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

180 Privatization: Evidence from Estonia
Labour productivityannualized average growth in (real sales)/employment
Employmentannualized average growth in employment
Control (Dummy) Variables
TALLINN Dummy1 for firm located in Tallinn, the capital of Estonia
IND*set of industry Dummies
Notes
01 For a survey of British economic thought on the effects of worker management
and worker participation on enterprise performance, see Jones (1976).
02 For reviews, see Carlin and Landsmann (1997) and EBRD (1997).
03 Unfortunately, our data do not enable us to examine the effects of other
potentially important factors that influence enterprise performance (such as
employee influence). We focus on ownership because that is a focus of the
current debate in transition economies.
04 There is also abundant empirical evidence which points to the superior economic
performance of economic systems that are neither state-owned nor
capitalist. For an important contribution on the better performance of the
(former) Yugoslav labour managed economy, see Horvat (1969).
05 To illustrate some of these points, Ben-Ner and Jones (1995) have noted
that ownership of an asset consists of two central rights – the right to control
its use and to enjoy its returns.
06 However, there are few empirical studies that have looked at minority ownership
when minority ownership stakes are ‘large’ – say, more than 10 per
cent. For example, in the case of Japan, employee ownership stakes average
less than 2 per cent (see Jones and Kato, 1995). For the potential benefits of
managerial stakes see the executive compensation literature (for example,
Asch and Warner, 1997).
07 Moreover, the links between majority ownership and control are expected
to be diffuse. Thus, studies of firms in many transition economies have
examined the implications of different ownership configurations for corporate
governance and most conclude that, irrespective of ownership form,
normally employee influence is quite limited and management influence is
very pronounced (Blasi, 1994; Jones and Weisskopf, 1996). Hence, it is also
potentially important to take account of the effects on enterprise behaviour
not only of ownership but also of control. While we will endeavour to
collect measures of control for use in future studies, in this paper, we follow
the bulk of the literature and assume that our measures of ownership are
adequate.
08 For more exhaustive accounts, see Mygind (1996, 1997).
09 For details of the way the sample was selected see Jones and Mygind (1998).
10 Based on two sample mean t tests, there do not appear to be any significant
differences in the nature of the firms for which we have only partial
information.
11 This definition of ‘transition effect’ is most appropriate when privatization is
accompanied by other major economic reforms such as price liberalization.