Ownership Structure and Enterprise Restructuring in the Czech Republic

Dominant Ownership and Restructuring Indicators

Source: Katsoulacos and Takla, excerpted in EBRD Table 8.6.

This table shows how restructuring outcomes vary by the type of dominant enterprise owner. The data are from a random survey of 257 Czech enterprises in 1994. An owner, except for a privatization fund, is classified as dominant owner of an enterprise if it owns more than 50% of the enterprises' shares. Privatization funds are considered dominant owners if they own more than 20% of an enterprises' shares and no other owner has a majority share. Five enterprises did not have a dominant owner according to this classification procedure. Note also that there may be dispersed ownership among owners of a particular type. Such dispersal would be expected to reduce restructuring incentives.

The table shows that relatively low employment shedding and relatively high real wage growth, sales growth, productivity growth, and export and investment levels are restructuring characteristics associated with each other. Enterprises with dominant foreign owners ranked highest in terms of these characteristics. Enterprises with dominant domestic outsider or insider ownership ranked next, while state-owned enterprises scored lowest on these criteria. Enterprises with privatization funds as dominant owners also scored relatively low. This may reflect the relatively weak criterion for classifying an enterprise as having a privatization fund as a dominant owner.

Enterprise Restructuring in the FSU