Operations and Technology Management

Poland is regarded as the country which has made the greatest progress following the economic liberalisation of Eastern Europe. This paper examines the strength of the relationship between the new Western context and the understanding of the methods which Polish enterprises need to address their current difficulties. The study was undertaken by visiting some 50 Polish businesses to analyse their views on progress. The conclusions of the study suggest that there is much scope for continued success in the future, but that this will require an adaptation of Western methods as well as an ability to use them selectively to overcome the constraints of the emerging Polish environment. Current and future business success in Poland Poland is the success story of recent changes in Europe. Table I shows progress in macroeconomic terms since liberalisation started in 1991. Poland is now confident enough to apply for membership of the European Economic Union. Much evidence supports this confidence: the basic standard of living is rising, car ownership is increasing at 40 per cent per annum, inflation and unemployment, although high, are not getting worse. A basic question to ask is: where is this wealth coming from? It may be any of: Government policies, borrowed money, Western suppliers who are now in Poland with subsidised operations, reduced wastage, more entrepreneurship creating new products to meet new needs? Clearly there is no single answer to this question although many economists may provide tentative explanations through the analysis of economic statistics. The basic conditions for sustained overall economic advantage must come in the end from improved performance of individual businesses and they in turn must deliver through the methods they adopt and the initiatives they take to improve productivity and quality throughout their businesses. Very little is reported on these developments between general statements made by economists and particular studies of particular companies. This paper aims to initiate research on the middle ground. The schematic of Figure 1 suggests a loose overall relationship between the economy as a whole, business initiatives that are taken, and the operational working of business practices. Of course the whole system is not as simple or coherent as it looks in Figure 1. The figure assumes that there is a genuine understanding of the working relationships by the policy makers at each level: that Government policy has a view of how to create economic success, that business managers select the right initiatives and that methods are appropriately chosen to implement them. The connections between the three The new technology for Polish business? 539 levels nevertheless determine the context for the working practices for each of the lower boxes. The context that is created is assumed to be cooperative and helpful, but it may equally well turn out to be constraining and disruptive. For example, pressure on the government may force them to create an unfavourable environment for business, and the pursuit of profitability may prevent the development of effective working practices. Also, the whole scheme relies on a series of balances working out in which the successful growth of companies and industries will produce the taxes which will in turn lead to the ability to create favourable environments for future business. We will comment later on some of the distortions to these assumptions and their linkages, which are arising at the present time in Poland. Although the schematic of Figure 1 is very sweeping in its coverage it lays out the connections which need to be made to work to promote economic growth. Rarely does it seem that the theory provided by the economists' analysis or the perspectives of the central policy makers recognise the difficulties encountered at the business level. These are well reported in an individual study (Brown, 1992) and supported more anecdotally in a study by McDonald (1993). The existence of the relationships of the model in Figure 1 is implied in earlier historical studies. The growth of US industry and its economic strength was rooted in its ability to create very effective systems ± systems that reduced prices and raised wages, typically exemplified by the Table I. Polish economic performance 1991-1997 1991 1992 1993 1994 1995 1996 (est.) 1997 (est.) GDP ± real growth (%) ±7.0 2.6 3.8 5.3 7.0 6.0 5.5 GDP per capita ± real growth (%) ±7.3 2.3 3.5 5.0 6.9 5.7 5.2 Unemployment (%) 11.8 13.6 15.7 16.0 14.9 13.0 13.0 Consumer price inflation (%) 70.3 43.0 35.3 32.2 26.8 21.0 17.0 Source: Poland International Economic Report (1996/9)