Inter-enterprise Network Formation and Foreign Investments in Hungary, 1987–2001
Abstract
To model, from its inception, interenterprise network formation and its interaction with foreign investment across an entire epoch of rapid and profound economic transformation, we gathered data on the complete ownership histories of 1,696 of the largest Hungarian enterprises from 1987 to 2001. We develop a combination of network and sequence analysis to identify distinctive pathways whereby firms use network resources to buffer uncertainty, hide or restructure assets, or gain knowledge and legitimacy. During this period, networked property grew, stabilized, and involved a growing proportion of foreign capital. Cohesive networks of recombinant property were robust, and in fact integrated foreign investment. Although multinationals, through their subsidiaries, dissolved ties in joint venture arrangements, we find evidence that they also built durable networks. Our findings suggest that developing economies do not necessarily face a forced choice between networks of global reach and those of local embeddedness.
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Articles of the Russian Management Journal are open access distributed under the terms of the License Agreement with Saint Petersburg State University, which permits to the authors unrestricted distribution and self-archiving free of charge.