Economic History, Education and Science, Markets and Companies

International Internet Magazine. Baltic States news & analytics Saturday, 04.12.2021, 06:16

Business forms of housing development sector in Latvia

Inara Lisa, doctoral student, Baltic International Academy, Riga, 29.04.2020.Print version
Modern economic processes occurring whether in Latvia, European Union or all over the world have created conditions for appearing of various legal forms of organization.

The main form of incorporation in housing development sector in Latvia are Limited Liability Company (Sabiedrība ar ierobežotu atbildību (SIA)), Joint-Stock Company (Akciju sabiedrība (AS)), European trading company (Societas Europaea (SE))[1]. Therewith, new forms of business combinations either with bank capital or creation of various financial and construction groups, such as holdings or concerns (for example, the leader of the Baltic market concern Merko [2] or holding company YIT [3]) are also actively developing.


It should be noted that activities of typical business combinations and capitals are regulated using various instruments of antitrust, investment, credit, tax and other areas of the economic strategy, which affects their operating efficiency. As part of the ongoing globalization processes, changes in the business forms are taking place.


The postindustrial (informational) company is based on innovative combinations - enterprise networks of a cluster type. Cluster development is a newish form of improving competitiveness by integrating firms and supporting participants at the regional level. Although construction plays an integral role in growth and employment in most countries of the European Union, it lags behind in innovation and Research and Advanced Development costs.


One of the first cluster associations in the European construction sector is the Reg-Con project - an attempt to apply clustering techniques in the construction industry in European regions by sharing of best practice and mentor schemes [4].


Formation of building clusters allows optimizing scientific and technological potential of the sector by creating economies of scale and providing a sufficient critical amount for the efficient development of its goals. Partners in building clusters may be government agencies, research and development and innovation centers formed in each region, international agents or any other representatives interested in achievement of their objectives.


The strategic research program, prepared by the European Construction Technology Platform, sets quite ambitious goals for transforming the traditional construction sector into the science-intensive and scientific-research sectors [5]. According to the specialists' research, countries that implement the use of cluster strategies in various fields of activity have achieved GDP growth in the range of 75 to 90% [6].


Over several decades, various cluster strategies have been introduced and real-life clusters have been created in various branches of the economy in the Baltic countries. It should be noted that relatively small territory of these countries, its neighborhood and common history are a good basis for creation and functioning of clusters of various sizes: from regional and national to transnational ones [7]. The main advantage provided by the creation of an innovative cluster is the so-called synergetic effect [8]. A framework for occurrence of such effect is the creation of strong order relation between participants. According to the research of R. Kh. Khasanov, the significant synergetic effects of the cluster are so-called “overflow of knowledge” effects, which generates additional cash flows due to the joint use of various infrastructure facilities and transaction costs reduction [9].


Thus, the construction market is on the rise, causing a corresponding transformation of its forms of organization. Use of innovative technologies enhances the industrial efficiency, and implementation of the cluster strategy allows achieving synergetic effects.


  1. (2015). Business forms in Latvia. [online] Available at: [Accessed 12 Sep. 2019].
  2. (2019). Company profile — Merko. [online] Available at: [Accessed 12 Sep. 2019].
  3. (2019). YIT. [online] Available at: [Accessed 12 Sep. 2019].
  4. Petousis, Markos & Vairis, Achilles & Yfanti, Sofia & Vidakis, Nectarios & Sakkas, Nikos. (2008). CLUSTER DEVELOPMENT IN THE EU CONSTRUCTION INDUSTRY: EXPERIENCE IN DIFFERENT REGIONS.
  5. EU Agenda. (2014). European Construction Technology Platform (ECTP). [online] Available at: [Accessed 12 Sep. 2019].
  6. Belousova, E. (2016). Trends of European innovation clusters development. Gobal economics, 4(137), p.116.
  8. Zaitseva, E. (2016). DEVELOPMENT OF LATVIA INNOVATIVE CLUSTERS, SYNERGETIC EFFECT. National Association of Scientists, 5(2).
  9. Zaitseva, E. (2016). DEVELOPMENT OF LATVIA INNOVATIVE CLUSTERS, SYNERGETIC EFFECT. National Association of Scientists, 5(2).


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