Hungarian management in transition: enterprise guidance in an era of economic reform

by Steven W. Popper

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In 1968, Hungary introduced a series of reforms to the central planning system. The goal was to make the economy more efficient by placing decisionmaking authority at the level that has the most information on production and marketing possibilities--the level of the enterprise. This paper examines the situation enterprise managers face and suggests reasons that the changes in managerial behavior that were expected by the reformers, and upon which the reform is predicated, have not come easily. The author argues that reform has altered the terms of economic relations in Hungary, while the underlying structure of relations between enterprise managers and their superiors has not changed enough to allow the new system to function as intended.

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