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The chapter shows how globalization and the IFRSs have affected the development of financial accounting and reporting in Estonia. This is interpreted through institutional theory.

The theoretical framework takes into account the prior papers published using institutional theory for defining pressures affecting the development of financial reporting model. The discussion part is presented in three sub-sections. Coercive institutional pressure is analyzed using Estonian accounting legislation from 1990–2012 and normative pressure by focusing on the impact of Big 4 audit companies in the Estonian context. The authors also give an overview of mimetic institutional pressures. As a methodological technique literature review and document analysis are used.

In the context of coercive institutional pressure the development of accounting legislation in Estonia has been mostly influenced by the IFRSs and European Union. In the light of recent events it seems that Estonia has the opportunity to follow its own way deciding which accounting principles should be applied to SMEs. Mimetic institutional pressure affecting Estonian accounting system is International Accounting Standards Board (IASB), which practices Estonian Accounting Standards Board (EASB) copies. Normative institutional pressures influencing the development of the Estonian accounting system are the Big 4 audit firms.

Although using institutional theory to interpret the development of financial reporting framework is not new its application is underexplored in the context of post-Soviet countries such as Estonia. The chapter potentially contributes to the accounting reforms evidence in emerging economies.

The purpose of this paper is twofold. First, it aims to contribute to the theoretical discussion on shared service centres (SSCs) for public sector accounting by putting forth a novel typology of different SSCs and their creation modes, and outlining the challenges these specific models are likely to face. Second, it uses the Estonian case study to test the theoretical conjectures.

Since in the Estonian central government different reform models for creating SSCs for public sector accounting have been tried out, the Estonian case offers an opportunity for exploring what the motives behind the creation of different forms of SSCs can be and what kind of challenges reform actors can face when opting for different reform models. The sources of data for the qualitative case study included official documents, media articles and interviews.

The Estonian case study demonstrates that the distinct reform models for creating SSCs in public sector accounting can indeed have different motives and also face various challenges to different degrees. Some challenges, however, are present in all reform models (e.g. difficulties in achieving customer orientation and reduced input to managerial decision making).

This paper puts forth a novel typology of public sector SSC reform models and analyses the challenges these different reform models are likely to face. The theoretical contribution and the Estonian case study are valuable for both academics and practitioners analysing or considering the creation of SSCs.

The aim of the study is to explore the relationship between organizational leadership capability and organizational performance in the context of market orientation in Estonian financial services organizations.

A total of eight organizations from the Estonian financial services sector participated in this study: the five largest banks (∼95 per cent of the market), the largest leasing organization (∼50 per cent of the market) and the two largest insurance companies (∼50 per cent of the market). The data used includes: aggregated and non‐aggregated evaluations by customers, and aggregated financial data. The methodology combines two approaches for testing the hypotheses: a quantitative OLS regression analysis of the evaluations from 555 customers, and ranking mean values of the aggregated assessments from customers and financial data in quartiles for all eight organizations.

The results of the study reveal a relationship between specific organizational leadership capabilities and organizational performance.

The study suggests that the positive relationship between leadership and organizational performance at the organizational level explains how an organization manages in the context of its external environment. However, the results of the authors’ investigation are only valid in the Estonian financial services context, and the influence of organizational leadership capability on organizational performance in organizations in other service sectors could differ from these results.

This paper demonstrates that organizational leadership capability, expressed as the interaction between the main behavioural principles of an organization marked as organizational orientation and adaptation, has a clear relationship with organizational performance.

The purpose of this paper is to mainly find out how well is time-driven activity-based costing (TDABC) suits for a university library setting in Estonia. For this purpose, all activities related to acquisitions process were identified and recorded in detail, and the cost of all these activities related to acquisition process in Estonian university libraries based on the example of the TDABC method were anlyzed.

The data used in this paper is based on a review of relevant literature to provide an overview of the concept of the different cost accounting methods suitable for the measurement of the acquisition process. Through a case study, conducted among Estonian university libraries, the TDABC approach was used to analyze the acquisition process in university libraries. More specifically, the acquisition process studied concerned print format books, audiovisual documents and sheet music, and covered acquisition processes such as receipt of orders, ordering documents, communication with bookshop (if necessary), receiving documents and communication with the customer.

On the basis of the current study it can be said the TDABC methodology seems to be one of the best tools for understanding cost behavior and for refining a cost system for university libraries. While analyzing the results, it appeared that the difference in time and cost for acquiring a document can be remarkable and concerns both – acquiring foreign documents (documents from other countries) and acquiring domestic documents, and between the university libraries chosen for the current study.

