Equality, Participation, Transition: Essays in Honour of Branko Horvat

176 Privatization: Evidence from Estonia
majority employee ownership and a large domestic minority shareholding
have faster sales growth of about 42 per cent (0.9679–0.5478).
In Table 10.3 we report the results of augmenting specification (2)
with a vector of ‘ownership dynamics’ variables. For firms which do
not change their majority owner, a set of ‘constant’ ownership variables
are included, for foreigners, domestic outsiders, managers,
employees and no majority – respectively KMAJF, KMAJD, KMAJM,
KMAJE and KMAJN. (The base case is state majority ownership
throughout the period.) For firms which do change ownership, variables
for ownership transitions are included. For example, for firms
which begin with majority ownership in foreign hands and ownership
switches to domestic outsiders, managers, employees, and to no majority,
the variables are F95D97, F95M97, F95E97, F95N97 respectively.
Since there were no switches to state ownership and no switches from
no majority to either foreign or employee ownership, there was a total
of 28 variables in this ‘ownership dynamics’ vector. For these variables,
only estimates for which there is at least one statistically significant
coefficient are reported. The key new finding that emerges from this
‘ownership dynamics’ exercise is that, for all four performance measures,
the null hypothesis that the joint effect of the ‘ownership transition’
variables on performance is zero, is supported by F tests. However,
in a limited number of cases (in fact in 12/112), at least one of the individual
coefficients on the ownership dynamics variables is found to be
statistically significant. For example, firms which switch from majority
state ownership to majority domestic ownership (S95D97) and majority
management ownership (S95M97) have faster rates of employment
growth. By contrast, firms which switch from employee majority ownership
to domestic majority ownership (E95D97) have slower rates of
employment growth.
10.6 Conclusions and implications
In this paper, we report evidence on the effects of different forms of
ownership on enterprise performance. Since our data are for one country,
our findings would not necessarily be expected to generalize to
other countries. However, the Estonian case is of special interest since,
by the many indicators, it is generally believed to be in the top tier of
transition economies. Moreover, our findings are derived from a new
and large panel that is representative of the whole economy. We are,
therefore, able to assemble some of the first reliable evidence on these
matters.