Ekonomika i zhizn', 1991, 16, reprinted in Aviastroitel', 29 April 1991, p. 2 (in-house SAZ newspaper); Aleksandr Kislov, 'Chto khuzhe - bez poluchki ili bez raboty', Izvestiya, 30 January 1996, p. 2.
20. 'Mozhesh' sdelat' bol'she - delai', Ekonomika i zhizn', 1991, 16, reprinted in Aviastroitel', 29 April 1991, p. 2 (in-house SAZ newspaper); Aleksandr Kislov, 'Chto khuzhe - bez poluchki ili bez raboty', Izvestiya, 30 January 1996, p. 2.
21. SAZ management first presented its ideas about privatisation (or de-statisation) to the then Prime Minister, N. I. Ryzhkov. at the XXVIII Party Congress during the summer of 1990. Ryzhkov subsequently visited SAZ at the end of July 1990. See generally Kathryn Hendley, 'Legal Development and Privatization in Russia: A Case Study'. Soviet Economy, 8, 2, 1992, pp. 130-152.
22. The Aviation Ministry had a sub-unit, known as AviaEksport, which handled all sales abroad of Russian planes. SAZ had a relationship with AviaEksport, but was not permitted to maintain a continuing relationship with the buyers of its planes.
23. The 1995 joint-stock company law attempts to limit closed joint-stock companies to entities with less than 50 shareholders. But article 94-4 of this law provides that closed joint-stock companies that were formed prior to this law and that have more than 50 shareholders are entitled to retain their status as closed joint-stock companies. M. Yu Tikhomerov (ed.), Kommentarii k Federal'nomu zakonu ob aktsionernykh obshchestvakh (Moscow, 1996), pp. 364-368. See also 'Ob aktsionemykh obshchestvakh', Sobranie zakonodatel' stva RF, 1996, 1, art. 1.
24. The 1995 joint-stock company law attempts to limit closed joint-stock companies to entities with less than 50 shareholders. But article 94-4 of this law provides that closed joint-stock companies that were formed prior to this law and that have more than 50 shareholders are entitled to retain their status as closed joint-stock companies. M. Yu Tikhomerov (ed.), Kommentarii k Federal'nomu zakonu ob aktsionernykh obshchestvakh (Moscow, 1996), pp. 364-368. See also 'Ob aktsionemykh obshchestvakh', Sobranie zakonodatel' stva RF, 1996, 1, art. 1.
25. During the five years of my case study only two top level managers - deputy directors (zamestitel' direktora)- have left. On the surface, both departures were voluntary. Both were replaced through promotions from within rather than by bringing in an outsider.
26. For a critique of closed joint-stock companies, see Maxim Boycko, Andrei Shleifer & Robert Vishny, Privatizing Russia (Cambridge, MA, MIT Press, 1995), pp. 75-77.
27. SAZ initially took the corporate form of a 'collective enterprise' (kollektivnoe predpriyatie). This was a property form recognised by Soviet but not by Russian property laws. When the Soviet Union ceased to exist, SAZ had to assume a corporate form recognised under Russian law. It first became a limited liability company (tovarishchestvo s ogranichennoi otvetstvennost'yu) and then a closed joint-stock company. See Hendley, 'Legal Development and Privatization'.
28. SEPO (Saratov Electromechanical Production Organisation), the other Saratov plant that was privatised in the same way and, in fact, was covered by the same governmental decree, diverged from SAZ at this point and became an open joint-stock company. For additional background on SEPO, see Clifford G. Gaddy, The Price of the Past: Russia's Struggle with the Legacy of a Militarized Economy (Washington, DC, Brookings Institution, 1996), pp. 131-147.
29. The non-SAZ workers who have been approved as stockholders include an official of the Saratov bank where SAZ maintains its primary account, the chief designer of the Yakovlev Design Bureau in Moscow, officials of Moscow marketing firms that handle SAZ's account, and an American business consultant.
30. Initially, the chairman of the board of directors was limited to 0.2% of the total outstanding shares and other members of the board were limited to 0.15%. In 1994 the shareholders approved an amendment to the charter that increased the percentages to 2.4 and 1.8 respectively. Prior to the 1995 annual shareholders' meeting the amounts owned by the board were disclosed. The average ownership was 0.76%. These restrictions were eliminated when the charter was rewritten in 1996 in response to the new joint-stock company law.
31. From a comparative perspective, the level of ownership by top-level SAZ officials was rather low. In a December 1993 survey Blasi & Shleifer found that top management owned on average 8.6% of outstanding stock. All insiders owned on average 65%. See 'Corporate Governance', p. 80.
32. See John S. Earle & Saul Estrin, 'Employee Ownership in Transition', in Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia: Insiders and the State (Budapest, Central European University Press, 1996), pp. 1-61; Joseph Blasi, with Darya Panina & Katerina Grachova, 'Ownership, Governance, and Restructuring', in Ira W. Lieberman & John Nellis (eds), Russia: Creating Private Enterprises and Efficient Markets (Washington, DC, The World Bank, 1995), pp. 125-139. The lines of authority among the shareholders, the board of directors and management are never as clear in practice as they appear in the law. See Mark J. Roe, Strong Managers, Weak Owners: The Political Roots of American Corporate Finance (Princeton, Princeton University Press, 1994).
