ABSTRACT
From the beginning, managers were reluctant to embrace these reforms and in many instances openly resisted moves toward privatization. During the earlier Soviet period, government orders had been followed without question, and when compliance was too difficult, managers often falsified company records or manufactured products of lower quality. Now, during the time of reform, this behavior became the standard operating procedure for the new Russian manager as well. By the end of the mass privatization program, approximately 77 percent of Russian medium-and large-sized enterprises accounting for 88.3 percent of industrial production had been privatized (Blasi, Kroumova, and Kruse, 1997:6). In reality, however, these companies had not transformed themselves into the market-driven, shareholder-responsive firms intended by reformers. The resistance to privatization exhibited by Russian managers baffled Western scholars. Managers in the United States, for example, are generally enthusiastic about privatization efforts and support less government control of assets and property. In retrospect, it is clear that Russian reformers and their Western advisers overestimated the response of the major players in the business environment, and this greatly complicated any movement toward change. Ironically, privatization had instead become a cover for the continuation of old patterns of nomenklatura and the power of elites-including many of
the old Soviet-trained managers-over inefficient companies. Reform efforts fell far short of their anticipated success.
