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.

Keywords

contractual relations trust Hungary Slovenia societal transformation path dependency

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