"When you can measure what you are speaking about, and express it in numbers, you know something about it; but when you cannot express it in numbers, your knowledge is of a meagre and unsatisfactory kind; it may be the beginning of knowledge, but you have scarcely, in your thoughts, advanced to the stage of science, whatever the matter may be."
Lord Kelvin

Competitive intensity and family business

May 30th 2017

In this short paper we analyse the effect of friendship and family ties with the Hungarian Prime Minister (Viktor Orban) on the competitive intensity of public tenders won by companies owned by his close friends and family members. The analysis is based on more than 151,000 Hungarian public procurement tenders in the period of 2009-2016. Using OLS and ordered logit estimations, we estimate the effect of the friendship and family ties on the competitive intensity of tenders. The results point out that the family and friendship ties have significant negative effects on the competitive intensity, if we control the effect of sectors, time, EU funding, procedure type and size of tenders. Thus, for the Hungarian economic actors, the friendship with Orban or being a member of his family pays off.

 The paper in Hungarian (pdf)