Restructuring and Privatization of Big Enterprises in Hungary

?Dinosaurs were huge animals?, a chief executive explained me in the early 80s before our extensive knowledge of paleontology was developed from the books of our children. ?If a rat started to chew their tail it took several years for the information to reach the dinosaurs? brain. Our big enterprises are just like dinosaurs? - he stated with self irony. Have these primordial creatures died out of the Hungarian economy? The crucial question of our research was how the political and economic turnover affected the Hungarian large scale industry. How has the organizational and ownership structure of the socialist big enterprises changed? How have their production structures, patterns of behavior and orientations changed? What enterprise strategies have proven to be successful? What has the role of the government been like in connection with big firms? In order to answer these questions we used a combination of economic and sociological methods, based on case studies and the processing the balance sheet data of 49 enterprises, which were considered as privileged, strategic firms under Socialism. First we will outline the main characteristics of the big enterprise group concerned, than have a look at the method and degree of organizational and ownership changes. In the last section the basic lines of disintegration, the elements and the constraints of disintegration will be presented.

Published by Perfekt-Pénzügykutató Rt. 1997 (in Hungarian) Tovább»​​​​​​​

Restructuring and privatization of large firms

What does systemic change mean for large scale Hungarian industry? How have the organizational and ownership structure of large socialist firms changed? How have their activities, behavior and orientation modified? What kind of firm strategies proved to be successful? What is the role of the state as an owner, regulator and market actor in shaping the fate of large firms? The research presented in the paper tries to find answers to the questions with by combining economic and sociological approaches. The fate of 49 large firms, considered as a special group of strategic enterprises in the planned economy, is analyzed by case studies and processing their balance sheet data.

Közgazdasági Szemle - Economic Review, XLIV. évf., 1997. January (31 - 41. O.), Study Tovább»​​​​​​​

According to general understanding, privatization in Central East Europe does not simply mean the transfer of individual firms from state hands to other proprietors, but it is the precondition and the main instrument of rebuilding the whole economic system. Thus, the task is not to fit in state owned enterprises into a functioning market but to create this new integration mechanism parallel with and by the mean of a wide-ranging change of ownership structure. One of the basic dilemmas of the transformation is, whether it is possible to build up the frameworks of a decentralized market mechanism applying a comprehensive, homogeneous privatization strategy, carried out by centralized governmental institutions. In other words: can privatization be designed?
Based on the Hungarian experience, in comparison with Czech-Slovakia and Poland, this paper will argue that all governments have tried to do so. Nevertheless, their attempts to design ownership changes have been successful at a different degree - not (only) in terms of privatized assets or enterprises but in terms of the impact of programs, guidelines and centralized decision making on the transformation of the proprietary structure. The degree of "design" will be characterized by the stability versus shifts of governmental privatization policies and the relationship between the programs declared and the empirical changes.

In: Institutional Design in New Democracies, A. Lijphart, C.H. Waisman eds., Westview Press, Boulder, Colorado, 1996. 177-194. Tovább»​​​​​​​

(Government's role in changing Hungary's ownership structure)

The paper discusses the shifts in Hungarian privatization strategies and in the role of the government in changing the ownership structure. Analyzing the forms of transformation, the goals and motivations of the participants (enterprises and government organizations) and the reasons for changing the main direction, it argues that the five years history of Hungarian privatization indicates the mixed and unstable character of the process. There has never been a uniform, homogeneous method of changing the ownership structure: market type techniques have been accompanied by central distribution of property.
The often changing governmental strategies, motivated predominantly by purely political considerations, show a clear tendency towards the re-establishment of centralized control of state organizations over the firms. The coming years can see an emergence of redistribution type solutions with highly dubious social and economic implications.

In: Strategic Choice and Path-dependency in Post-socialism, Jerzy Hausner, Bob Jessop, Klaus Nielsen eds., Edward Elgar, Brookfield 1995. pp. 287-308. Tovább»​​​​​​​

Politicians and analysts, businessmen and citizens generally agree that economic transformation should amount to market economy creation. Paradoxically enough, the gradual establishment of the basic institutions of the market, including private ownership, is contrasted by the signs of the reactivation of another integration mechanism, namely the redistribution. Following a temporary withdrawal in the late 1980s and early 1990s, the direct redistributive function of the state seems to have gained new vigor.

Acta Oeconomica, Vol.46.(1994)No.1-2. pp.63-78. Tovább»​​​​​​​