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The economic and political change facing the formerly-controlled economies of Central and Eastern Europe allows far a very broad perspective when considering the potential role of the entrepreneurial sector in each economy and the methods for supporting and developing this sector's role in moving toward market-oriented economies. Some of the cornerstones of a market economy include: individual ownership; the right of an individual to use an asset and achieve a return; the key role of consumer demand in the allocation of resources; open competition and relatively free entry of competitive companies; a business position determined by management skills rather than by political connections; and variable prices mainly determined by resource allocation. Given these cornerstones, the development of entrepreneurship, entrepreneurial ventures, and owner-manager organizations is key to making a successful transition from a controlled to a market-oriented economy in such countries as Hungary.
Why is it important to understand entrepreneurs and their entrepreneurial ventures in Hungary when much has already been written about the nature of entrepreneurs and their ventures, particularly in the United States? While entrepreneurs worldwide certainly possess similar attitudes and characteristics, as do their ventures, the environment and culture of a country also affects both the entrepreneur and the new venture created. Any attempt to explain the specific issues of Hungarian entrepreneurship is not very realistic unless the recent economic and political developments in Hungary are taken into account.
Hungary: 1947 to 1982
The policies implemented by Hungary following WWII reflected the rejection by Marxist philosophy and Stalinism of the concepts of private ownership and entrepreneurship. In 1947 through 1948, often referred to by historians as the "decisive year," a Communist takeover of Hungary resulted in the elimination of private ownership of large enterprises. During this same time period, a total nationalization of all forms of private property resulted in the socialization of assets based on the ideology of the regime.
Although every citizen in the country experienced an economic system that was suffering from operational disturbances of a structural origin and lived in a planned economy where even the most basic good were sometimes difficult to obtain, the true nature of the problems involved was recognized by only a limited group of intellectuals. Since this information was only available to those who...