The subject of cost accounting as a performance measurement method is in general an unexplored field in Estonian university libraries. Time guidelines for acquiring the documents were, however, quite common in the 1980s in the USSR, including Estonia. Soviet-wide regulatory documents were issued on all library work processes, but each library could still implement their own rules. In the 1990s, the regulations were consigned to oblivion. Very few cost surveys involving different library activities have been carried out in Estonia and none have been published. Where such studies have been conducted, the results remain for internal use only.

The purpose of this paper is to explore the dynamics of the usage of performance measurement (PM) methods and indicators, and this usage's influencing factors in service companies.

The study is based on the contingency theory framework and focuses on PM patterns. The sector, company size, and market environment dynamics, which are these patterns' primary determinants, are analysed. The study uses empirical survey data gathered from the 61 largest companies in Estonia. The study has a dynamic focus, explaining the changes in PM practices as in 2004 and 2007.

The research shows the increasing use of more balanced PM tools combining financial and non‐financial, market‐related and internal process dimensions. Nevertheless, the findings demonstrate that the companies predominantly used traditional cost accounting and reporting methods, as well as financial indicators for their PM. The findings highlight the similarities and differences between the PM patterns in service companies and manufacturing companies.

The general limitations of survey‐based research have to be considered. The findings on the PM indicators and methods explain the usage's intensity, but not the effects of this usage on the performance. The study also analyses only a limited number of drivers that influence PM practices.

The research findings have two main implications. First, the paper contributes to the scarce knowledge about PM practices in service companies. Second, the paper considers the changes in PM patterns, concentrating on the dynamics of PM practices.

Estonia’s results in programme for international student assessment (PISA) studies between 2006 and 2012 showed both high-level attainment and social equity. The combination of excellence and equity makes Estonia stand out from other countries. The purpose of this paper is to explore the wide range of factors that influence Estonian students’ performance in these tests and note how professional capital fits into the overall picture.

First the authors present a brief analysis of the outcomes in terms of the PISA results. Then the authors describe a wide range of contextual factors in Estonia such as: the country’s general level of human development; historical and cultural factors; demographics and social factors. These are the inputs to the education system. Finally the authors explore the interplay between features of the education system itself – the schooling processes – and note the impact of professional capital.

The authors judge that the interplay between professional capital with other factors that work in harmony explains why the system is highly effective. This coherence is not accidental; it is the outcome of a series of deliberate reforms and investment over a single generation.

Between 2009 and 2012 Estonia increased its share of top performers in PISA tests while, at the same time, reduced the proportion of low performers. This is commonly referred to as “raising the bar and closing the gap”. Individual schools struggle to close attainment gaps between different groups of students. Estonia is one of a very small number of countries to achieve both excellence and equality across the whole national system.

The purpose of this study is to investigate ways in which the performance management at different school management levels contributes to the performance of public schools in the Estonian general education system.

The study is based on the balanced performance management approach and focuses on performance management patterns in Estonian general education schools. At the individual, operational, and strategic performance management levels, the primary performance determinants are analysed. The study uses empirical survey data gathered from 164 schools providing upper secondary education in Estonia.

The research shows that a pupil's academic performance as the most common indicator of a school's performance influences individual goals, such as satisfaction with the quality of education and teaching in the school and the pupils' further choices and opportunities in education. The satisfaction of other interested parties such as teachers and parents is influenced by the school's strategic as well as operational performance management measures. Therefore, a school's performance management system must operate as a balanced system integrating the individual, operational and strategic performance management levels of the school.

The general limitations of survey‐based research have to be considered – the study is static in nature, although the longitudinal approach would allow assessing the dynamic aspects of performance management in public schools. In addition, it is necessary to further explore a wider set of individual, operational and strategic performance management indicators and their interconnections in the implementation of performance management in public schools.

The research findings have two main implications. First, the paper contributes to the limited knowledge about the implementation of performance management practices in public schools. Second, due to the fact that the Estonian education system is firmly based on approaches that have proven to be performance‐enhancing, the analysis provides an overview of and information about the countries that have not gone to such lengths in the restructuring of their education system.

This article aims to examine academic literature and the taxation regulatory environment in Estonia in relation to small and medium enterprises (SMEs). The objective of the paper is to identify key areas of the taxation regulatory environment which affects SMEs and assess and link important academic literature in relation to those areas with the empirical research. In effect to explore that business reality including Estonia's Soviet historical background and compliance with her EU membership taxation obligations.

This exploratory paper makes use of World Bank Surveys and primary tax law sources, together with qualitative empirical research from an SME manager and a taxation law firm, both from within the country assessed.

