Transition has speeded up the changes in the Hungarian industrial economy since 1988-89. The paper focuses on the main effects in the performance of the companies in connection with the industrial policy changes. It gives a view about development in the corporate structure according to the ownership pattern, horizontal and vertical links of the companies, production organisation, productivity, changing market structure, source of profit and losses, cost-structure and rate return on invested capital.The methods used in the paper are to measure the effects of the changing ownership pattern on company performance in the manufacturing industry and in some industrial subsectors, such as food, textile, clothing, and engineering. Data of the firms balance sheets in 1992-1993 is the basis of this analysis. However, results and assessments include the experiences accumulated in different surveys on SME development and on JVs characteristics to gather information absent in the statistics financial reports of the companies.

Some of the main findings of the paper:

• Transitional crises have more severe effects on the industrial output decline in several subindustries than the collapse of the Austro-Hungarian Monarchy and the Great Depression had in the past.
• After five years of transition, the relative level of industrial productivity, wages, equipment and technology and the GDP compared to developed economies have not reached yet the relative level of development at early years of this of the century.
• Policy changes launched several important structural changes in the manufacturing industry and corporate behaviour, however, most of the main elements have loosened strictness and efficiency when the massive inflow of the FDI let the government interfere again in the competitive sphere of the economy
• In manufacturing and almost in all selected industries (except textiles) the performance of the companies significantly improved from 1992 to 1993.
• A clear correlation could be found between the increase of private and foreign shares in the assets and per capita net income on sale, but there were almost no differences in per capita profits after taxation.
• In most cases the 100% state owned and surprisingly the 100% foreign owned firms were highly represented among the main loss-makers, while indigenous mixed companies and the JVs closed reasonably the gap in profitability.
• An opposite trend was found between the wholly foreign owned firms and the JVs according to their production organisation: the first group decreased links with indigenous suppliers to almost zero in contrast with the large increase of its world-wide subcontractor- and suppliers links, while the subcontracting connections of the JVs increased fast and they rather repatriated their growing profits gained abroad to Hungary.
• The JVs were regularly much more export-oriented, while most of the 100% foreign owned firms gathered income mainly at the domestic market.
• The analyses of the cost structure of the profitable company group in all sectors gave a surprising view: the significant differences in the costs structure of the profitable firms and that of the loss-makers among the state-owned, private or foreign owned companies in the previous years, almost disappeared in 1993. This supports the view, that tax-, duty-, or other preferences and the possibility to avoid taxation count more in profitability than the changing production organisation or company strategy to adjust for competition.
• Rate of return on capital almost in all cases (except in one part of the clothing industry was found so low, that it is difficult to understand why foreigners were still investing heavily in the Hungarian manufacturing industry.