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Towards a framework to understand the relative performance of state-owned firms

Estrin, Saul ORCID: 0000-0002-3447-8593 (2020) Towards a framework to understand the relative performance of state-owned firms. Economic Annals, 65 (225). 11 - 31. ISSN 0013-3264

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Identification Number: 10.2298/EKA2025011E


This paper considers the factors influencing the comparative performance of state-owned and privately-owned enterprises (SOE/POE). The economics literature has argued that firm performance is influenced by governance arrangements, leading to expectations of inferior performance from SOEs. Meanwhile, a political economy literature classifies countries according to the model of state engagement, which also has implications for SOE performance. We combine these two frameworks to provide a taxonomy. The first framework relating to governance concerns the relationship between owners and managers, the relationship between large and small owners, and the functioning of the managerial labour market. The second framework considers three types of model of state engagement: the Welfare State, the Developmental State, and the Predatory State. Each of the six resulting taxonomies yields distinct outcomes in terms of SOE versus POE performance. In all models, SOEs perform better in a better governance environment than in a worse governance environment, and this ranking is the same in Welfare States and Predatory States. However, in Developmental States with strong governance, SOEs may outperform POEs if they can benefit from superior state resources.

Item Type: Article
Official URL:
Additional Information: © 2020 Faculty of Economics, Belgrade
Divisions: Management
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HB Economic Theory
Date Deposited: 31 Mar 2021 11:39
Last Modified: 16 May 2024 03:20

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