2010/2011

ture of the Estonian enterprises was the most varied and
open of the three countries. The entrepreneurial community
was young, active and quite well educated 16 , although
their activity was somewhat hampered by the setback following
the Russian crisis as a number of “crown jewels” of
the new business (including banks) were sold to foreign,
mostly Nordic capital in the worsening economic situation.
The protectionist lobby and the intertwining of business
and politics were relatively weak. The weakness of
the entrepreneurship structure was primarily the scarcity
of strong leader firms as well as insufficient cooperation
between enterprises.
A clear majority of important enterprises in Estonia
are presently owned by foreign investors. Accordingly,
the opportunities for entering the foreign markets should
be better as well. However, there are certain signs showing
that international firms with a Scandinavian background
and Estonian managers, many of whom started
their career as entrepreneurs rather than paid employees,
need not always make a happy combination (Elenurm,
Terk & Andresoo 2008). The corporate governance
and management practice of international firms does not
always favour local initiative, while the limited opportunities
for strategic choices cannot motivate Estonian managers,
who are used to greater freedom of action.
One of the traits that characterizes all three Baltic
states was that no significant number of large enterprises
emerged in any of them with the transition to market
economy. This can be stated not only regarding the 1990s,
but also about the later period. A survey carried out in
2006 (Müürsepp 2007) showed that Estonia, the most successful
of the Baltic states, had only four firms (Eesti Energia,
Tallink, Eesti Telekom, Merko Ehitus) listed among
the 500 largest in regard to turnover in Central and Eastern
Europe (except the CIS countries) and only five among
the top thousand. The situation was hardly better in the
other Baltic states with three out of the five largest enterprises
belonging to Estonia.
The scarcity of large and strong leading enterprises
need not be a factor of fatal significance, as Denmark, for
instance, is known for its successful small and mediumsized
enterprises. Yet, their small number complicates a
more extensive attaining by Estonian entrepreneurship of
the higher value added niches of the international market.
Irish experts, who consulted Estonia a number of years
ago (Best & Bradley 2006), pointed out the excessive dispersal
of the Estonian entrepreneurship between various
industrial sectors and sub-sectors, as well as the resulting
need to concentrate around potential breakthrough lines.
With the scarcity of flagship enterprises, achieving these
goals would require, in entrepreneurship policy in general
and innovation policy in particular, highly creative solutions.
On the way towards new restructuring:
innovation challenges and innovation policy
Innovation policy and other policies to support innovation
(education, management, science, information technology
policies, etc.) came to the fore in the middle of the
first decade of this century. Obviously, innovation-related
moves can be observed even earlier. For instance, three
foundations, which could be considered tools of innovation
policy – the science foundation, the innovation foundation
and the information sciences foundation – were
established in Estonia as early as between 1989 and 1990.
However, the capital available for supporting innovation
was rather limited at that time and the arsenal of policy
measures for the same purpose was very small as well.
Efforts were made to support the development of hightechnology
small enterprises, which had spun off from
research institutions, but the shortage of marketing and
financial management skills and knowledge, as well as
the absence of high-technology firms’ management culture,
obstructed them for quite a long time (Terk 1997).
More sophisticated innovative entrepreneurship, especially
technologically innovative, was driven to the background
as the private ownership-based entrepreneurship
structure was taking shape.
The implementation of information technology in the
Baltic states has moved along somewhat different paths.
ICT development is not a separate direction of entrepreneurship,
but rather a general basis that creates a foundation
for the modernization of the entire economy and
social affairs. In that respect, the rapid success of Estonia,
in particular, should be highlighted, as it adopted the leading
place along with Slovenia among the Central and Eastern
European countries by the end of the 1990s and passed
by several Western European countries on a number of
ICT usage indicators. A slower, yet quite commendable
development, in comparison with other countries, took
place in Latvia, while Lithuania’s progress was somewhat
slower. While the number of computer users among residents
aged 15–74 years was approximately 20% in Latvia
by the end of the 1990s and slightly lower in Lithuania,
it had reached one third of the population in Estonia and
the rapid growth continued, approaching the 50% limit,
which predicts a qualitative change, by 2003. Largely similar
dynamics with a lag of couple of years can be observed
in Internet usage as well. Estonia reached the limit of one
third of population in the 15–74 year age bracket in 2001,
while Latvia and Lithuania achieved the same level of
Internet usage in 2005. (TNS Emor, e-monitoring ).
Estonia’s progress in ICT, which is primarily related
to the 1990s, has been explained by various factors. It has
been emphasized that this was not the case of realisation
of a classical, programmed in advance, development plan,
but rather was an activity based on timely initiatives and
enthusiastic supporters (including key figures), which
developed in stages. Emphasis was laid on aspects such as
finding the correct and popularly supported focus at the
stage of the initial promotion of an idea (bringing Internet
to schools, stressing the creating of opportunities for the
young generation); first success stories (banking services,
e-tax board, later m-parking); increasing the support for
ICT development from the state budget (gradual increasing
of the initially small budget allocations in 1994–1998);
the advantage of “starting from scratch” (e.g. in banking
the stage of paying with cheques was bypassed); ensuring
broad access to the Internet (Lemberg, Terk & Viia 2007).
Estonia’s ICT success has not been realized as a nationally
important sector of the economy and export on the
basis of IT, but rather by demonstrating the efficiency of
16 As early as in the mid-1990s, studies revealed the surprising fact that the education levels of Estonian entrepreneurs in small and
medium-sized manufacturing firms were higher than those of their British colleagues (Smallbone & Venesaar 1996)
| 36