Entrepreneurship in CentralEast Europe: Conditions · Opportunities · Strategies

283 Pages·1993·10.822 MB·English

by  Dr. Jana Sereghyová DrSc. (auth.)

Jana Sereghyova
In Collaboration with
Benjamin Bastida Vila· Milan Cizkovsky . Bela Galg6czi
Erzsebet Gidai· Maciej H. Grabowski· Vc:I;;lz\v KubiSta Birgit Sander
Klaus-Dieter Schmidt and Maria Teresa Virgili Bonet
Entrepreneurship
in CentralEast Europe
Conditions· Opportunities· Strategies
With 6 Figures and 36 Tables
Physica-Verlag
A Springer-Verlag Company
Dr. Jana Sereghyova, DrSc.
The Economics Institute Academy of Sciences of the Czech Republic
n. Politickych vezrlu 7.,
CS-11121 Praha 1., Czech Republic
ISBN-13: 978-3-7908-0730-1 e-ISBN-13: 978-3-642-95908-0
DOl: 10.1007/978-3-642-95908-0
Die Deutsche Bibliothek - CIP-Einheitsaufnahme
Screghyova, lana:
Entrepreneurship in central east Europe:
conditions, opportunities, strategies; with 36 tables /
lana Sereghyova. In collab. with Benjamin Bastida Vila. -
Heidelberg: Physica-VerI., 1993
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Contents
Introduction ............. .............................................................. ....................... 1
1 Changes in Entrepreneurial Structures in CentralEast
European Countries........................................................................... 5
1.1 Initial Structural Distortions ................................................................ 6
1.2 Changes in the Structure of the Enterprise Sphere in Hungary ............. 9
1.3 Changes in the Structure of the Enterprise Sphere in Poland ................ 22
1.4 Changes in the Structure of the Enterprise Sphere in
the Former CSFR ................................................................................. 33
2 Mainstays of the Institutional Framework for Entrepreneurial
Activities Established in Individual CentralEast
European Countries ........................................................................... 47
2.1 The Formation of a Two-Tier Banking System .................................... 47
2.2 The Legal and Institutional Framework for the Formation
of a Capital Market.............................................................................. 53
2.3 Institutional Changes in Foreign Trade of CentralEast
European Countries ................. ............................................................ 60
3 The Main Features of the Trade-Political Framework in
CentralEast European Countries ...................................................... 69
3.1 The Reasons for the Collapse of COMECON Trade and its
Consequences for Enterprises in CentralEast European Countries........ 70
3.1.1 Special Aspects of Trade Relations between CentralEast and East
European Countries ............................................................................. 73
3.2 The First Steps Towards Granting CentralEast European Countries
Access to Western Markets... ............................................................... 77
3.3 Some Trade-Political Aspects of the Association Agreements
Concluded between Individual CentralEast European Countries
and the EC........................................................................................... 81
VI
3.3.1 Principles of Reciprocity and Asymmetry ............................................ 85
3.4 Possibilities for a New Take-Up of Trade Between the Countries of
CentralEast and East Europe................................................................ 89
3.4.1 The Central European Free Trade Area................................................ 91
3.4.2 Financial Aspects of a New Take-Up of CentraiEast European Trade.. 94
4 New Behavioural Patterns Emerging in the Enterprise Sphere of
Central East European Countries ...................................................... 103
4.1 Changes in Behavioural Patterns in Agriculture and in the Food
Processing Industry .............................................................................. 104
4.2 Changes in Behavioural Patterns in Manufacturing (other than
Food Processing) ................................................................................. 108
4.2.1 New Behavioural Patterns in the Consumer Goods Industry ................ 109
4.3 Changes in Behavioural Patterns in the Heavy Industry ....................... 115
4.4 Changes in Behavioural Patterns in the Service Sector ........................ 130
4.4.1 New Entrepreneurial Behaviour in Trade ............................................. 130
4.4.2 New Entrepreneurial Behaviour in Transport and Tourism .................. 135
4.4.3 Entrepreneurship in the Sphere of Technical and Financial Services .... 138
5 Entrepreneurial Opportunities in CentralEast European
Countries for Foreign Investors and Businessmen ........................... 153
5.1 Identifying Entrepreneurial Opportunities in CentralEast
European Countries ............................................................................. 154
5.1.1 Sources of Information ........................................................................ 157
5.2 The "Stake-Holders" and Their Influence on Decision Making
Processes Concerning the Choice of Foreign Partners .......................... 160
5.2.1 The Authorities in the Capacity of Stake-Holders ................................ 163
5.2.2 The Enterprises as Stake-Holders ......................................................... -171
5.2.3 The Employees as Stake-Holders ......................................................... 173
5.3 Risks and Risk Reducing Measures ...................................................... 177
