State or Private Ownership? A Survey of Empirical Studies

Issue: 2012/2

Michaela Tichá

VŠB-Technická univerzita Ostrava, Ekonomická fakulta, Sokolská tř. 33, 701 21 Ostrava 1, email:

This paper focuses on property rights and performance of enterprises. The objective of this paper is to summarize existing knowledge from empirical studies dealing with the question of whether private property and privatization of enterprises encourage firms to increase their performance measured as growth of profitability, labor productivity, investments, costs effectiveness, etc. On the basis of empirical studies, it is also determined what the influence of institutional frameworks of property rights and privatization is on the firm performance. The first part of the paper reviews results of studies on the non-transition economies privatized by 1990. The second one evaluates the impact of private ownership on performance of enterprises from transition economies of Central and Eastern Europe, and the Former Soviet Union. The results of the studies suggest that private ownership is an important but not sufficient determinant of firm prosperity, subsequently resulting in overall rise of wealth of nations. The positive impact of private ownership on economic performance can occur only in an appropriate institutional environment with relevant legal standards (righteous and enforceable contracts, the protection of shareholders and creditors, adequate banking system, functioning bankruptcy courts, capital market supervision, etc.).

DOI: 10.2478/v10135-012-0006-6
JEL: P31, L33
Keywords: State-owned enterprises, Privatization, Private ownership, Institutional environment, Economic performance


BARBERIS, N. et al. (1996). How Does Privatization Work? Evidence from the Russian Shops. Journal of Political Economy, Vol. 104, August 1996, pp. 764–790.

BOARDMAN, A. E., A. R. VINING. (1989). Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises. Journal of Law and Economics, Vol. XXXII, April 1989, pp. 1–33.

BOUBAKRI, N., J. C. COSSET. (1998). The Financial and Operating Performance of Newly Privatized Firms: Evidence from Developing Countries. Journal of Finance, Vol. 53, June 1998, pp. 1081–1110.

BOUBAKRI, N., J. C. COSSET. (2002). Does Privatization Meet the Expectations in Developing Countries? A Survey and Some Evidence from Africa. Journal of African Economies, Vol. 11, February 2002, pp. 111–140.

CARLIN, W., J. V. REENEN, T. WOLFE. (1995). Enterprise Restructuring in Early Transition: The Case of Study Evidence from Central and Eastern Europe. Economics of Transition, Vol. 3, Issue 4, December 1995, pp. 427–458.

CHANG, H., ed. (2007). Institutional change and economic development. New York: United Nations University Press.

CHANG, H., A. SINGH. (1997). Can large firms be run efficiently without being bureaucratic? Journal of International Development, Vol. 9, Issue 6, September 1997, pp. 865–875.

CLAESSENS, S., S. DJANKOV, G. POHL. (1997). Ownership and Corporate Governance: Evidence from the Czech Republic. The World Bank Policy Research Working Paper No. 1737, March 1997.

DEWENTER, K. L., P. H. MALATESTA. (2001). State-Owned and Privately Owned Firms: An Empirical Analysis of Profitability, Leverage, and Labor Intensity. The American Economic Review, Vol. 91, No. 1, March 2001, pp. 320–334.

DJANKOV, S. (1999). Ownership Structure and Enterprise Restructuring in Six Newly Independent States. The World Bank: Policy Research Working Paper 2047, February 1999.

EARLE, J. S. (1998). Post-Privatization Ownership Structure and Productivity in Russian Industrial Enterprises. Stockholm: SITE Working Paper No. 127, March 1998.

EARLE, J. S., S. ESTRIN, 1998. Privatization, Competition and Budget Constrains: Disciplining Enterprises in Russia. Stockholm: SITE Working Paper No. 128, March 1998.

FRYDMAN, R. et al. (1993). Needed mechanisms of corporate governance and finance in Eastern Europe. Economics of Transition, Vol. I (2), June 1993, pp. 171–207.

FRYDMAN, R. et al. (1997). Private Ownership and Corporate Performance: Some Lessons from Transition Economies. The World Bank Policy Research Working Paper No. 1830, June 1997.

FRYDMAN, R. et al. (1999). When Does Privatization Work? The Impact of Private Ownership on Corporate Performance in the Transition Economies. The Quarterly Journal of Economics, vol. 114, no. 4, November 1999, pp. 1153–1191.

