Enterprises In Transition Economies Research Articles

Transition and Active Investors: Venture Capital in Hungary, Poland and Slovakia

The development of active investors has been argued to be a major factor in achieving efficiency in enterprises in transition economies. This article analyses the role of venture capital firms as active investors in Hungary, Poland and Slovakia. It outlines the development of the venture capital markets in each country and provides evidence on the extent, nature and constraints upon the active investor role of venture capital firms in each country. The article discusses the policy implications for the development of venture capital firms as active investors in the three countries concerned, notably suggesting the need to develop appropriate legislation, enhance financial reporting systems, develop the range of skills of venture capital executives and define carefully the role of public sector providers of venture capital.

Job Creation, Job Destruction, and Growth of Newly Established, Privatized, and State-Owned Enterprises in Transition Economies: Survey Evidence from Bulgaria, Hungary, and Romania

This paper reports new and unique firm-level survey evidence to investigate the microeconomic nature of the growth process and structural change in three transition countries, Romania, Bulgaria, and Hungary. In particular we investigate gross job creation and destruction in newly established private (de novo) firms and “traditional” ones, both state-owned and privatized firms, and find that thede novoprivate firms are the most dynamic in terms of job creation. After controlling for size and life-cycle effects, we find thatde novoprivate firms consistently outperform the state-owned and privatized enterprises. In addition, we find that state-owned enterprises and privatized firms have on average the same firm-level employment growth.J. Comp. Econom.,September 1998, 26(3), pp. 429–445. University of Cambridge, Cambridge CB3 9DE, UK; Katholieke Universiteit Leuven, Leuven B-3000, Belgium; CEPR, London, UK.

Employment and wage behaviour of industrial enterprises in transition economies: The cases of Poland and Czechoslovakia1

AbstractIn this paper we use two very large panel datasets from Poland, 1988‐90 and Czechoslovakia, 1990‐1992 to explore the dynamics of employment and wage determination at the enterprise level in the early years of transition. The study is intended to assist in building a coherent picture of microeconomic adjustment in transition, a field which was not sufficiently explored in the early years of reform. We find that Polish firms were already to some extent responsive to market conditions pre‐reform, notably to demand in determining employment. Czechoslovak firms, however, were largely unresponsive to such pressures in 1989‐90. The elasticities rose significantly in both countries in the early years of reform, especially in Czechoslovakia which quickly attained initial Polish patterns of adjustment. Firms became much more responsive to sales and cost pressures in adjusting employment and to their own productivity in setting pay. Ownership effects in these early years were, however, much more modest, with state‐owned firms adjusting employment more than their private counterparts, perhaps because over‐manning was more serious in that sector.

IN SEARCH OF OWNERS: PRIVATIZATION AND CORPORATE GOVERNANCE IN TRANSITION ECONOMIES

Experiments in privatizing enterprises in transition economies abound, from extensive efforts at sales to strategic owners (as in Estonia and Hungary), to programs based primarily on insider buyouts (as in Russia and Slovenia), to innovative mass privatization programs involving the creation of large and powerful new financial intermediaries (as in the Czech and Slovak republics and Poland). Each approach has inherent strengths and risks. But if the objectives are to sever the links between the state and the enterprises, to school the population in market basics, and to foster further ownership change, the initial weight of evidence seems to favor significant reliance on voucher privatization, especially given the difficulty most countries have finding willing cash investors.

Developing local support services for small business development in Central and Eastern Europe—The donor challenge

The paper focuses upon the future development of local support for small enterprises in transition economies. It points to the rapid growth in numbers of support agencies in all of these countries. These agencies are largely based upon western models and are supported by western funds. A number of issues are raised in respect of their future. These are explored under three headings: the true relevance of the western models; strategic issues in die survival of agencies; and conceptual issues as they relate to the problems of adding value and effectiveness in networking and organization design. These issues are then examined in the context of a comparative in-depth study of a number of Hungarian and UK Local Enterprise Agencies. The results point to die value of ‘a priori’ comparative exploration of die circumstances that underpin any model that is to be used as a basis for a transfer process. They indicate that UK agencies share many strategic problems with Hungarian agencies and cannot offer many solutions. They also demonstrate the shared weaknesses of die policy and networking conceptual base. The results point to a range of needs that derive from die ‘second stage’ strategies demanded of such agencies in die transition economies if they are to survive and grow following die reduction of donor support.

Behavior of Participatory Firms in Yugoslavia: Lessons for Transforming Economies

This paper develops a multiparty model of enterprise behavior, with the management, workers, and government authorities being the decisionmakers. The model captures the behavior of Yugoslav enterprises in the 1970s and 1980s, enterprises in transitional economies, and public-sector bargaining in Western countries. Estimating the model on Yugoslav firm-level data from the 1970s and 1980s indicates that the perverse behavior predicted by the Ward-Domar-Vanek model of labor-managed firms is not supported by the data as firms place emphasis on both wages and employment. A direct test shows that the employment response to output price changes is insignificant. Coauthors are Jan Svejnar, Dubravko Mihaljek, and Vesna Prasnikar. Copyright 1994 by MIT Press.