33. See John S. Earle & Saul Estrin, 'Employee Ownership in Transition', in Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia: Insiders and the State (Budapest, Central European University Press, 1996), pp. 1-61; Joseph Blasi, with Darya Panina & Katerina Grachova, 'Ownership, Governance, and Restructuring', in Ira W. Lieberman & John Nellis (eds), Russia: Creating Private Enterprises and Efficient Markets (Washington, DC, The World Bank, 1995), pp. 125-139. The lines of authority among the shareholders, the board of directors and management are never as clear in practice as they appear in the law. See Mark J. Roe, Strong Managers, Weak Owners: The Political Roots of American Corporate Finance (Princeton, Princeton University Press, 1994).
34. See John S. Earle & Saul Estrin, 'Employee Ownership in Transition', in Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia: Insiders and the State (Budapest, Central European University Press, 1996), pp. 1-61; Joseph Blasi, with Darya Panina & Katerina Grachova, 'Ownership, Governance, and Restructuring', in Ira W. Lieberman & John Nellis (eds), Russia: Creating Private Enterprises and Efficient Markets (Washington, DC, The World Bank, 1995), pp. 125-139. The lines of authority among the shareholders, the board of directors and management are never as clear in practice as they appear in the law. See Mark J. Roe, Strong Managers, Weak Owners: The Political Roots of American Corporate Finance (Princeton, Princeton University Press, 1994).
35. See Michael Useem, Executive Defense: Shareholder Power & Corporate Reorganization (Cambridge, MA, Harvard University Press, 1993) pp. 182-189, 201-206. Useem documents that, in the 10 largest leveraged buyouts from 1986 to 1988. the representation of outsiders on the board actually decreased following the takeovers (p. 184). This indicates that the correlation between outsider ownership and outsider representation on the board is not automatic.
36. When the joint-stock company was created in 1993 the chairman of the trade union committee tried to have one seat on the board reserved for a worker representative (such as himself). This effort failed. The board has been true to its stated purpose of exercising management functions.
37. This firm (Dakono-Air) had been instrumental in the leasing of Yak-42s in new markets, such as Cuba, Peru, Iran, Pakistan and the Philippines, as a means of stimulating demand.
38. Alfred D. Chandler, Jr, Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge, MA, Harvard University Press, 1990), pp. 33, 49, 85; John R. Hall, 'The Ideal Director ...,' Across the Board, July/August 1995, pp. 53-55.
39. Alfred D. Chandler, Jr, Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge, MA, Harvard University Press, 1990), pp. 33, 49, 85; John R. Hall, 'The Ideal Director ...,' Across the Board, July/August 1995, pp. 53-55.
40. An important barrier was overcome in 1997 with the election of a woman to the board. Women are barely represented in the upper ranks of SAZ management. None of its deputy directors has ever been a woman. This female pioneer on the board is responsible for SAZ's internal bank, and is presently working to create a semi-independent bank on the premises of SAZ.
41. The general director began his work life at SAZ and progressed rather swiftly through the ranks of management. With the exception of one year as an instructor for the ablast' Communist Party organisation in the early 1980s, and 1985-86, when he worked at another Saratov enterprise, he has spent his entire career at SAZ.
42. Laurie Hays, 'Russian Plant Weans Itself From Military: Consumer Goods, Airliners Spell Success for Saratov', Wall Street Journal, 5 January 1993, p. A10; Michael McFaul, 'The Allocation of Property Rights in Russia: The First Round', Communist and Post-Communist Studies, 29, 3, 1996, pp. 295-297. Journals geared to foreign investors also portrayed him as market-oriented, e.g. 'Alexandr Yermishin: An Unidentified Flying Opportunist', Delovye lyudi, May 1993, pp. 76-78.
43. Laurie Hays, 'Russian Plant Weans Itself From Military: Consumer Goods, Airliners Spell Success for Saratov', Wall Street Journal, 5 January 1993, p. A10; Michael McFaul, 'The Allocation of Property Rights in Russia: The First Round', Communist and Post-Communist Studies, 29, 3, 1996, pp. 295-297. Journals geared to foreign investors also portrayed him as market-oriented, e.g. 'Alexandr Yermishin: An Unidentified Flying Opportunist', Delovye lyudi, May 1993, pp. 76-78.
44. Laurie Hays, 'Russian Plant Weans Itself From Military: Consumer Goods, Airliners Spell Success for Saratov', Wall Street Journal, 5 January 1993, p. A10; Michael McFaul, 'The Allocation of Property Rights in Russia: The First Round', Communist and Post-Communist Studies, 29, 3, 1996, pp. 295-297. Journals geared to foreign investors also portrayed him as market-oriented, e.g. 'Alexandr Yermishin: An Unidentified Flying Opportunist', Delovye lyudi, May 1993, pp. 76-78.
45. For example, in a report broadcast on the nightly television news programme 'Vremya' soon after the first round of the presidential election in June 1996, a SAZ worker said that he believed that the general director had been working energetically for the election of the Communist Party candidate, Zyuganov. Empirically, this statement was incorrect, but the existence of such a belief among SAZ workers demonstrates that the general director does not enjoy the reputation of democratic reformer among locals that he does among many Western observers.
46. See generally Joseph S. Berliner, Factory and Manager in the USSR (Cambridge, MA, Harvard University Press, 1957); Michael Burawoy & Kathryn Hendley, 'Between Perestroika and Privatisation: Divided Strategies and Political Crisis in a Soviet Enterprise', Soviet Studies, 44, 3, 1992, pp. 371-402.
47. See generally Joseph S. Berliner, Factory and Manager in the USSR (Cambridge, MA, Harvard University Press, 1957); Michael Burawoy & Kathryn Hendley, 'Between Perestroika and Privatisation: Divided Strategies and Political Crisis in a Soviet Enterprise', Soviet Studies, 44, 3, 1992, pp. 371-402.