FURUBOTN, E. G., R. RICHTER. (2005). Institutions and Economic Theory: The Contribution of the New Institutional Economics. Michigan: The University of Michigan Press.

GRYGORENKO, G., S. LUTZ. (2004). Firm Performance and Privatization in Ukraine. Bonn: Zentrum für Europäische Intergrationsforschung, Working Paper B04-27, October 2004.

HANOUSEK, J., E. KOČENDA, J. ŠVEJNAR. (2004). Ownership, Control and Corporate Performance after Large-Scale Privatization. William Davidson Institute Working Paper, No. 652, February 2004.

HANOUSEK, J., E. KOČENDA, J. ŠVEJNAR. (2006). Rozdělení, privatizace podniků a jejich výkonnost. Politická ekonomie, 4, 2006, pp. 467–489.

HARPER, J. T. (2002). The Performance of Privatized Firms in the Czech Republic. Journal of Banking & Finance, Vol. 26, Issue 4, April 2002, pp. 621–649.

HAVRYLYSHYN, O., D. McGETTIGAN. (1999). Privatization in Transition Countries: A Sampling of the Literature. IMF Working Paper, January 1999.

HEITGER, B. (2004). Property Rights and Wealth of Nations: A Cross-country study. Cato Journal, vol. 23, no. 3, winter 2004, pp. 381–402.

JÜTTING, J. (2003) Institutions and Development: a Critical Review. OECD, Development Center.

KARPOFF, J. M. (2001). Public versus Private Initiative in Arctic Exploration: The Effects of Incentives and Organizational Structure. Journal of Political Economy, Vol. 109, No. 1, February 2001, pp. 38–78.

KLUSOŇ, V. (2004). Instituce a odpovědnost. K filozofii ekonomické vědy. Praha: UK Karolinum.

KOUBA, K., O. VYCHODIL, J. ROBERTS. (2005). Privatizace bez kapitálu. Zvýšené transakční náklady české transformace. Praha: Karolinum.

LA PORTA, R., F. LÓPEZ-DE-SILANES. (1999). The Benefits of Privatization: Evidence from Mexico. Quarterly Journal of Economics, Vol. 114, No. 4, November 1999, pp. 1193-1242.

MEGGINSON, W. L., R. C. NASH, M. van RANDENBORGH. (1994). The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis. The Journal of Finance, Vol. XLIX, No. 2, June 1994, pp. 403–452.

MERCURO, N., S. G. MEDEMA. (2006). Economics and the Law: from Posner to Postmodernism and Beyond. Princeton: Princeton University Press.

NORTH, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.

OLSON, M. (1996). Big Bills Left on the Sidewalk: Why Some Nations are Rich, and Others Poor. Journal of Economic Perspectives, vol. 10/1996, pp. 3–24.

OLSON, M. (2000). Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships. New York: Basic Books.

PEREVALOV, Y., I. GIMADY, V. DOBRODEY. (1999). Impact of Privatization on Performance of Industrial Enterprises in Russia. In: The First Conference of the Global Development Network: „GDN-99: Bridging Knowledge and Policy“. Bonn, December 1999.

PINTO, B., M. BELKA, S. KRAJEWSKI. (1993). Transforming State Enterprises in Poland: Evidence on Adjustment by Manufacturing Firms. Brookings Papers on Economic Activity, No. 1, pp. 213-270.

POHL, G. et al. (1997). Privatization and Restructuring in Central and Eastern Europe: Evidence and Policy Options. World Bank Technical Paper No. 368, May 1997.

SACHS, J., C. ZINNES, Y. EILAT. (2000). The Gains from Privatization in Transition Economies: Is „Change of Ownership“Enough? Cambridge: Harvard Institute for International Development. CAER II Discussion Paper 63, February 2000.

SHIRLEY, M., P. WALSH. (2000). Public versus Private Ownership: The Current State of the Debate. World Bank Policy Research Working Paper 2420, August 2000. 

SOTO, H. de. (2003). The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic Books.

ZAK, P. J. (2002). Institutions, Property Rights, and Growth. Recherches économiques de Louvain, Vol. 68/2002, pp. 55–73.