Privatization, insider control and managerial entrenchment in Russia

This paper provides new survey evidence on managerial entrenchment and the role of outsiders in the post-privatization restructuring of Russian enterprises. The major findings are that managers are hostile towards outside ownership, and they effectively collude with other employees to preserve insider control. The paper also provides empirical evidence that the gradual accumulation of shares by managers is not based only on a profit motive, but is also driven by their efforts to preserve insider control. The issues raised have relevance to other transition economies where the privatization process has encouraged insider control, such as Ukraine and Belarus.