5.3.1 Possible Approaches to Assess the Technological Abilities of
Economies, Regions and EnterpriSes ................................................... 182
5.3.2 Operational Risks and their Possible Elimination ................................. 192
6 Entrepreneurial Concepts Applied in Preparation for Becoming
Part of a "Big Europe" ...................................................................... 201
6.1 Entrepreneurial Strategies Developed in the CSFR .............................. 202
6.1.1 Enterprises Operating in the Consumer Goods Industry ....................... 202
6.1.2 Case Studies of Enterprises Operating in the Engineering Industry ...... 219
6.1.3 Case Studies of Enterprises Operating in Trade and Services ............... 230
6.2 Entrepreneurial Strategies Applied in Catalonia -Spain ....................... 241
6.2.1 Entrepreneurial Concepts Applied in "Qualified Chemistry" ................ 243
6.2.2 Entrepreneurial Strategies of Catalan Enterprises Operating in the
Engineering Industry ........................................................................... 247
VII
6.2.3 Entrepreneurial Strategies Observed in Less Research-Intensive
Manufacturing in Catalonia ................................................................. 249
7 Indicators of the Eligibility of an Enterprise as a Base for a
Potentially Successful Joint Venture ................................................. 253
7.1 Available Data and Their Credibility ................................................... 255
7.2 Methodology and Outcome of Comparing Past and Present
Performance of Industrial Enterprises .................................................. 259
7.3 Testing the Eligibility of Enterprises as a Base for a Potentially
Successful Joint Venture ...................................................................... 266
Concluding Remarks .................................................................................... 271
References ..................................................................................................... 277
List of Charts
Chart 1.1 Geographical distribution of foreign investors' home countries
by size of invested capital............................................................ 32
Chart 1.2 Geographical distribution of foreign investors' home countries
by number of enterprises ............................................................. 32
Chart 3.1 Foreign trade of the former USSR with CentralEast European
countries from 1986-1990............................................................ 74
Chart 3.2 Structure of proposed international Export Credit Guarantee
Facility... ........................... .................. ........ ........... ..................... 95
Chart 5.1 Foreign direct investment in CentralEast and East Europe
at the beginning of 1992 .............................................................. 156
Chart 6.1 Plants of the Glavunion Group ..................................................... 214
List of Tables
Table 1.1 Structural pattern of employment in CentralEast European
countries at the beginning of "socialist industrialization"
and at the end of the 80's .......... .............................................. ..... 7
Table 1.2 Enterprises privatized by the State Property Agency in
Hungary 1990-1992..................................................................... 11
Table 1.3 Opinion poll on the future desirable share of state ownership
in various spheres ........................................................................ 17
Table 1.4 The growth of the private sector in Hungary from 1988 to
March 1992 ................................................................................. 18
Table 1.5 Overview of private enterprises with legal entity in a break-Up
as to type of activity and organizational form ........... ......... .......... 18
x
Table 1.6 Development of ownership structures in corporate
entrepreneurship in Hungary from 1985 to 1992 .......................... 22
Table 1.7 Privatization in the Polish economy from August 1990 to
December 1991 ........................................................................... 24
Table 1.8 The growth of the private sector in Poland from 1980 to 1992..... 27
Table 1.9 Changes in ouput in the state-owned and the private sector
in selected industries in Poland in 1990 and 1991........................ 28
Table 1.10 Developments in the private sector in Poland from
1989 to 1991................................................................................ 29
Table 1.11 Individual private entrepreneurs registered in the Czech and in
the Slovak Republic by the end of 1991 in a break-up as to type
of activity .................................................................................... 39
Table 1.12 Overview of the share of individual types of ownership in the
manufacturing sector of the Czech Republic in October 1992...... 41
Table 1.13 Value added in the private sector in 1991 in a break-up
as to type of activity .................................................................... 41
Table 2.1 The share of state property in major, formerly fully state-owned
Hungarian commercial banks by the end of 1991......................... 49
Table 2.2 The structure of Czechoslovak customs duties at the
end of 1992 ................................................................................. 67
Table 3.1 The regional structure of foreign trade of CentralEast
European countries in the middle of the 80's................................ 70
T"ble 3.2 The regional structure of imports of CentralEast European
