IMPACT OF FOREIGN OWNERS ON THE RESTRUCTURING PROCESS OF ESTONIAN MANUFACTURING ENTERPRISES

A large amount of foreign direct investment has moved into the transition countries as a result of the privatisation process. The purpose of this paper is to analyse empirically the role of foreign owners in the restructuring process of Estonian manufacturing enterprises. The main hypothesis is that foreign ownership contributes to an increasing efficiency at the company level in general. The second hypothesis is that enterprises representing different forms of ownership use different models for restructuring. Efficiencies of domestic and foreign-owned enterprises in the manufacturing sector will be compared, using the pyramid of efficiency worked out by the British Institute of Management and Centre for Interfirm Comparison. Firm-level data of the Estonian Statistical Office for the period 1995–1998 will be used. The analysis leads to the conclusion that foreign enterprises contribute to an increasing efficiency at the company level, having especially high labour and capital productivity, paying higher wages and having a several times higher ratio of fixed assets per employee. Another result of the paper indicates that foreign enterprises are more engaged in strategi