48. 'Mozhesh' sdelat' bol' she - delai', Ekonomika i zhizn', 1991, 16, reprinted in Aviastroitel', 29 April 1991, p. 2.
49. 'Mozhesh' sdelat' bol' she - delai', Ekonomika i zhizn', 1991, 16, reprinted in Aviastroitel', 29 April 1991, p. 2.
50. Through 1993, in interviews published in the SAZ newspaper, the general director and his subordinates continued to insist that the economic difficulties being experienced would not require either reducing the five-day work week or laying off workers. Lay-offs did not begin in earnest until the summer of 1994.
51. This September 1995 incident is discussed in more detail below in the analysis of SAZ's efforts at depoliticisation.
52. Until December 1995 the governor of Saratov ablast' was Yu. Belykh. According to political insiders in Saratov, El'tsin dismissed Belykh as a result of his dissatisfaction with the results of the elections for the State Duma held in December 1995. In April 1996 El'tsin appointed D. F. Ayatskov to serve as governor. He won popular election in September 1996.
53. E.g. K. Agababyan, 'U zavoda "vyrastut kryl'ya" tol'ko pod krylom gosudarstva', Saratovskie vesti, 18 June 1996, p. 2; Tat'yana Borisova, 'Gosudarstvu pod krylo - tam i sukho i teplo', Saratov, 15 June 1996, p. 2.
54. E.g. K. Agababyan, 'U zavoda "vyrastut kryl'ya" tol'ko pod krylom gosudarstva', Saratovskie vesti, 18 June 1996, p. 2; Tat'yana Borisova, 'Gosudarstvu pod krylo - tam i sukho i teplo', Saratov, 15 June 1996, p. 2.
55. In particular, he declined an invitation to speak at a seminar at the research division of the World Bank in the late autumn of 1995, even though that trip would have given him an opportunity to network with both Bank officials and potential business partners. In 1992 and 1993, by contrast, he visited the United States several times for academic conferences that held out little promise of acquainting him with potential investors.
56. High levels of ownership by workers were common among privatised Russian enterprises. See Aslund, How Russia Became a Market Economy, pp. 230-244.
57. Art. 66-2, Ob aktsionernykh obshchestvakh'.
58. On the definition of 'depoliticisation' and its critical role in reform, see Boycko et al., Privatizing Russia, pp. 10-11, 64, 125-131.
59. At his August 1996 press conference the general director commented that 'Even if the residential quarters are taken away from me - 50,000 people live there - when something breaks down in their homes, they come to me. They have developed this habit'. 'Press Conference Regarding the Russian Aircraft Industry', Official Kremlin International News Broadcast, 5 August 1996.
60. On the legal ramifications of the instability of Aeroflot, see Piotr Siemion, Ownership Transformations in Eastern Europe: The Case of National Air Carriers', Parker School Journal of East European Law, 3, 4-5, 1996, pp. 519-540.
61. For example, SAZ bartered planes to the Smolensk plant that manufactured the wings, and to the Zaporozhe plant that supplies the engines for the Yak-42. Other planes have gone to Gazprom and to the Balakovskii atomic energy plant pursuant to barter arrangements. Barter has been a constant fact of life for SAZ, both before and after privatisation.
62. Janos Kornai, 'The Soft Budget Constraint', Kyklos, 39, 1, 1986.
63. Simon Commander, Une J. Lee & Andrei Tolstopiatenko, 'Social Benefits and the Russian Industrial Firm', in Simon Commander, Qimiao Fan & Mark E. Schaffer (eds), Enterprise Restructuring and Economic Policy in Russia (Washington, DC, The World Bank, 1996). pp. 5-6, comment on the opaque character of subsidies in the post-Soviet era and the consequent difficulty of documentation.
64. See D. Lomov, 'Taina Angara 18', Zarya molodezhi, 27 November 1996, p. 4; Elena Ardibatskaya & Dmitrii Lomov, 'Russkaya "letayushchaya tarelka" pikiruet na Vashington?', Komsomol'skaya pravda, 16 January 1997, p. 2.
65. See D. Lomov, 'Taina Angara 18', Zarya molodezhi, 27 November 1996, p. 4; Elena Ardibatskaya & Dmitrii Lomov, 'Russkaya "letayushchaya tarelka" pikiruet na Vashington?', Komsomol'skaya pravda, 16 January 1997, p. 2.
66. E.g. 'Sovmestnymi usiliyami - k stabilizatsii proizvodstva', Aviastroitel', 22 January 1997, p. 3; 'Press Conference Regarding the Russian Aircraft Industry'. Official Kremlin International News Broadcast, 5 August 1996.
67. E.g. 'Sovmestnymi usiliyami - k stabilizatsii proizvodstva', Aviastroitel', 22 January 1997, p. 3; 'Press Conference Regarding the Russian Aircraft Industry'. Official Kremlin International News Broadcast, 5 August 1996.
68. See Nikolai Novichkov, 'Korporatsiya 'Yak' namerena integrirovat'sya v evropeiskuyu aviapromyshlennost', Segodnya, 16 July 1996, p. 2.
69. Erin Arvedlund, 'Industry Chief Opposes Fokker Guarantees', The Moscow Times, 6 August 1996. See generally, Aleksei Orlov, 'Pochem "Fokkery" dlya naroda', Nezavisimaya gazeta, 2 August 1996, p. 6.
70. Erin Arvedlund, 'Industry Chief Opposes Fokker Guarantees', The Moscow Times, 6 August 1996. See generally, Aleksei Orlov, 'Pochem "Fokkery" dlya naroda', Nezavisimaya gazeta, 2 August 1996, p. 6.
