What allows some economies to combine strong companies, developed capital markets, long-term ownership and high levels of institutional trust – and what can Europe and the Baltics learn from them?
These questions were explored during a special edition of the BMI Board Network in Vilnius, organised as the opening event of the 25th Workshop on Corporate Governance and Investment.
The session brought together Lars Ohnemus, PhD, Director of the Center for Corporate Governance at Copenhagen Business School and Board Member at BMI Executive Institute; Daina Kleponė, PhD, Professor at VILNIUS TECH, Member of the Supervisory Council at ILTE Lietuva and BMI Executive MBA Alumna; and Andrew Hobbs, Partner and EMEIA Center for Board Matters Leader at EY. The conversation was moderated by Prof. Dr. Marc Steffen Rapp, Professor at Marburg University and Visiting Professor at BMI Executive Institute.
At the centre of the topic is a broader question: how closely are governance, ownership and competitiveness connected?
The Nordic model works as an ecosystem
The Nordic economies provide an important reference point for Europe because their performance cannot be explained by one governance mechanism alone. Their model combines open markets, developed capital markets, effective public institutions, investment in innovation and R&D, and ownership structures capable of supporting companies over long periods.
Ownership is particularly important. Strong owners need to remain patient through business cycles while still being prepared to challenge strategy, management or performance when necessary, creating a balance between long-term commitment and accountability.
For the Baltics, this is becoming increasingly relevant as many companies built during the first generation of post-independence entrepreneurship enter a new stage of development. Founder-led structures are gradually evolving towards more institutional ownership, external investors, professional management and independent boards, which raises an important governance challenge: how to preserve entrepreneurial speed while adding the structures required for sustainable growth.
Capital markets are part of the governance system
One of the clearest structural differences between the Baltics and the Nordic countries is the depth of their capital markets. During the event, stock-market capitalisation was discussed at around 7% of GDP in the Baltic context compared with around 70% across the Nordics.
This matters for more than financing. Developed capital markets create external scrutiny, transparency and discipline, while also giving companies more options to finance growth beyond retained earnings or bank lending.
Different forms of capital also shape different behaviours. Bank financing can provide continuity and strong local-market understanding, while equity and other forms of risk capital can be better suited to transformation, international expansion and long-term investments with uncertain returns. Competitive economies therefore benefit from a wider financing ecosystem in which companies can access different sources of capital as they mature.
For Europe, the challenge is not simply the absence of capital, but how effectively existing household and institutional savings reach productive businesses. Governance matters directly here because investors assess not only individual companies, but also ownership rights, board quality, transparency, accountability and the predictability of institutions.
Trust is economic infrastructure
Trust is one of the less visible, but most important, parts of this system because it influences whether entrepreneurs are prepared to bring in outside investors, whether owners are comfortable appointing independent board members, and whether companies are willing to become more transparent.
In privately owned and family businesses, these questions become particularly important. External capital usually requires some degree of shared control, a professional board requires management to accept independent challenge, and a public listing requires greater transparency. Where trust is limited, owners are naturally more reluctant to make these changes.
The Nordic experience shows that trust can be built over time through credible institutions, financial literacy, functioning capital markets and repeated experience. As investors become more comfortable with the system and companies become more accustomed to operating transparently, participation in public markets can broaden.
For Lithuania, stronger governance can therefore support a wider economic objective by creating the confidence required for more companies and investors to participate in capital markets.
Professional boards become more important as companies mature
As companies grow, bring in new shareholders, expand internationally or separate ownership from management, professional boards become increasingly important because they provide structured challenge, external experience and independent judgement.
This is especially relevant during succession, ownership transitions, major investment decisions or periods of strategic uncertainty, when founder-led decision-making alone may no longer provide enough perspective.
Lars Ohnemus connected this directly to the development of management and board competence in the Baltic region. Strong technical and entrepreneurial capabilities have long been present, but professionalising management and boards remains an important part of the next stage of development.
For smaller and mid-sized companies, an experienced board can also provide strategic expertise that might otherwise require several external advisers.
Incentives need to support long-term strategy
Good governance also depends on what organisations choose to reward. Executive remuneration systems have become increasingly complex, often combining financial targets with a wide range of non-financial KPIs, but excessive complexity can make it difficult to understand what behaviour these systems are actually encouraging.
The more important question is whether incentives remain clearly connected to long-term strategy. This means focusing on multi-year performance and ensuring that non-financial measures genuinely reflect strategic priorities rather than becoming an additional layer of reporting.
Boards therefore need to examine not only how executives are rewarded, but also what kind of decision-making those systems encourage over time.
Europe’s competitiveness challenge is also a governance challenge
Europe has strong research capabilities, successful entrepreneurs and significant pools of private capital, yet many companies still struggle to scale.
Part of the challenge lies in balancing regulation, accountability and risk. Strong frameworks are necessary, but excessive complexity can slow decision-making and discourage experimentation, so institutions need to protect stakeholders while still allowing entrepreneurs, executives and boards to take calculated risks.
For the Baltics, visibility is another important factor. Successful companies and entrepreneurs already exist, but international capital does not automatically find them, and stronger exposure to markets such as Stockholm, Copenhagen and London can help connect Baltic businesses with deeper pools of capital. Governance supports this process by increasing credibility and reducing perceived investor risk.
AI is becoming a board-level responsibility
Artificial intelligence adds a new dimension to the governance agenda because boards now need to consider AI not only as a productivity tool, but also at the level of strategy, organisational capability, risk and accountability.
Boards need to understand how AI may change business models and sources of value, while also considering longer-term consequences for talent development and management pipelines. Automation may reduce some entry-level tasks, but organisations still need to develop the people who will become experienced managers and leaders in the future.
Clear accountability is equally important. Directors need to understand who owns AI-related decisions, controls and risks within the organisation, rather than relying on broad statements about responsible technology.
The technology changes, but the core board responsibility remains familiar: understand strategic implications, challenge management and establish clear accountability.
What the Baltics can take from the Nordic model
Governance systems cannot simply be copied from one country to another because institutional history, ownership structures, regulation, culture and capital markets differ across Europe.
The more useful approach is to identify the principles that make strong systems work and adapt them to the local context. For Lithuania and the wider Baltic region, the priorities are clear: deeper and more trusted capital markets, active long-term ownership, stronger professional boards, continued development of managerial and board-level capability, incentives aligned with strategy, governance frameworks that support responsible risk-taking, and clear accountability as technologies such as AI become embedded in business.
Together, these elements create the conditions for stronger companies, greater investor confidence and more sustainable long-term growth.
From governance principles to boardroom practice
These questions are closely connected to the purpose of executive and board education because governance becomes most relevant when it reaches practical decisions: how ownership should evolve, how boards and management work together, how incentives are structured, how directors challenge strategy and how organisations navigate uncertainty.
The Board Leadership and Governance programme, jointly crafted by BMI Executive Institute in partnership with Copenhagen Business School, takes these topics further through four days of intensive learning in Copenhagen and Vilnius, covering ownership structures, board roles and dynamics, decision-making, finance for board members, succession, executive incentives, stewardship, risk and the legal responsibilities of board work.
Lars Ohnemus is among the programme faculty, bringing his experience across international business, investment, academia and board work directly into the classroom.
15-16 October 2026 | Copenhagen Business School, Copenhagen
30 November-1 December 2026 | BMI Executive Institute, Vilnius
A few places remain in the autumn cohort. Secure one of the last seats and continue exploring how stronger governance can translate into better boardroom decisions and long-term value creation.
Learn more about the Board Leadership and Governance programme.