countries from 1989 to 1991........................................................ 72
Table 3.3 Hungary's, Poland's and the CSFR's imports of labour-intensive
and R&D intensive goods 1990 and 1991.................................... 75
Table 3.4 The decrease of trade between the Commonwealth of
Independent States and CentralEast European Countries
and Finland from the first half of 1990 to the first half of 1991.... 77
Table 3.5 Changes in foreign trade of CentralEast European Countries
with main regions from 1989 to 1991.......................................... 78
Table 3.6 The share of CentralEast European countries in overall
EC imports of "sensitive items" 1988 and 1990........................... 82
Table 4.1 The decrease of output and employment in selected industrial
branches in the CSFR and in Hungary in 1991.. ........................... 104
Table 4.2 The share of consumer goods in the export of CentralEast
European countries to developed market economies 1986-1992 .. 114
Table 4.3 The share of the metallurgical, chemical and engineering
industry in overall industrial production of CentralEast
European countries 1989-1991 .................................................... 115
XI
Table 5.1 Reasons for the low engagements in CentralEast Europe
given by a sample of 163 respondents from developed
market economies ........................................................................ 155
Table 5.2 Alternative scenarios of growth-rates and investment needs of
East and CentralEast European countries 1989-1999 ................... 164
Table 5.3 Alternative forecasting scenarios of economic growth and
capital needs of East and CentralEast European countries
(not including the former USSR) from 1989-1999 ....................... 165
Table 5.4 Commitments of financial assistance to CentralEast and
East European countries made by groups of countries and by
individual financial institutions from January 1990 up to
August 1992 ................................................................................ 167
Table 5.5 Commitments of financial assistance made to individual
CentralEast European countries between January 1990
and August 1992 .......................................................................... 167
Table 6.1 Changes in the structure of the Catalan industry 1978-1988 ......... 242
Table 7.1 Profit margins in the manufacturing industry of selected
countries in 1991 ......................................................................... 258
Table 7.2 Differences in the structure of calculatory items of enterprises
in the manufacturing industry of the CSFR and the FRG ............. 258
Table 7.3 The sample of 248 Czechoslovak industrial enterprises under
observation in a break-up as to their location in individual
industrial branches and their relations to a parent company ......... 260
Table 7.4 The incidence of improvements in the performance of
industrial enterprises under observation in a break-up into
technologically more and less demanding productions ................. 261
Table 7.5 Enterprises with an improved performance in a
break-up into individual low-value-added branches ..................... 261
Table 7.6 The rating of good previous exporters to the west among
present overall good performers ................................................... 263
Introduction
The transformation process, on which all four CentralEast European countries,
i.e. the Czech Republic, Hungary, Poland and the Slovak Republic, have em
barked, has become the subject of numerous publications. But as yet the majority
of them dealt with institutional (systematic) changes and their implications for
macroeconomic developments, while changes going on in the enterprise sphere
received as yet only little attention. Even the few publications dealing with mi
croeconomic topics focused only on individual issues and are thus unable to give
a comprehensive picture of new entrepreneurial opportunities emerging in these
countries.
In order to fill this gap, economists from the Czech Republic, Germany, Hun
gary, Poland and Spain put forward a proposition to analyse these developments
in the framework of the A.C.E. programme of the European Communities. The
E.C. included the research project entitled "Entrepreneurship in CentralEast Eu
ropean Countries in the Framework of Increasing East-West Economic Compati
bility" into the second round of that programme.
Thanks to support received from the European Communities it was possible to
embark on a research of unusually wide scope, encompassing not only the devel
opment of entrepreneurship in each of the CentralEast European countries, but
also the conditions under which joint ventures with foreign capital participation
are operating there. In this connection, it was also possible to examine the con
sequences of the accession of Spain to the E.C. for enterprises in Catalonia. This
was done in order to study the impact of the envisaged integration of CentralEast
European countries into a "Big Europe".
In the present research project participated economists working at universities
and research institutes of international renown, most of whom have been advi
sors to entrepreneurial organisations and governmental institutions on questions
of investment and entrepreneurship in transformation countries. The participants
in this research project were Dipl.-Volkswirt Klaus-Dieter Schmidt and Dipl.
Volkswirtin Birgit Sander from the Institute of World Economics in Kiel/FRG,
Prof. Erzsebet Gidai DrSc and Ing. Bela Galgoczi esc from the Research Insti-