71. Mikhail Zimin, 'Pervym delom samolety', Itogi, 10 October 1996, p. 24.
72. E.g. Nikolai Manvelov, 'Rynochnye otnosheniya ne meshayut SAZu vypuskat' samolety', Kapital, August 1996, p. 14; see generally 'Im Stalin dal stal'nye ruki-kryl'ya, a Chernomyrdin - plamennyi privet', Delovye lyudi, January 1997, p. 44.
73. E.g. Nikolai Manvelov, 'Rynochnye otnosheniya ne meshayut SAZu vypuskat' samolety', Kapital, August 1996, p. 14; see generally 'Im Stalin dal stal'nye ruki-kryl'ya, a Chernomyrdin - plamennyi privet', Delovye lyudi, January 1997, p. 44.
74. E.g. Vera Postnova, 'Rukovodstvo respublikoi nedovol'no Aeroflotom', Nezavisimaya gazeta, 19 September 1996, p. 3; Vladimir Babenkov, 'Kuda nesut kryl'ya "Boinga" ', Rossiiskaya gazeta, 27 September 1996, pp. 1-2; Vladimir Kandryshev, 'Aleksandr Polyakov: "Nadezhda Aviastara" - v lobbirovanii rynka', Otkrytaya gazeta, 10, November 1996, p. 5.
75. E.g. Vera Postnova, 'Rukovodstvo respublikoi nedovol'no Aeroflotom', Nezavisimaya gazeta, 19 September 1996, p. 3; Vladimir Babenkov, 'Kuda nesut kryl'ya "Boinga" ', Rossiiskaya gazeta, 27 September 1996, pp. 1-2; Vladimir Kandryshev, 'Aleksandr Polyakov: "Nadezhda Aviastara" - v lobbirovanii rynka', Otkrytaya gazeta, 10, November 1996, p. 5.
76. E.g. Vera Postnova, 'Rukovodstvo respublikoi nedovol'no Aeroflotom', Nezavisimaya gazeta, 19 September 1996, p. 3; Vladimir Babenkov, 'Kuda nesut kryl'ya "Boinga" ', Rossiiskaya gazeta, 27 September 1996, pp. 1-2; Vladimir Kandryshev, 'Aleksandr Polyakov: "Nadezhda Aviastara" - v lobbirovanii rynka', Otkrytaya gazeta, 10, November 1996, p. 5.
77. Igor' Chernyak, 'Shaposhnikov zapuskaet planer', Delovoi vtornik, 17 December 1996, p. 2. The Russian government subsequently issued a decree outlining its financial support for this plane. 'Postanovlenie Pravitel'stva Rossiiskoi Federatsii, "O merakh gosudarstvennoi podderzhki proizvodstva samoletov Il-96 M/T", Rossiiskaya gazeta, 25 February 1997, p. 4. Production began in April 1997. 'V Voronezhe nachato seriinoe proizvodstvo avialainerov Il-96', Segodnya, 29 April 1997, p. 4.
78. Igor' Chernyak, 'Shaposhnikov zapuskaet planer', Delovoi vtornik, 17 December 1996, p. 2. The Russian government subsequently issued a decree outlining its financial support for this plane. 'Postanovlenie Pravitel'stva Rossiiskoi Federatsii, "O merakh gosudarstvennoi podderzhki proizvodstva samoletov Il-96 M/T", Rossiiskaya gazeta, 25 February 1997, p. 4. Production began in April 1997. 'V Voronezhe nachato seriinoe proizvodstvo avialainerov Il-96', Segodnya, 29 April 1997, p. 4.
79. Igor' Chernyak, 'Shaposhnikov zapuskaet planer', Delovoi vtornik, 17 December 1996, p. 2. The Russian government subsequently issued a decree outlining its financial support for this plane. 'Postanovlenie Pravitel'stva Rossiiskoi Federatsii, "O merakh gosudarstvennoi podderzhki proizvodstva samoletov Il-96 M/T", Rossiiskaya gazeta, 25 February 1997, p. 4. Production began in April 1997. 'V Voronezhe nachato seriinoe proizvodstvo avialainerov Il-96', Segodnya, 29 April 1997, p. 4.
80. Sometimes payment problems became apparent only after delivery. SAZ contemplated repossessing two Yak-42s that had been sold to Kazakhstan in 1994 owing to non-payment. In June 1996 the Kazakh government still owed SAZ $2.4 million. Nine months later, in March 1997, the debt had only been reduced by $100 000. The legal mechanisms for recovering debts from CIS countries had not been completely worked out. The option of requiring 100% prepayment, which many Russian enterprises resorted to during this period, was not feasible owing to the high price of planes. Other aviation plants faced similar problems. E.g. Mikhail Birin, 'Chinovniki vysokogo poleta riskuyut: Dva samoleta pravitel'stvennoi aviakompanii derzhatsya v vozdukhe na "chestnom slove"', Vek, 1996, 45, p. 2.
81. For an analysis of the underlying reasoning, see Kathryn Hendley, 'Legal Development in Post-Soviet Russia', Post-Soviet Affairs, 13, 3, 1997, pp. 231-256.
82. According to a letter written by the local deputy to the State Duma, A. N. Gordeev, to El'tsin, both Chernomyrdin and Soskovets (then a deputy prime minister) had signed an order supporting the return of this debt to SAZ. Kislov, 'Chto khuzhe - bez poluchki ili bez raboty', Izvesliva, 30 January 1996, p. 2.
