Corporate Restructuring in Russian Privatizations: Implications for U.S. Investors

California Management Review

Volumn 38, Issue 2, 1996, Pages 87-105

  Filatotchev, Igor ^a   Hoskisson, Robert E ^a   Buck, Trevor ^a   Wright, Mike ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0030539911     PISSN: 00081256     EISSN: 21628564     Source Type: Journal    
DOI: 10.2307/41165834     Document Type: Article

References (28)

1. A. Shama, “Entry Strategies of U.S. Firms to the Newly Independent States, Baltic States, and Eastern European Countries,” California Management Review, 37/3 (Spring 1995): 90-109.
2. D. McCarthy, S. Puffer, and P. Simmonds, “Riding the Russian Roller Coaster: U.S. Firms' Recent Experience and Future Plans in the Former USSR,” California Management Review, 36/1 (Fall 1993): 99-115.
3. D.H. Holt, D.A. Ralston, and R.H. Terpstra, “Constraints on Capitalism in Russia: The Managerial Psyche, Social Infrastructure, and Ideology,” California Management Review, 36/3 (Spring 1994): 124-141.
4. M. Boycko, A. Shleifer, and R. Vishny, “Privatizing Russia,” Brookings Papers on Economic Activity, 2 (1993): 139-192
5. See M. Wright, I. Filatotchev, T. Buck, and K. Robbie, eds., Management and Employee Buy-outs in Central and Eastern Europe (London: European Bank/CEEPN, 1993)
6. I. Filatotchev, T. Buck, and M. Wright, “Privatization and Buy-Outs in the Former USSR,” Soviet Studies, 44/2 (1992): 265-282.
7. Boycko, “Privatizing Russia,” Brookings Papers on Economic Activity, 2 (1993): 139-192
8. To some extent the ethical problems in Russian buy-outs echo the issues raised in respect to buy-outs in the West. See R. Bruner and L. Paine, “Management BuyOuts and Managerial Ethics,” California Management Review, 30/2 (Winter 1988): 89-106
9. and, for a somewhat different view, T. Jones and R. Hunt, “The Ethics of Leveraged Management Buy-Outs Revisited,” Journal of Business Ethics, 10/11 (1991): 833-840.
10. However, there may also be a number of ethical problems specific to Russia in such buy-outs. For a discussion, see I. Filatotchev, K. Starkey, and M. Wright, “The Ethical Challenge of Management and Employee Buy-Outs in the Transformation of Central and Eastern Europe,” Journal of Business Ethics, 14(1994).
11. State Committee on Statistics of the Russian Federation, Statistical Press Bulletin, No. 2, Moscow, 1994.
12. A. Chubais and M. Vishnevskaya, “Russian Privatization: Mid-1994,” mimeo, 1994.
13. This problem is essentially a principal-agent problem, with the state as principal and the managers as their agents. For detailed discussion of the principal-agent problem in the context of state-owned firms in the West, see M. Wright, S. Thompson, and K. Robbie, “Finance and Control in Privatization by Management Buy-Outs,” Financial Accountability and Management, 9/2 (May 1993): 75-99.
14. G. Standing, “Unemployment in Russia,” ILO, Geneva, October 1994.
15. See R. Hisrich and M. Grachev, “The Russian Entrepreneur,” Journal of Business Venturing, 8 (1993): 487-497. They also discuss the development of entrepreneurs in Russia prior to the advent of Communism.
16. I. Filatotchev, T. Buck, and M. Wright, “Privatization and Entrepreneurship in the Break-up of the USSR,” World Economy, 15/4 (July 1992): 505-524.
17. See A. Gibb, “Small Business Development in Central and Eastern Europe— Opportunity for a Rethink?” Journal of Business Venturing, 8 (1993): 461-486.
18. See M. Jensen, “Eclipse of the Public Corporation,” Harvard Business Review, 67/5 (September/October 1989): 61-74.
19. R. Frydman, E. Phelps, A. Rapaczynski, and A. Shleifer, “Needed Mechanisms of Corporate Governance and Finance in Eastern Europe,” Economics of Transition, 1/2 (1993): 171-207.
20. This is a well-documented problem in such enterprises. See, for example, A. Ben-Ner, “Organizational Reform in Central and Eastern Europe: A Comparative Perspective,” Annals of Public and Cooperative Economy, 64/3 (1993): 327-364. Employees are generally viewed as preferring to take the more certain short-term gains rather than wait for longer-term benefits which may not materialize.
21. This pattern contrasts with experience with buy-outs in the West. See, for example, M. Wright, S. Thompson, B. Chiplin, and K. Robbie, “Management Buy-Outs and Large-Small Firm Relationships,” Management International Review, 30/1 (1990): 52-72.
22. J.K. Johansson, I.A. Ronkainen, and M.R. Czinkota, “Negative Country-of-Origin Effects: The Case of the New Russia,” Journal of International Business Studies, 25/1 (1994): 157-176.
23. See S. Puffer and D. McCarthy, “Finding the Common Ground in Russian and American Business Ethics,” California Management Review, 37/2 (Winter 1995): 29-46, who point out that over a number of centuries ruling elites and authority figures have tightly controlled society and suppressed personal freedom giving little opportunity for overt dispute. For example the Russian Orthodox Church emphasized deference and obedience to Church doctrine and religious authority figures as well as the subjugation of personal interests to the common good. Communism had similar themes though within an atheistic ideology, with the excesses of the Stalinist era also discouraging people from openly questioning authority.
24. See, for example, the problems encountered by the Baird Corporation with its Russian joint venture cited by Puffer and D. McCarthy, “Finding the Common Ground in Russian and American Business Ethics,” California Management Review, 37/2 (Winter 1995): 29-46.
25. See Puffer and D. McCarthy, “Finding the Common Ground in Russian and American Business Ethics,” California Management Review, 37/2 (Winter 1995): 29-46.
26. O. Khaykin, J. Lindquist, and C. Ackerman, “Acquirers Come in from the Cold,” Acquisitions Monthly (December 1993), pp. 44-46.
27. Holt “Constraints on Capitalism in Russia: The Managerial Psyche, Social Infrastructure, and Ideology,” California Management Review, 36/3 (Spring 1994): 124-141.
28. The State Property Committee of the Russian Federation, Reforma (December 1993): 5.