Ownership Patterns and Dynamics in Privatized Firms in Transition Economies : Evidence from the Baltics

To provide evidence on patterns of and changes in ownership structures both at the start and during early privatization, we develop different typologies of enterprise ownership and use new data for more than 1500 firms in the Baltic Republics. We find that: (i) by international standards, insider ownership is very common in all Baltic countries; (ii) ownership patterns differ much across the Baltic Republics with a much higher incidence of foreign ownership in Estonia; (iii) ownership patterns are quite heterogeneous within all countries (e.g. by sector and by size). In Estonia and Latvia more insider ownership is found in small enterprises, and in agriculture, less in services and transport, and also less in trade in Estonia. Similar tendencies are not found in Lithuania; (iv) In Estonia and Latvia capital intensity is significantly lower in insider owned enterprises and this is not the case in Lithuania; (v) changes in ownership category are relatively frequent in all countries; (vi) for firm that change ownership regime, typically levels of employee ownership fall and managerial and outside ownership rises; (vii) in Estonia employee dominated ownership tend to be most stable in small enterprises. There is great heterogeneity across firms both in the situation at the time of privatization and in the following ownership dynamics. These findings are consistent with an institutionalist perspective that predicts variation across and within countries and points to roles for factors both at societal and firm level in accounting for such differences and changes