Pathways from postsocialism: ownership sequence and performance of firms in Hungary, 1991‐1999

Abstract

AbstractCorporate ownership structures were important means to navigate postsocialist uncertainties, and as relational structures, they were vulnerable to subsequent path dependencies. Organizational innovations might outlive their relevant environments, locking firms in to underperform. This article analyzes the ownership sequences and performance of the 200 largest Hungarian firms between 1991 and 1999. Hungary in the 1990s is a strategic historical case to understand turning points, sequencing and performance. Optimal matching analysis is used to identify pathways, and dynamic scaling analysis to delimit ownership regimes in time. Hypotheses about how sequences mattered are tested by regression models of performance. The findings indicate that network forms buffered uncertainties up to 1995, contributing to high labor and capital efficiency. After this period, domestic corporate coalitions locked firms in, leading to inferior performance compared to manager buy‐outs, domestic subsidiaries, and foreign‐owned firms. Joint ventures on the other hand provided protection and then later the option for concentrating ownership, outperforming other pathways of ownership.