83. The trade union at SAZ is part of the Federation of Independent Trade Unions (FNPR), the successor to the Soviet-era official trade union. Management made a half-hearted effort to get rid of the union following privatisation but failed. Conversations with workers and managers on various levels reveal the general irrelevance of the trade union as a protector of workers' rights. Most viewed the trade union as the distributor of vacations and other perquisites. As these grew less common, the mission of the trade union grew increasingly unclear.
84. Among the slogans on the placards were 'Government! Honour the Debt of 26 Million Dollars' and 'Hungry Children - A Country Without a Future'.
85. The local deputy was A. N. Gordeev, who has been a prominent member of the Communist Party. Prior to entering politics, Gordeev worked at SAZ.
86. The governor also 'dismissed' two other general directors. One was the general director of SEPO which was, like SAZ, a completely private entity. The other was the general director of Korpus, a defence plant that had yet to privatise. Neither of these public dismissals resulted in the immediate removal of the general director. By the spring of 1997, however, of the general directors the governor attempted to dismiss, only the SAZ general director still had his job.
87. In September 1996 Ayatskov won election with over 80% of the popular vote. Patrick Henry, 'Yeltsin's Candidate Wins Poll in Saratov', The Moscow Times, 3 September 1996. Not surprisingly, the Saratov press has treated him gingerly. E.g. A. Vorotnikov & V. Dines, 'Korenniki stanovyatsya v upryazhku', Saratovskie vesti, 28 January 1997, pp. 1-2. The Moscow press has begun to question the wisdom of Ayatskov's virtual monopoly over Saratov. See Aleksandr Krutov, 'Blesk i nishcheta Saratovskogo gubernatora', Moskovskaya pravda, 18 February 1997, p. 6.
88. In September 1996 Ayatskov won election with over 80% of the popular vote. Patrick Henry, 'Yeltsin's Candidate Wins Poll in Saratov', The Moscow Times, 3 September 1996. Not surprisingly, the Saratov press has treated him gingerly. E.g. A. Vorotnikov & V. Dines, 'Korenniki stanovyatsya v upryazhku', Saratovskie vesti, 28 January 1997, pp. 1-2. The Moscow press has begun to question the wisdom of Ayatskov's virtual monopoly over Saratov. See Aleksandr Krutov, 'Blesk i nishcheta Saratovskogo gubernatora', Moskovskaya pravda, 18 February 1997, p. 6.
89. In September 1996 Ayatskov won election with over 80% of the popular vote. Patrick Henry, 'Yeltsin's Candidate Wins Poll in Saratov', The Moscow Times, 3 September 1996. Not surprisingly, the Saratov press has treated him gingerly. E.g. A. Vorotnikov & V. Dines, 'Korenniki stanovyatsya v upryazhku', Saratovskie vesti, 28 January 1997, pp. 1-2. The Moscow press has begun to question the wisdom of Ayatskov's virtual monopoly over Saratov. See Aleksandr Krutov, 'Blesk i nishcheta Saratovskogo gubernatora', Moskovskaya pravda, 18 February 1997, p. 6.
90. K. Agababyan, 'U zavoda "vyrastut kryl'ya" tol'ko pod krylom gosudarstva', Saratovskie vesti, 18 June 1996, p. 2.
91. As a methodological note, it is worth pointing out that the local newspapers in Saratov contained no reports of these attempted dismissals, though they were the talk of the town during the summer of 1996. Each of the local papers did carry a story about the meeting at which the SAZ general director was publicly humiliated, but none mentioned the effort of the governor to dismiss him. E.g. K. Agababyan, 'U zavoda "vyrȧstut kryl'ya" tol'ko pod krylom gosudarstva', Saratovskie vesti, 18 June 1996; Lyubov' Sharshavova, 'Dela plokhie, no idut khorosho', Saratov, 19 June 1996, p. 2. Almost a year later, one of the smaller Saratov papers carried a story about Ayatskov's role in the removal of the general director of SEPO, another large former defence plant. Natal'ya Aleksandrova, 'Promyshlennuyu elitu pochistyat i profil'truyut', Zemskoe obozrenie, 4 April 1997, P. 7.
92. As a methodological note, it is worth pointing out that the local newspapers in Saratov contained no reports of these attempted dismissals, though they were the talk of the town during the summer of 1996. Each of the local papers did carry a story about the meeting at which the SAZ general director was publicly humiliated, but none mentioned the effort of the governor to dismiss him. E.g. K. Agababyan, 'U zavoda "vyrȧstut kryl'ya" tol'ko pod krylom gosudarstva', Saratovskie vesti, 18 June 1996; Lyubov' Sharshavova, 'Dela plokhie, no idut khorosho', Saratov, 19 June 1996, p. 2. Almost a year later, one of the smaller Saratov papers carried a story about Ayatskov's role in the removal of the general director of SEPO, another large former defence plant. Natal'ya Aleksandrova, 'Promyshlennuyu elitu pochistyat i profil'truyut', Zemskoe obozrenie, 4 April 1997, P. 7.
93. As a methodological note, it is worth pointing out that the local newspapers in Saratov contained no reports of these attempted dismissals, though they were the talk of the town during the summer of 1996. Each of the local papers did carry a story about the meeting at which the SAZ general director was publicly humiliated, but none mentioned the effort of the governor to dismiss him. E.g. K. Agababyan, 'U zavoda "vyrȧstut kryl'ya" tol'ko pod krylom gosudarstva', Saratovskie vesti, 18 June 1996; Lyubov' Sharshavova, 'Dela plokhie, no idut khorosho', Saratov, 19 June 1996, p. 2. Almost a year later, one of the smaller Saratov papers carried a story about Ayatskov's role in the removal of the general director of SEPO, another large former defence plant. Natal'ya Aleksandrova, 'Promyshlennuyu elitu pochistyat i profil'truyut', Zemskoe obozrenie, 4 April 1997, P. 7.
