Path Dependence and Contractual Relations in Emergent Capitalism: Contrasting State Socialist Legacies and Inter-Firm Cooperation in Hungary and Slovenia

Abstract

Inter-firm relations vary significantly between capitalist economies as a result of institutional differences, especially in terms of trust and mechanisms ensuring adherence to contractual commitments. The transformation of the state socialist economies in Eastern Europe might be expected to destroy the pre-1989 relationships between suppliers and customers and generate new types of connections. This study of 18 Hungarian firms and eight Slovenian firms found significant differences between the ways companies transformed and/or preserved the way they managed their supplier-customer relationships. These differences were mainly due to the differences between the legacies of state socialism, the mode of the macroeconomic transformation and the general business environment in the two countries. This study also shows that unlike the Japanese firms studied by Sako, firms in Eastern Europe show contradictory behaviours if Sako’s indicators of trust are applied.

Different Forms of Agency and Institutional Influences within Multinational Enterprises

“…The Polish subsidiary is embedded in a mixture of state-organized and compartmentalized national business system where the state continues to dominate economic development and guides firm behaviour although its influence is declining (Meardi et al, 2009). Similar to other Central Eastern European countries, collaboration within sectors is reduced and horizontal linkages between actors across sectors and employer-employee interdependence are limited by strong ties of vertical dependence (Czaban et al, 2003). Trade unions are politicized, employer associations are weak, and there is single-channel employee representation (Meardi et al, 2009).…”

At What Level (and in Whom) We Trust

“…Multiple studies have indeed examined the impact of trust in interorganizational relations and provide a good example of how, together, the findings provide a picture of cultural impact on trust in this referent at the organizational level. Scholars have generally found that interorganizational trust differs in quality and quantity across cultures (Bachmann, 2010;Czaban, Hocevar, Jaklic, & Whitley, 2003: Dyer & Chu, 2000. Naturally, cross-cultural differences and a lack of trust inhibit effective collaboration between local and foreign firms (Fang, 2011).…”

Inscribed Strategies: Exploring the Organizational Nature of Strategic Lock-in

“…The concept of path dependence has recently come to the fore of management and organization theory (Czaban, Hocevar, & Whitley, 2003;Garud & Karnøe, 2001;Hutzschenreuter, Pedersen, & Volberda, 2007;Schreyögg & Sydow, 2010;Sydow, Schreyögg, & Koch, 2005, 2009Vergne & Durand, 2010;Gruber, 2010). Whereas the notion of path dependence has found widespread application, a more rigorous and conceptual understanding of organizational path dependence is still part of a nascent field of management and organization research.…”