Abstract
Institutional change and the privatization of state enterprises were expected to transform the former state socialist economies of Eastern Europe. In particular, it was thought by many advocates of `shock therapy' that changes in governance structures would lead directly to major changes in labour management practices and greatly increase productivity as a result of removing state control. However, ownership and control changes have had only a limited impact on many aspects of enterprise behaviour in these emergent capitalist societies because of the continued dominant role of the state in the economy, its frequent policy oscillations, the lack of an independent capitalist class, the power of many trade unions and the institutional legacies of the previous regime which cannot be negated by ultra-liberal economic nostrums. In this study of 14 Hungarian enterprises we show that, although control differences were connected to some variations in the use of external labour markets and in how rewards were allocated, many differences in labour management strategies were related to differences in size and financial performance. Furthermore, there was no indication that the privately owned enterprises were shedding labour more quickly, were reducing the number of middle managers and clerical workers more sharply, were increasing task variety and moving to more Taylorist patterns of labour management than state owned enterprises. In general, the extent of radical changes in employment policies and task management in all of these Hungarian organizations appeared quite limited.