State-owned enterprises (SOEs) operate in the majority of European countries. The advantages and disadvantages of their market operation has always been a debatable issue. States shape different policies and adopt contrastive decisions on their engagement into economic activity.
In the present paper, a state-owned enterprise is defined as a legal entity directly or indirectly controlled by the state in which the state owns 50 percent or more of the voting shares. For the purposes of this paper, municipality-owned enterprises do not fall within the definition of state-owned enterprises.
The Guidelines on Corporate Governance of State- Owned Enterprises by OECD provides that the state should define the rationales for owning an individual SOE. However, specific criteria that could be followed by policy-makers is not provided, stating that the ultimate purpose of state ownership of enterprises should be to maximise value for society, through an efficient allocation of resources.
At present, it is unclear if different states follow specific criteria in establishing whether the state may operate on the market. If no criteria exist, is the decision taken on a case-by-case basis? In addition, the market share of SOEs in different countries remains unclear.
Therefore, the present paper provides a review of the rationales behind state ownership and the decisions to establish SOEs as well as delineates specific implications of these policies. In addition, the paper provides a review of policies and decisions, relating to the corporate management of SOEs in Bulgaria, Estonia, Lithuania, Poland and Slovakia, focusing on the scope of state participation in economic activity throughout the last decade.
Based on twelve criteria, the first part of the paper provides a comparison of public and private businesses. The second part focuses on the rationales behind state participation in commercial activity and their implications. The third part provides reviews of corporate governance of state-owned enterprises in Bulgarian, Estonia, Lithuania, Poland and Slovakia from 2007 to 2018.
You may read the full study Private or Public? What Kind of Business Does Europe Prefer? here.