The Significance of SOEs Performance Measurement as Policy Instrument in Baltic Countries

Ruta Kloviene, Edita Gimzauskiene, Dalius Misiūnas

Abstract


State-owned enterprises play a significant role in many economies. Both, in Baltic countries and other EU member countries state owned enterprises (SOE) create a significant portion of the gross domestic product, often in a monopoly position of the market and provide important public services (energy, water, public transport, electronic communications, health, education, social services). The efficiency of their activities to a large extent determines the competitiveness of national economies. However, the performance of these companies and their activities are not always sufficiently effective, which manifests in low economic performance and the contribution to the national economy's competitiveness is not as high as it could be.

In Baltic countries the emergence of performance and its disclosure was caused by certain political events. When these countries have become members of Europe Union, they have undertaken to implement a more comprehensive performance reporting in public sector (Lithuanian Institute of Public Administration, 2005). However, this is a long-term process, which is continuing up to today. Also, there is still not created the common assessment of reports and how comprehensive and correct information is given in the annual reports. Not speaking about the comparison of the results among these three Baltic countries, which are similar to their historical background, size and economic situation.

Purpose. To investigate the importance of performance measurement in state-owned enterprises and how increasing quality of performance can influence SOEs in Baltic countries.

Methodology. The scientific literature and strategic document analysis, logical analysis methods that involves the generalization of theoretical propositions is applied to analyze the conceptual framework of state-owned enterprises and their performance reporting features. Seeking to analyze the peculiar aspects of SOE’s performance in all three Baltic countries, a number of public documents, OECD recommendations and other governmental reports were investigated. Also the annual reports of SOEs in Baltic countries at national level were investigated seeking to evaluate the extent of information disclosure.

Results. Performance measurement in all three Baltic countries has a significant role not only as a policy instrument, but also as strength of economy. Numerous changes should be implemented in terms of quality of performance, which is followed by the recommendations provided by OECD and other institutions. Even the legal obligations are properly set in the documented level, there is still a lack of practical implementation.

The theoretical contribution. The evaluation of reporting quality and recognition of the results and specific characteristics are a key element for future performance measurement development process in state owned enterprises of Baltic countries.

Practical implications (if applicable). The results obtained can be used for creating the performance measurement system, where various gathered aspects would be taken into account.

Keywords: state-owned enterprises, performance measurement, public sector

Paper type: Theoretical paper.

 


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