94. See generally E. Spirin, 'Est' li u rossiiskoi aviatsii budushchee?', Nizhegorodskie novosti, 11 September 1996, p. 2; I. Lozhkina, 'Mertvaya petlya rossiiskoi aviatsii', Ekonomika i zhizn', 1996, 46, p. 12; Philip Butterworth-Hayes, 'Russia's Loss is the West's Gain', Aerospace America, September 1995, p. 4.
95. See generally E. Spirin, 'Est' li u rossiiskoi aviatsii budushchee?', Nizhegorodskie novosti, 11 September 1996, p. 2; I. Lozhkina, 'Mertvaya petlya rossiiskoi aviatsii', Ekonomika i zhizn', 1996, 46, p. 12; Philip Butterworth-Hayes, 'Russia's Loss is the West's Gain', Aerospace America, September 1995, p. 4.
96. See generally E. Spirin, 'Est' li u rossiiskoi aviatsii budushchee?', Nizhegorodskie novosti, 11 September 1996, p. 2; I. Lozhkina, 'Mertvaya petlya rossiiskoi aviatsii', Ekonomika i zhizn', 1996, 46, p. 12; Philip Butterworth-Hayes, 'Russia's Loss is the West's Gain', Aerospace America, September 1995, p. 4.
97. Prior to privatisation, SAZ was largely limited to consulting with the scientific-research institutes (nauchno-issledovateiskie instituty) of the Aviation Ministry. It worked with these institutes on the initial privatisation plan which, in retrospect, was far from ideal. It is worth pointing out that the ISKAN group with which SAZ collaborated was headed by Andrei Kokoshin, who went on to become a Deputy Minister of Defence.
98. One of the stops on this tour was the Center for International Security and Arms Control at Stanford University, which is where we first became acquainted in December 1991.
99. On the leasing of Yak-42s in Pakistan, for example, see Tahir Ikram, 'Private Pakistani Airlines Strive to Outshine PIA', The Reuters Asia-Pacific Business Repon, 2 September 1995.
100. A thorough analysis of the failure of this initial strategy is beyond the scope of this article, but SAZ's underappreciation of the importance of marketing certainly played a role. Because its first success came as a result of the personal negotiating skills and charisma of the general director, SAZ mistakenly assumed that his charms would win them more contracts. To be sure, the good press about the general director opened the door of many foreign companies, but SAZ proved incapable of following through these promising contacts. Although a marketing department was set up, it was staffed by redeployed SAZ managers rather than by trained specialists. SAZ was also slow to appreciate the need to establish an independent servicing capability for planes sold abroad if it expected to compete with the Western giants. Such problems with marketing were common to Russian defence plants. See Kevin P. O'Prey, A Farewell to Arms? Russia's Struggles With Defense Conversion (New York, Twentieth Century Fund Press, 1995), p. 71.
101. A Smolensk enterprise that manufactured the wings for Yak-42s was also part of the Yak Corporation, though largely a silent partner. The Yak Corporation was originally named Skorost'.
102. The form sometimes left Western investors puzzled. The Yak Corporation appeared to have enormous assets, but the appearance was illusory. Russian observers were also taken in. Kokoshin often cited the Yak Corporation as a successful financial industrial group. See O'Prey, A Farewell to Arms?, p. 74.
103. See David M. North, 'IAI Launches Galaxy Into Crowded Market', Aviation Week and Space Technology, 139, 13, 27 September 1993, p. 29; 'Yakovlev Design Bureau to Participate in Galaxy Business Jet'. Aviation Daily, 313, 60, 24 September 1992, p. 475; 'Saratov Wins Galaxy Jet Work', Flight International, 16 March 1994.
104. See David M. North, 'IAI Launches Galaxy Into Crowded Market', Aviation Week and Space Technology, 139, 13, 27 September 1993, p. 29; 'Yakovlev Design Bureau to Participate in Galaxy Business Jet'. Aviation Daily, 313, 60, 24 September 1992, p. 475; 'Saratov Wins Galaxy Jet Work', Flight International, 16 March 1994.
105. See David M. North, 'IAI Launches Galaxy Into Crowded Market', Aviation Week and Space Technology, 139, 13, 27 September 1993, p. 29; 'Yakovlev Design Bureau to Participate in Galaxy Business Jet'. Aviation Daily, 313, 60, 24 September 1992, p. 475; 'Saratov Wins Galaxy Jet Work', Flight International, 16 March 1994.
106. The Yak-40 was a 30-seat plane. Over 1200 were manufactured, and continue to fly in the former Soviet Union as well as 19 other countries.
107. 'IAI Shifts Initial Production from Russia to Israel to Keep Galaxy on Schedule', The Weekly of Business Aviation, 61, 14, 2 October 1995, p. 142.
108. The Design Bureau has faced its own financial crises in recent years. For example, in December 1996 the Moscow telephone company cut off almost all telephones due to massive unpaid bills. Viktor Anoshkin, 'Moscow Phone Company Cuts Off Plane-Maker Yakovlev', Reuters European Business Report, 2 December 1996.
109. Aleksei Orlov, 'Pochem "Fokkery" dlya naroda', Nezavisimaya gazeta, 2 August 1996, p. 6.
110. The chief designer had built up an expectation that SAZ would get this contract when, at the annual shareholders' meeting in March 1995, he promised that the manufacture of test planes would soon be transferred to Saratov.