It confirms the correlation between economic growth and taxation and identifies the “key” aspects of the taxation regulatory environment for an SME through academic literature reviewed which is linked with the empirical research. This qualitative research provides in‐depth information and fills gaps from previous quantitative research. It emphasises a very positive progression including significant electronic development and compliance with EU directives and regulations has been made by Estonia encouraging SME activity.

This research demonstrates the business reality of the Estonian taxation regulatory environment. Unofficial costs, a legacy from the Soviet period, are virtually non‐existent within the Estonian taxation system. Gaps within World Bank Surveys are filled by the interviews, which give a grass‐roots perspective on taxation regulation affecting an SME.

The research highlights the importance of the taxation regulatory environment and the reality of the regulation and compliance work for SMEs within a relatively new EU member state. Estonia is an important country within Europe's “Northern Dimension” and a former member of the Soviet Union. Consequently, any assessment of its taxation environment can be used as a guideline/model for others from similar backgrounds with similar aspirations.

The purpose of this paper is to participate in the discussion of a relatively new field of corporate governance (CG) and its development. The aim of the research is to discover how well‐known Estonian business leaders perceive the purpose of business activities, corporate relations with the society and environment and who they consider the most significant stakeholders. These issues are studied and analyzed during a ten‐year period in the real‐life Estonian business environment.

The empirical part of the paper is based on the results of in‐depth interviews with 26 top Estonian managers and owners, often known as generalists. The paper discusses the results of qualitative research conducted among these business leaders, owners and top‐managers in Estonian organizations, exploring how business purposes and interests, relations with the society and environment as well as different stakeholders are perceived and how these perceptions have changed in Estonia during the period of ten years (1995‐2004).

This paper shows how business purposes, interests, corporate relations with the society and environment as well as with different stakeholders are perceived in a rapidly developing former post‐socialist and now EU member state, Estonia. It was revealed that stakeholder interests and corporate relations with the society and environment in business have not yet been considered important issues in business organizations. According to the results, the stakeholder thinking and stakeholder concepts have just recently became recognized and understood among the Estonian business leaders. There is a clear difference seen in two periods studied in this research.

The main limitation of the study is related to survey methodology. In‐depth interviews are conducted with 26 representatives; this sets limits to the possibility to generalize the results. In further research, the aim is to get more data through structured questionnaires thus enabling to conduct quantitative analysis and draw conclusions based on larger amount of respondents.

In order to stay sustainable and be able to develop further there is a need for Estonian business leaders and organizations to start paying more attention to the different stakeholders, and see the organizations as a part of the environment and society.

The main contribution of the paper can be found in the in‐depth discussion of the concept of CG particularly from the perspective of stakeholder theory.

The purpose of this chapter is to provide a comprehensive review of empirical research on performance management (PM) in former communist Central and Eastern European (CEE) countries, to evaluate the state of knowledge in this area and suggest possible directions for future research.

An examination of the literature was undertaken to review the empirical studies treating on PM in ex-communist countries from CEE. A total of 96 journal articles, PhD thesis, and conference papers were identified, categorized, and analyzed according to research questions, methodology, and theoretical framework. Contributions are classified by countries, according to progress in transition process (post-transition/transition countries) and membership in the Soviet Union (Soviet/non-Soviet countries). The review examines publications in four languages (English, French, Romanian, and Russian).

The literature review identified various stages of development of PM research and practice in the different groups of CEE countries.

In post-transition CEE countries, PM research follows the trends settled up in the developed countries (quantitative studies examining the extent of usage of different PM tools, influence of contingent factors, relationship PM-strategy, and impact on company’s performance). Also, the findings illustrate the modernization of PM practices: increasing importance of nonfinancial indicators and integrated performance management systems (PMS), although financial indicators are prevailing.

On the contrary, in transition countries PM research and practices are at an early stage, the reviewed literature highlights some specific issues related to transition context: the dynamic aspect of PM, change management, importance of informal systems, cultural aspects, and business traditions.

Because of the large number of CEE countries and the diversity of their national languages, many studies conducted in native languages have not been addressed in this literature review, which is essentially based on publications in English and French. Only for three CEE countries (Russia, Romania, and Moldova) publications in national language were considered.

This literature review may be useful for practitioners, providing insights on the extent of diffusion and usage of different PM tools and identifying difficulties and pitfalls to avoid in their implementation.

The chapter represents one of the first contributions to the knowledge about PM research and practice in former communist CEE countries. The adopted framework for reviewing and classifying the literature allows identifying the differences in PM research and practices between post-transition/transition and Soviet/non-Soviet countries.