EU outsourcing to the East, governance and innovation systems in the Baltic Countries: A three-stage approach

This paper combines the features of outsourcing theory, the principal-agent model and institutional economics, and gives the guidelines how the firms in the Baltic countries might survive in the enlargened EU markets. Such guidelines are presented in three stages to demonstrate an institutional system framework connecting financial governance, the governance in production and the governance of innovation in order to enhance the principal and managerial incentives for higher innovative activity in the enlargened EU-Baltic industrial integration.