Radosevic, S; Yoruk, DE; Dornisch, D; (2001) The issues of enterprise growth in transition and post-transition period: the case of Polish 'Elektrim'. (Economics Working Papers 1). Centre for the Study of Economic and Social Change in Europe, SSEES, UCL: London, UK.

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Abstract

Case study of Polish company Elektrim illustrates the changing basis of growth of enterprises between the transition and post-transition periods. Elektrim grew primarily through conglomeration in the transition period. After the exhaustion of this mode of growth Elektrim has started to focus on a few core areas (telecoms, cables, energy). The strategic shift to telecommunications has been based on partnerships with foreign firms and it is likely that this will be the pattern in other areas. In this respect, the case of Elektrim shows the importance of internationalisation for the growth of enterprises in CEE. Based on the case study the paper draws several analytical issues: First, Elektrim's shift from conglomeration to focusing suggests that the institutional context, which drives firm strategy in post-socialist economies like Poland, is, perhaps, also changing. Second, in order to grow Elektrim is forced to enter into equity relationships and partnerships like with French Vivendi. This suggests that the possibilities for firm growth in post-socialist economies, like Poland, through generic expansion are still fewer when compared to growth based on mergers & acquisitions or different forms of alliances. Third, Elektrim's relationship with government is complex and refutes the simplified dichotomy of markets vs. governments. This raises the issue of to what extent post-socialist governments operate as a 'compensatory mechanism' on which firms like Elektrim can rely to grow. Fourth, the opening of the CEECs has led to relocations of EU and other MNCs into this region with the result that they are also transferring the oligopolistic competition from EU into new markets. The case of Elektrim shows how CEE companies and goverment regulations become factors in the oligopolistic competition between big EU companies. CEE companies and governments may use this competition to their advantage but also their limited bargaining powers may lead to outcomes unfavourable to them.

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