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The Performance Differential between Private and State Owned Enterprises: The Roles of Ownership, Management and Market Structure

Authors


Gabriel R. G. Benito, BI Norwegian School of Management, Nydalsveien 37, N-0442 Oslo, Norway (gabriel.r.g.benito@bi.no).

Abstract

abstract  This article examines differences in performance between private companies (POEs) and state owned enterprises (SOEs), with an emphasis on the effects of market structure. The study uses a comprehensive panel covering in principle all registered companies during the 1990s in Norway, a country where SOEs play an important role in regular markets. Return on assets as well as costs relative to sales revenue are used as measures of performance in markets where SOEs and POEs compete with each other. Overall, POEs perform significantly better than SOEs. The study tests the hypothesis that SOE managers may learn from POE managers in environments with stronger competition, but finds only weak empirical support for such a learning mechanism.

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