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  • Cited by 13
  • Print publication year: 1997
  • Online publication date: October 2009

4 - Employeeism: Corporate Governance and Employee Share Ownership in Transitional Economies


A number of countries have embarked on a program of privatization using vouchers, establishing a form of people's capitalism. Here my advice is a word of caution, one that most of them have already taken to heart: Beware of the corporate governance problem.

Joseph Stiglitz

What's happened so far is not privatization, it's collectivization, which puts the workers and managers in charge of enterprises. Their interest is in increasing wages, not investment. This is a new problem created by this style of privatization.

Grigory Yavlinsky

I'm the man who makes the decisions.

Viktor Kozeny


Under the heading of “corporate governance” we include problems arising when an enterprise is owned by more than one owner and managed by a hired managerial group, and also the rules and incentives appropriate to make it function as efficiently and impartially as if it were owned and run by a single owner–entrepreneur. Throughout this essay we shall refer to co-owners as shareholders, thus implicitly referring to joint stock companies; unless otherwise stated, decisional (voting) powers are presumed to be distributed in proportion to ownership. Mutatis mutandis, identical considerations apply to any form of enterprise co-ownership and attribution of decisional powers.

Two basic classes of problems arise in joint stock companies: (i) establishing shareholder control over managerial discretion; (ii) avoiding or resolving conflicts between groups of shareholders that may occur when a controlling interest is vested in shareholders who also have a stake in company activity in another capacity.