Chapter 4: Venture capital in transition economies: the cases of Hungary, Poland and Slovakia
Page 81 4. Venture capital in transition economies: the cases of Hungary, Poland and Slovakia Judit Karsai, Mike Wright, Zbigniew Dudzinski and Jan Morovic Introduction The countries of Central and Eastern Europe (CEE) are now deep into a longterm process of transition to a market economy. The creation of market oriented enterprises is a crucial element of this transition and has been taking place both through the establishment of new businesses (Lane, 1995; Roman, 1991; Gibb, 1993) and the privatisation of stateowned firms either through sales to other companies or to incumbent management and employees (Karsai and Wright, 1994). While these developments have already led to a significant private sector throughout much of CEE, a number of major problems need to be addressed before transition to a fully functioning market economy is achieved (Grosfeld and Hare, 1991). The development of entrepreneurship was severely constrained under the regimes in existence prior to 1989 and although there has been extensive creation of new businesses since then, considerable progress still needs to be made in the development of entrepreneurial skills (Filatotchev et al., 1996b). Similarly, although much of the stateowned enterprise sector has been transferred to the private sector, major problems remain in converting them into commercially viable enterprises, not least because of problems with the age and vintage of productive capacity and the level of managers’ commercial skills. Developing a successful private sector also faces two further major problems. The first concerns access to finance. Roman (1991) in a...
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