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

178 Privatization: Evidence from Estonia
find evidence that economic performance varies with the type of
minority ownership. As such, these results support the view that, in
accounting for differences in economic performance, it is not sufficient
to identify the majority owners, and that sometimes more favourable
performance may arise from decreasing the concentration of majority
ownership and increasing minority ownership.
In other exercises examining differences in performance, the hypothesis
that the joint effect of a vector of ‘changes-in-ownership’ variables
on economic performance is nil, is always accepted. Nevertheless, occasionally,
there is evidence that particular ownership transitions do
have an effect on economic performance that is statistically significant.
In particular, movements away from state ownership tend to lead to
faster sales growth. As such, these results give mild support to the view
that when investigating economic performance in transition economies,
some attention might be paid to the ownership trajectory
that the firm has followed (rather than just the current ownership
configuration).
Future research might go in two directions. First, there is a need to
explore the use of empirical approaches that are alternative to the
empirical strategy adopted in this paper. In particular, in investigating
the determinants of business performance, more standard strategies
(such as estimating technical efficiency frontiers and production functions)
need to be implemented (and their results compared to findings
based on the approach used in this paper). Secondly, research might
focus on identifying the different legal and institutional factors which
may contribute to the discrepancy in results for even the same
ownership forms among the transitional countries. Indeed, there is a
limited volume of other research which points to the empirical importance
of other factors in accounting for differences in efficiency.
For example, in an important study, Weitzman and Xu (1994) find
that, in China, economic efficiency may not require unambiguous
property rights and that contracts may not need to be accompanied by
the full gamut of legal institutions. The implication is that the optimal
level of property rights may vary with the underlying propensity of
the population to cooperate and that in cultures where cooperative traditions
are strong (China) ambiguous property rights may work
best. Also, as predicted by Horvat (1982), evidence for Russia (Jones,
1998) and for Bulgaria (Jones, Klinedinst and Rock, 1998) points to
the important influence of employee participation upon business
performance. 22