Management Team and Firm Restructuring

The privatization of state-owned enterprises in Russia and the subsequent redistribution of property rights made up a large cohort of manager-owners. This group, according to surveys of the Russian Economic Barometer, became the major category of owners for the first time in 2003, with a 25% share in ownership structure, and maintained their leading position into 2007 with a 35% share (Aukutsionek et al. 2007). Therefore, a considerable number of management teams of Russian JSCs are headed by (or include) manager-owners. On the other hand, in the last decade, a tendency toward the separation of ownership and management has become more and more noticeable, and the old Soviet-style managerial teams are being substituted by a new generation of professionally trained hired managers. They are expected to be more effective at improving company performance by facilitating the large-scale market-oriented restructuring needed by the majority of privatized enterprises. However, the results of empirical surveys provide evidence that the privatization of initially state-owned manufacturing firms in Russia did not result in significant increases in productivity (Brown et al. 2004). Bhaumik and Estrin (2005) discovered that Russian industrial firms were unresponsive to almost all the normal economic drivers. In an attempt to explain the difference between two transitional countries, China and Russia, they discussed the managerial quality in the economies in transition and its influence on company performance.