111. The idea that SAZ would switch allegiance to another design bureau, e.g. the Tupolev or the Ilushin bureau, was not feasible in the Russian context.
112. 'Press Conference Regarding the Russian Aircraft Industry', Official Kremlin International News Broadcast, 5 August 1996. This seemingly rash behaviour was prompted by a combination of frustration and anger. He was pushed over the edge during a business trip to Taiwan when he was asked about the Fokker deal in almost every meeting. He felt obliged to clarify his (and SAZ's) position publicly.
113. Ibid.; Aleksandr Kislov, 'Chto khuzhe - bez poluchki ili bez raboty', Izvestiya, 30 January 1996, p. 2.
114. Ibid.; Aleksandr Kislov, 'Chto khuzhe - bez poluchki ili bez raboty', Izvestiya, 30 January 1996, p. 2.
115. See Nataliya Yachimennikova, 'Kuda letit' s odnim krylom?', Rossiiskaya gazeta, 22 September 1995, reprinted in Aviastroitel', 11 October 1995, p. 2; Anatolii Tkachenko, ' "Rosaviakonsortsium" szhimaet pal'tsy v kulak', Delovoi mir, 4-10 October 1996, p. 7; Roza Gorn, 'Aviastroiteli - za soyuz s bankami i gosudarstvom', Ekonomika i zhizn', 1996, 48, p. 4.
116. See Nataliya Yachimennikova, 'Kuda letit' s odnim krylom?', Rossiiskaya gazeta, 22 September 1995, reprinted in Aviastroitel', 11 October 1995, p. 2; Anatolii Tkachenko, ' "Rosaviakonsortsium" szhimaet pal'tsy v kulak', Delovoi mir, 4-10 October 1996, p. 7; Roza Gorn, 'Aviastroiteli - za soyuz s bankami i gosudarstvom', Ekonomika i zhizn', 1996, 48, p. 4.
117. See Nataliya Yachimennikova, 'Kuda letit' s odnim krylom?', Rossiiskaya gazeta, 22 September 1995, reprinted in Aviastroitel', 11 October 1995, p. 2; Anatolii Tkachenko, ' "Rosaviakonsortsium" szhimaet pal'tsy v kulak', Delovoi mir, 4-10 October 1996, p. 7; Roza Gorn, 'Aviastroiteli - za soyuz s bankami i gosudarstvom', Ekonomika i zhizn', 1996, 48, p. 4.
118. See Nataliya Yachimennikova, 'Kuda letit' s odnim krylom?', Rossiiskaya gazeta, 22 September 1995, reprinted in Aviastroitel', 11 October 1995, p. 2; Anatolii Tkachenko, ' "Rosaviakonsortsium" szhimaet pal'tsy v kulak', Delovoi mir, 4-10 October 1996, p. 7; Roza Gorn, 'Aviastroiteli - za soyuz s bankami i gosudarstvom', Ekonomika i zhizn', 1996, 48, p. 4.
119. There are varying opinions among industry leaders about whether the FIG should be vertical, i.e. concentrate principally on plane manufacturing, or should expand its horizons to other ventures.
120. Other Russian aviation plants were also seeking these same markets. Aviakor, a Samarabased manufacturer of Tu-154s, signed a contract in August 1996 to supply 12 planes to Iran. See Vladimir Ul'yanov, 'Samara otpravit v Iran dvenadtsat' Tu-154M', Delovoi mir, 16-22 August 1996.
121. See Sergei Istratov, 'Aviastroiteli pereklyuchayutsya na vypusk administrativnykh samoletov i modelei biznes-klassa', Segodnya, 27 August 1996, p. 4; Nikolai Manivelov, 'Na biznes-samoletakh v Rossii letayut bol'shim kollektivem', Kapital, 18-24 September 1996, p. 9; Patricia Kranz, 'Gazprom One, You're Cleared for Takeoff, Business Week, 16 October 1995, p. 118.
122. See Sergei Istratov, 'Aviastroiteli pereklyuchayutsya na vypusk administrativnykh samoletov i modelei biznes-klassa', Segodnya, 27 August 1996, p. 4; Nikolai Manivelov, 'Na biznes-samoletakh v Rossii letayut bol'shim kollektivem', Kapital, 18-24 September 1996, p. 9; Patricia Kranz, 'Gazprom One, You're Cleared for Takeoff, Business Week, 16 October 1995, p. 118.
123. See Sergei Istratov, 'Aviastroiteli pereklyuchayutsya na vypusk administrativnykh samoletov i modelei biznes-klassa', Segodnya, 27 August 1996, p. 4; Nikolai Manivelov, 'Na biznes-samoletakh v Rossii letayut bol'shim kollektivem', Kapital, 18-24 September 1996, p. 9; Patricia Kranz, 'Gazprom One, You're Cleared for Takeoff, Business Week, 16 October 1995, p. 118.
124. The FAA has granted experimental approval to the Yak-54. SAZ has a contract to sell up to 48 more planes to the same US buyer over the next four years. Paul Proctor, 'Dancing Bear', Aviation Week and Space Technology, 146, 6, 10 February 1997, p. 13.
125. The term EKIP is an abbreviation for ecology and progress (ekologiya i progress).
126. See D. Lomov, 'Taina Angara 18', Zarya molodezhi, 27 November 1996, p. 4; Elena Ardibatskaya & Dmitrii Lomov, 'Russkaya "letayushchaya tarelka" pikiruet na Vashington?', Komsomol'skaya pravda, 16 January 1997, p. 2.
