The Evolution of the Market of the Hungarian Printing Industry after 1989: The End of a Success Story?

Abstract

This article examines a case study of one industry in order to explore the factors influencing changing performance levels in the industries of post-socialist economies. It explores the influence on industrial performance of a number of once-only non-repetitive factors of market development that were typical of the transition period and compares them with longer term aspects of the market economy. The case that we discuss here is the development of the market for products of the Hungarian printing industry since the late 1980s. During the transition phase, privatisation, deregulation, the abolition of administrative distribution, and radical cuts in subsidies were all among the factors affecting this industry. Its supply chains also changed radically. However, these lost their importance after the transition had been completed and the long term processes of technical development and consumer behaviour became the main determinants of the behaviour of the printing companies.

Notes

Performance differences are measured by the rate of growth of output or by numbers of employees.

We should mention also that there were cases when the inherited rigid inter-firm connections blocked the structural changes (McDermott 1997).

For reasons of space it would be complicated to review here the practical and methodological problems of measurement and data collection.

Our research project, entitled ‘Product and service market development in Hungary after 1989’, was supported generously by OTKA (the Hungarian Scientific Research Foundation) between 2004 and 2007. The project included eight case studies which dealt with the development of markets of different products and services (mineral water, shoes, wine, school books, teaching of foreign languages, school-book editing, spa therapy, printing industry). About 200 in depth interviews (which were made in 2004–2008) were the main source of information of these case studies.

We conducted 25 in-depth interviews with owner-managers of Hungarian small, medium-sized and large printing companies in 2006–2007. This sample was not representative but comprised printing houses with different sizes of product mix and regional character.

Insiders distinguish two sub-sectors of the printing industry: printing and packaging. The former relates to a group of producers that prints mainly books or journals. The latter is the group of those who produce leaflets, labels, prospectuses and printed packing materials.

The output of Hungarian processing and manufacturing industry decreased by 28.6% in the period of 1985–1994 while the output of the Hungarian printing industry increased by 16% (calculation based on the data of the Statistical Yearbook of Hungary (1994, p. 128)).

1937 was the last year before the so-called Vienna decisions when the territory of Hungary was more or less the same as today. ‘Only 22 printing houses employed more than 100 employees; 5% of the small and medium size companies employed more than 10; 15% of them employed 6–10 persons; 53% of these printing houses employed 1–5 persons; and in 27% of this sample the owner was self employed’ (Csapó1993, p. 78).

Interview with the chief editor of a medium-sized publishing company, Budapest, 2007.

From the huge literature on planning and of plan bargaining, see for example Berliner (1976), Kornai (1957), Kornai and Lipták (1965) and Johansen (1979).

Interview with the owner-manager of a large printing company, western Hungary, 2007.

In particular this meant that printing companies only produced and no longer designed their product as they did in the past.

‘The spectacular performance of book editing and distribution made possible the remarkable development of the book culture. Because of the state subsidies the prices of books did not depend on the costs and on the market conditions. Owing to their low prices the population was able to buy more and more books’ (Kókay 2000, p. 88).

The number of such libraries was 7,340 in 1990 and 4,466 in 1995. Their stock of books was 51.64 million in 1990 but 47.13 million volumes in 1995 (figures based on data of Statistical Yearbooks of Hungary (1995, p. 198)).

Interview with the chief manager of a large printing company, eastern Hungary, 2006.

A study of the Association of Paper Producers and of Printing Houses concluded that ‘Reading behaviour is changing in a negative direction and this tendency will influence the market position of the edited production in the future as well. The usage of the internet as a source of information is increasing constantly. Therefore we may expect a further shift to the detriment of the printing industry’ (PRINTEXPO 2005).

‘Our category of company size does not deal with mass production of books and journals. To deliver and distribute these products is complicated’ (interview with the owner–manager of a small printing house, Budapest, 2007).

Interview with the owner-manager of a small printing house, Budapest, 2007.

Interview with the owner-manager of a small printing house, Budapest, 2006.

Laki (1994). Grosfeld and Roland (1994) and Blanchard (1997) worked out a similar typology of adaptation.

Interview with the chief manager of a large printing company, western Hungary, 2007.

Interview with the chief manager of a large printing company, eastern Hungary, 2007.

Interview with the owner-manager of a small printing house, Budapest, 2007.

Interview with the owner-manager of a small printing house, Budapest, 2007.

Interview with the owner-manager of a large printing company, southern Hungary, 2006.

Interview with the owner-manager of a large printing company, southern Hungary, 2006.

Interview with the owner-manager of a large printing company, western Hungary, 2007.

MKKE (Magyar Könyvkiadók és Könyvterjesztők Egyesülése, Association of the Hungarian Booksellers and Editors) information (PRINTEXPO 2005, p. 2).

Interview with the owner-manager of a large printing company, western Hungary, 2006.

Interview with the owner-manager of a small printing house, Budapest, 2007.

Interview with the owner-manager of a large printing company, southern Hungary, 2006.

Interview with the owner-manager of a large printing company, southern Hungary, 2007.