May 11, 2021

High standards of governance in state-owned enterprises are a long-term value for business and society

It would be difficult to overestimate the contribution of qualified company management bodies, leaders and employees in building strong organizations. All management and corporate studies claim that effective management promotes competent supervision, transparency and accountability of companies. Therefore, effective state-owned enterprises can achieve better financial results and strengthen the country’s economy and create sustainable long-term benefits for society. Rytis Ambrazevičius, President of the non-governmental organization Baltic Institute of Corporate Governance (BICG) and Dainius Vilčinskas, CEO of the State Investment Management Agency (VIVA), which manages the State Aid Fund, have just joined the organization.

The state as a partner for business


VIVA CEO D. Vilčinskas says that one of VIVA’s key goals is to become a reliable financial partner for large and medium-sized businesses and provide them with the missing timely financial assistance in lending or investing. “VIVA’s business model is a truly next-generation state financial aid instrument. The multi-level management structure ensures the transparency of VIVA’s activities and decisions, a clear system of accurate cascading, performance measurement and effective communication between the company’s management bodies. By joining BICG, we will be able to share good management practices with other companies, as well as get acquainted with new management recommendations and constantly invest in the growth of competencies of our organization’s leaders and employees,” says VIVA CEO D. Vilčinskas.

According to him, the management bodies of VIVA and the Business Support Fund managed by it: the Board, the Supervisory Board and the Advisory Committee consist of many independent specialists in the fields of investment, banking sector, business management, strategic and risk management. “Modern state-owned companies strive to continuously strengthen strategic thinking, improve operational and management practices, and implement results-oriented management. I believe that the involvement of independent representatives of business and the public sector in the management of state-owned enterprises is significant to achieve these goals,” says D. Vilčinskas. However, modern state-owned enterprises can be attractive employers only if there are motivated experts in the field. Moreover, the enterprise itself is managed efficiently, focused on society’s needs, and is flexible in terms of employees and customers.

The interlocutor also notes that strong, mostly independent professional management bodies and good governance practices allow to understand and respond to dynamic, unique and fast-paced business needs and contribute to long-term value to society. “In order to be a business partner, first of all, we must ensure that the competencies concentrated in the company can respond to this partnership professionally. In VIVA, not only employees but also independent experts working in management bodies grow their professional knowledge, which allows us to create a company with a strong foundation from the very beginning, whose management structure can meet not only the needs of the state but also business,” said VIVA CEO D. Vilčinskas.

Effective governance for countries’ progress 

The Baltic Institute of Corporate Governance (BICG) is a non-governmental organization that promotes the improvement of the business environment. This includes governance of the public and private sector, monitoring the legislative process, problem definition and recommendations. The principles of good governance promote good corporate governance, transparency and accountability, which increases the efficiency of companies, fosters trust, ensures better financial results, helps to attract the best employees and creates sustainable, long-term benefits for the company and society. 

“I am glad that VIVA has followed the example of other strong state-owned companies and joined the BICG community. BICG shares knowledge of good governance, but it is, of course, up to the company to pursue and implement it accordingly. During this process, the role of collegial bodies is essential because the board and/or the supervisory board set the tone for all the company’s management processes and organizational culture. The collegial body must ensure that the company is managed responsibly, transparently and efficiently. Then, naturally, the best management practices with their benefits prevail in the company,” said BICG President Rytis Ambrazevičius. 

According to the head of the organization, a decade ago, BICG started to call for the inclusion of independent members in the collegial bodies of Lithuanian state-owned companies, as they bring companies a lot of additional competencies and help depoliticize corporate governance. “This idea has been heard, but it has been implemented gradually, sometimes trying to take a couple of steps back, so we have been working on this topic all these years, including these days,” said the NGO spokesman. R. Ambrazevčius also pointed out that cooperation with the Organization for Economic Co-operation and Development, of which Lithuania became a member a few years ago, and monitoring the implementation of its recommendations also play an essential role in this work. 

“I am glad to see that state-owned companies, which were the first to invite independent members of collegial bodies and have started to implement other good governance practices, such as Klaipedos Nafta or Ignitis Group, are still considered good examples for others. I believe that strong state-owned companies will not only create an environment for sustainable cooperation with the business but will also fundamentally change the culture, attitudes and values of public administration,” R. Ambrazevičius, President of BICG, summed up the conversation.


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