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Strong state, weak managers: How firms cope with autocracy in Hungary

Strong state, weak managers: How firms cope with autocracy in Hungary

Sallai, Dorottya and Schnyder, Gerhard (2015) Strong state, weak managers: How firms cope with autocracy in Hungary. [Working Paper]

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This paper investigates how companies manage risk associated with political ties in the context of the ‘return of state capitalism’. We show that findings from previous studies of firms’ copying strategies under autocratic regimes are of limited relevance in the context of Hungary, because they lack a sophisticated, theoretically underpinned conceptualisation of ‘the state’. We develop a more fine-grained analysis of the role of the state in emerging markets. We then show that the type of 'state capitalism' that is emerging in Hungary poses unique challenges to companies with implications for existing theories of companies’ political ‘buffering strategies’. Based on interviews with business leaders in Hungary, we identify two coping strategies: responsiveness –whereby firms accommodate state pressures by giving in to them – and a non-responsive strategy of ‘dormancy’, which consists in firms putting forward-looking activities on hold and focussing on survival. We discuss implications for theories of corporate political risk management.

Item Type: Working Paper
Uncontrolled Keywords: State capitalism; Political ties; Corporate strategies; Clan state; Post-socialism; Autocracy
Subjects: H Social Sciences > HB Economic Theory
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of International Business & Economics
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Last Modified: 10 Mar 2019 00:34
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
Selected for REF2021: None

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