127. See D. Lomov, 'Taina Angara 18', Zarya molodezhi, 27 November 1996, p. 4; Elena Ardibatskaya & Dmitrii Lomov, 'Russkaya "letayushchaya tarelka" pikiruet na Vashington?', Komsomol'skaya pravda, 16 January 1997, p. 2.
128. Lyubov' Sharshavova, 'Dela plokhie no idut khorosho', Saratov, 19 June 1996, p. 2.
129. At the time of privatisation SAZ controlled over 300 buildings containing residential housing, three dormitories and 20 kindergartens. It contributed to the maintenance of four schools, a medical clinic, various sports facilities and summer camps for children, although the details of SAZ's contributions were handled by the trade union committee and not by management.
130. Conversations with journalists in the spring of 1993 revealed that residents of SAZ housing had been sending complaints to local newspapers about SAZ's refusal to privatise its housing. The journalists advised these residents to pursue the matter in the courts, but the residents were reluctant to do so.
131. Management claimed that the closures were due to low enrolments, but the protests of women workers suggest that alternatives were not available.
132. Blasi et al., Kremlin Capitalism, p. 128.
133. Ibid., p. 124.
134. See Hendley, 'Legal Development and Privatization', p. 151.
135. 'Press Conference Regarding the Russian Aircraft Industry'. Official Kremlin International News Broadcast, 5 August 1996.
136. Blasi et al., Kremlin Capitalism, p. 124.
137. See Karen Aziz Chaudry, 'The Myth of the Market and the Common History of Late Developers', Politics & Society, 21, 3, 1994, pp. 245-274; Peter Evans, Embedded Autonomy: States & Industrial Transformation (Princeton, Princeton University Press, 1995); Charles Lindblom, Politics and Markets: The World's Political-Economic Systems (New York, Basic Books, 1977).
138. See Karen Aziz Chaudry, 'The Myth of the Market and the Common History of Late Developers', Politics & Society, 21, 3, 1994, pp. 245-274; Peter Evans, Embedded Autonomy: States & Industrial Transformation (Princeton, Princeton
139. See Karen Aziz Chaudry, 'The Myth of the Market and the Common History of Late Developers', Politics & Society, 21, 3, 1994, pp. 245-274; Peter Evans, Embedded Autonomy: States & Industrial Transformation (Princeton, Princeton University Press, 1995); Charles Lindblom, Politics and Markets: The World's Political-Economic Systems (New York, Basic Books, 1977).
140. When Boeing was working to establish itself in the Chinese market, the US government worked with the company. The Chinese were given the impression that the purchase of Boeing planes might soften the US stance on trade and other nagging problems.
141. E.g. Richard Preston, American Steel (New York, Avon Books, 1991).
142. Blasi et al., Kremlin Capitalism, pp. 62-64.
143. Ibid., pp. 4-10.
144. See Aslund, How Russia Became a Market Economy; Boycko et al., Privatizing Russia.
145. See Aslund, How Russia Became a Market Economy; Boycko et al., Privatizing Russia.
146. See Peter Murrell, 'What is Shock Therapy? What Did It Do in Poland and Russia?', Post-Soviet Affairs, 9, 2, 1993, pp. 111-140.
147. The experience of corporate takeovers in the USA during the 1980s suggests that outsiders are not always interested in managing the target company over the long run. E.g. David Carey, 'Can Raiders Run What They Raid?', Fortune, 4 June 1990, pp. 193-204.
148. Perhaps a better distinction could be made on the basis of age and/or nature of education. But this sort of generation-based argument is not typically made by Western commentators. E.g. Andrei Shleifer & Dmitry Vasiliev, 'Management Ownership and Russian Privatization', in Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia: Insiders and the State (Budapest, Central European University Press, 1996), pp. 62-77; Horst Siebert, 'Comments', European Economic Review, 38, 6, 1994, pp. 1357-1361.
149. Perhaps a better distinction could be made on the basis of age and/or nature of education. But this sort of generation-based argument is not typically made by Western commentators. E.g. Andrei Shleifer & Dmitry Vasiliev, 'Management Ownership and Russian Privatization', in Roman Frydman, Cheryl W. Gray & Andrzej Rapaczynski (eds), Corporate Governance in Central Europe and Russia: Insiders and the State (Budapest, Central European University Press, 1996), pp. 62-77; Horst Siebert, 'Comments', European Economic Review, 38, 6, 1994, pp. 1357-1361.
150. See Peter Murrell, 'Evolution in Economics and in the Economic Reform of the Centrally Planned Economies', in Christopher Clague & Gordon C. Rausser (eds), The Emergence of Market Economies in Eastern Europe (Cambridge, MA, Basil Blackwell, 1992), pp. 35-53; Richard R. Nelson & Sidney G. Winter, An Evolutionary Theory of Economic Change (Cambridge, MA, Harvard University Press, 1982).
151. See Peter Murrell, 'Evolution in Economics and in the Economic Reform of the Centrally Planned Economies', in Christopher Clague & Gordon C. Rausser (eds), The Emergence of Market Economies in Eastern Europe (Cambridge, MA, Basil Blackwell, 1992), pp. 35-53; Richard R. Nelson & Sidney G. Winter, An Evolutionary Theory of Economic Change (Cambridge, MA, Harvard University Press, 1982).
152. The miners, who adopted strikes as a part of their strategy in dealing with management and the state, constitute an exception. Other professions that engaged in aggressive tactics can be identified. But the vast majority of workers remained passive during the transition and adapted to the conditions created by management. This remained true even in the face of delays in paying wages and lay-offs of workers.