Privatisation, Restructuring and Management in Slovene Enterprises

This paper examines how the privatisation process has influenced the structure of ownership and management in Slovene enterprises during transition. First, we highlight how the powers of insiders and political factors have played a crucial role in the privatisation of Slovene enterprises. In the privatisation process, priority was given to insiders with the internal distribution of shares and discounted management-labour buy-outs. Second, we show how the relative importance of enterprises under different types of ownership has changed over time as the privatisation process has progressed. We find that the majority of employment is still in “socially-owned” enterprises, while the majority of gross profits and total revenues is generated by private enterprises and those with mixed ownership; this implies that private enterprises are more efficient than “socially-owned” enterprises. Further, large enterprises were found to be dominant in the economy, while small enterprises are most dynamic. Third, we address the issue of management in Slovene enterprises in relation to ownership, real sales ability, union recognition and competitive pressures, based on a firm panel data set. While there has been a substantial reduction in employment, no great changes in management structures in traditional privatised and “socially-owned” enterprises were found to have taken place during transition. The results of the regression equation to establish the demand for managers showed a significant positive impact of ownership for de novo private firms, while a negative impact resulted for former “socially-owned” enterprises. Real sales and competition do not seem to play a significant role in the demand for managers in Slovene enterprises.