Abstract
There has been a growing debate about the ethics of management buy-outs (MBOs). One possible criticism of the MBO is that it serves the interests of incumbent management at the expense of shareholders. In this paper we develop the general arguments concerning the ethical aspects of the MBO to include other forms of buy-out beyond “going privates” and apply the analysis to MBOs as a mode of privatisation in Central and Eastern Europe (CEE). MBOs are justified in this context postperestroika as a means of incentivising economic activity by giving managers an ownership stake in former state enterprises. The actual mode of privatisation, though, raises issues of social justice and the criticism that MBOs are at the expense of the broader social good. The ethical problem for the CEE is to balance the economic gains of a move to markets with the ethical risks to the agents of these markets.
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Igor Filatotchev is a lecturer in Soviet Studies, School of Management and Finance and Department of Geography, University of Nottingham. His main areas of research include economic and social problems of restructuring in former centrally planned economies. He has written extensively on different aspects of privatization in Eastern and Central Europe and the former USSR.
Ken Starkey is Reader in Organizational Analysis, School of Management and Finance, University of Nottingham. His research interests include ethical aspects of strategic management and public sector management. He has published widely on organizational analysis, strategy and human resource management.
Mike Wright is professor of Financial Studies and Director of the Centre for Management Buy-Out Research, University of Nottingham. His research interests include MBOs, corporate governance, mergers and divestment, and privatisation. He has published extensively in these areas. He is currently completing books on Corporate Accountability and Governance and buyouts in Central and Eastern Europe.
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Filatotchev, I., Starkey, K. & Wright, M. The ethical challenge of management buy-outs as a form of privatisation in Central and Eastern Europe. J Bus Ethics 13, 523–532 (1994). https://doi.org/10.1007/BF00881297
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DOI: https://doi.org/10.1007/BF00881297