Equality, Participation, Transition: Essays in Honour of Branko Horvat

Table 9.5 State ownership in Ukraine, 1996
Saul Estrin 155
Shareholding Privatized firms Privatized firms All old firms All old firms
(unweighted) (weighted) (unweighted) (weighted)
Total state 10.9 21.2 17.6 25.5
Total private 89.1 78.8 82.4 74.5
All insiders 50.7 41.7 46.9 39.4
Workers 42.8 35.5 39.6 33.6
Managers 7.9 6.2 7.3 5.9
All outsiders 38.4 37.1 35.5 35.1
Firms 9.9 10.1 9.2 9.6
Banks 7.8 7.4 7.2 7.0
Citizens 15.9 13.4 14.7 12.7
Foreigners 1.1 2.5 1.0 2.4
Other 3.8 3.7 3.5 3.5
Valid n 123 123 133 133
Source: Estrin and Rosevear (1998).
agenda. As we have seen, there is widespread individualistic ownership
with some trust holding or collective ownership in a few countries. We
need therefore to consider the appropriate rules that might be introduced
to address this problem, if employee owned firms are to have
access to the large investment funds that would be needed to implement
deep or strategic restructuring and accelerated transition.
It is important to note that individual ownership stakes held by workers
do not necessarily yield control over management. This is because
employee holdings are typically highly dispersed and there are significant
transaction costs of monitoring and controlling managers. This is
especially true if the combined employee stake is relatively large but
not controlling. Earle and Estrin (1996) argued that the situation that
might emerge would be one of an MCEO – ‘Managerially Controlled
Employee Owned Firm’. Such firms would quickly revert back to the
capitalist form. Therefore, if individualized employee ownership is to be
made into something meaningful in the transition context, we need to
see one of two things emerging. The first is a move to some element of
collective ownership, along the lines of producer cooperative sectors in
Italy or France. The second is to ensure institutional mechanisms that
convert employee ownership into real control over enterprise decision
making. Such governance mechanisms might include, for example,
direct elections by the workers of representatives to company boards,
with democratic systems to mandate the worker-directors. This would