Volume 4 Issue 4 2015

Business History: Enterprises in Adaptation

Volume 4 Issue 3

Judit Klement
Special Editor of the Thematic Issue

Contents

Articles

Petr Popelka

Business Strategies and Adaptation Mechanisms in Family Businesses during the Era of the Industrial Revolution: The Example of the Klein Family from Moravia

Abstract

Abstract

Family businesses are a central topic in the history of business, especially in the early phases of the industrialization process. This case study attempts to identify the business strategies and the adaptation mechanisms used by a family business during the era of the Industrial Revolution. The main aim of the study is to explore which adaptation mechanisms and strategies were used during the Industrial Revolution by large family firms in the Lands of the Bohemian Crown. The study focuses on a model example, the Klein family, which ranked among the foremost entrepreneurial families in the Bohemian Crown Lands. The Kleins initially rose to prominence through their road construction business. They later built private and state railways and also diversified into heavy industry. I delineate the main stages in the development of the family firm, discuss a number of key microeconomic factors which influenced the Kleins’ business activities, and describe the factors which ultimately led to the downfall of this once-successful firm.
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Judit Klement

How to Adapt to a Changing Market? The Budapest Flour Mill Companies at the Turn of the Nineteenth and Twenties Centuries

Abstract

Abstract

The focus of this article is the steam mill enterprises in Budapest at the end of the nineteenth century, a time when these companies were no longer enjoying their most profitable years. While earlier their high-quality flour had been sold for good profits on the markets of Western Europe, they found themselves slowly pushed from the marketplace by increasingly intense price competition, which was in part a consequence of the crisis in agriculture and, quite simply, the globalization of agriculture. While they were still able to produce for the undeniably important markets within the Austro-Hungarian Monarchy and ever higher customs duties on agricultural products helped strengthen their production for these markets, the demand for expensive flour on the domestic market was significantly smaller than in Western Europe. Confronted with the changes that had occurred in the marketplace, the mills in Budapest tried to adapt in a variety of different ways. In this article, I examine these strategies, focusing in particular on the very distinctive expansion of one of the mill companies.
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Ágnes Pogány

Crisis Management Strategies after World War I: The Case of the Budapest Flour Mills

Abstract

Abstract

The history of the big Budapest flour mills reached its finale in the second half of the 1920s. By then, it had been clear to all players that the Hungarian flour mill industry could not return to the prosperity of the nineteenth century and indeed had become one of the many crisis branches of the Trianon economy. The grave problems of the branch were not without antecedents. The big mills in Hungary had begun to lose ground in the global market in the last decades of the nineteenth century. Their declining competitiveness manifested itself in reduced exports, drops in price, and increasing domestic rivalry. The big Hungarian commercial mills sought solutions to overcome their problems that were similar to the solutions adopted by other foreign companies at the time. They strove to cut production costs and increase profits by establishing economies of scale and scope with horizontal and vertical integrations. Companies used basically two means to limit competition between firms: they organized cartels or they merged with their rivals to control their economic environment. In this article, I analyze how these crisis management practices were applied to meet corporate needs in the interwar period. I investigate these questions mainly as a case study of the biggest Hungarian flour milling company, the Első Budapesti Gőzmalom Rt. (First Budapest Steam Mill Co. later: FBSM), based on its archival documents and articles that were printed in the contemporary economic press.
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András Schlett

The Socialist-Type Process of Innovation: Lessons of Hungarian Agrarian Modernization between 1960 and 1990

Abstract

Abstract

This article analyses the role and the possibilities of innovations in agriculture during the socialist era in Hungary between 1960 and 1990. The introduction of the established industrial-type production systems ushered in significant changes in Hungarian agriculture in the 1960s. The most spectacular changes were increasing outputs and improvements in the food supply. The spreading of high-yield stocks and the adoption of intensive technological procedures helped improve production.
The first part of the paper uses J. A. Schumpeter’s basic definitions of innovation as a guideline to examine the particularities and limitations of socialist innovations as illustrated by the example of the introduction of industrial-type production systems. It highlights and analyzes the factors that exerted a particularly decisive influence on the launch and progress of a new and distinctive form of organizing production. Since the innovation had been institutionalized because of political resolve through central control based on the planned economy, I analyze the features of the relationships between politics and the economy, which were shaped by the politicians and the innovators.
Finally, I examine how political resolve and the inability to revise policies created a kind of path dependence in the 1970s in the socialist countries, while economic and technological development showed much more flexibility within the capitalist countries during the economic crisis.
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Zsuzsanna Varga

Opportunities and Limitations for Enterprise in the Socialist Economy: The Case of the Budapest Agricultural Cooperatives

Abstract

Abstract

To this day, there is widespread consensus in the secondary literature on agriculture in the socialist countries of the Soviet sphere according to which the “Termelőszövetkezet” (agricultural cooperative) in Hungary represented a unique path of development that diverged significantly from the Stalin kolkhoz model. In this article, I examine this process, focusing on the example of Budapest, the Hungarian capital. The natural features of the city (poor soil quality, land divided into small plots) did not really favor agricultural production. Furthermore, in the 1950s, the factories of the city offered higher wages, thus luring workers away from agriculture. The market pressures of the labor force set in motion a process of adaptation in agriculture. In comparison with the rest of Hungary, in Budapest the expansion of the sphere of non-agricultural activity of the agricultural cooperatives began earlier, and cooperative members were paid in cash instead of according to a Soviet-style model of remuneration based on work units. In response to the consumer demands of the population of Budapest, several innovative forms of vertical and horizontal integration emerged. I emphasize in my article that, in the case of the agricultural cooperatives, the important elements of entrepreneurial management took form before the introduction of the so-called New Economic Mechanism, for the most part as consequences of initiatives coming from below. Since these innovations were implemented before the relevant changes to the law had been made, a great deal depended on how the superior organs of government handled the lacuna between law and practice. In the 1960s, the agrarian lobby managed to exert sufficient influence on the government to prompt lawmakers to adjust the laws to conform, retroactively, to practice. In the 1970s, when the brakes were being put on the economic reforms, this phase displacement became a vulnerable point. Economic and administrative measures and even steps involving criminal prosecution were taken to limit the entrepreneurial independence of the agricultural cooperatives.
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Zsombor Bódy

Enthralled by Size: Business History or the History of Technocracy in the Study of a Hungarian Socialist Factory

Abstract

Abstract

In this essay, I examine the extent to which the terms and concepts of business history are useful in furthering an understanding of the development of a socialist enterprise, the Hungarian Ikarus bus factory. I come to the conclusion that the factory, which manufactured buses for all of the member states of COMECON (Council for Mutual Economic Assistance, 1949–1991), was not really able to take advantage of and turn a profit off of the economies of scale that the enormous market offered. The reason for this was that the socialist enterprise was not able to bring technological advancement in line with the need to make profit. The large investment in the bus factory rested on a technocratic vision which mechanically linked technical development with the solution to economic problems. This technocratic vision, which was found both in the West and in the countries of the Eastern Bloc, fit particularly well into the system of state socialism.
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