Restructuring via internationalization: The auto industry's direct investment projects in Eastern Central Europe

Internationalization based on direct foreign investment is proving to be a key economic factor for the transformation economies of Eastern Central Europe. The decisive influence factors in this process are primarily major investments by groups based on longer-term strategies with the new locations. The effects linked with this at factory and regional levels are discussed in the study using the example of the auto and components industry. The sector was chosen because it is one of those very strongly linked with such major projects. The Volkswagen group's two prominent investment projects, Škoda in the Czech Republic and Audi in Hungary, are used to illustrate two things. First, that there was very accelerated implementation of the operational expansion of competences, in terms of new products, modern production structures, international competitiveness, and quality standards achieved. Second, that this was able to be done because of the especially highly skilled workers in the area. As a consequence, the firms have since been able to achieve not just strong positions within their respective national economies, but also within the VW group. However, by contrast, impulses for local industry emanating from the major investments have remained very limited. The study attributes this development to a coincidence of various causes. These include, above all, structural change in the auto industry over the past few years, the VW group's specific modernization path, and weak governance on the part of the transformation countries' governments. The results arising from the extended perspective of globalization and transformation underlying the group's project approach clearly indicate that increased international competition has strengthened the Eastern Central European region's comparative constellation of advantages. This consists of high-skill structures at low-cost conditions. It is unclear how far further reaching industrial upgrading at factory and regional levels can still be achieved in the countries in the face of increased East-West locational competition linked with this. The authors interpret this as a question of implementing new transnational arrangements limiting the negative consequences for locations in the West as well. --

Cooperation and asymmetry: the development profile of an east-west corporate project

"This paper deals with a case of transnational cooperation between companies. The profile of cooperation between the two motor vehicle makers Skoda and the Volkswagen Group is reconstructed, characterised by the interlocking transformation and globalisation. Decisive for the success of the project was not only Volkswagen’s substantial transfer of know-how and management resources to the Czech manufacturer but also how it was approached. The utilisation of existing Škoda competencies was crucial in providing the stability needed for the learning process. The study discusses findings at three levels of integration: corporate, regional, and international. In contrast to the success achieved in international integration, the regional integration of the company has been slow. The authors conclude that this discrepancy was to be expected, given the unequal resources available to international firms and to local industry, and is not primarily to be explained by the tendency often attributed to so-called global strategy players of external concentration on the group network. The case has rather shown that limited regional integration has been largely due to the policy pursued by the Czech government in the important early years of transformation, which failed to generate the necessary domestic efforts in restructuring." (author's abstract

Kooperation und Asymmetrie: Das Entwicklungsprofil eines betrieblichen Ost-West-Projekts

Das vorliegende Papier befaßt sich mit einer transnationalen Unternehmenskooperation. Rekonstruiert wird das Entwicklungsprofil der Kooperation der beiden Automobilhersteller Skoda und Volkswagen, das durch das Ineinandergreifen der beiden aktuellen Tendenzen von Transformation und Globalisierung geprägt ist. Als für den Kooperationserfolg entscheidend zeigte sich nicht nur der von Volkswagen geleistete beträchtliche Know-how- und Managementtransfer an den tschechischen Standort, sondern auch die Art und Weise im Vorgehen. Vor allem das Anschließen an die bestehenden betrieblichen Kompetenzpotentiale erwies sich dabei als Faktor, der der Kooperation die notwendige Tragfähigkeit für den anstehenden großen Lernschritt ermöglicht hat. Die Studie diskutiert die Befunde auf drei Ebenen der Integration: der betrieblichen, der regionalen und der internationalen. Gegenüber der überaus gelungenen internationalen Integration zeigt sich die regionale Integration des Unternehmens als erheblich zurückgeblieben. Mit Blick auf dieses Problem kommen die Autorinnen zu dem Schluß, daß die eingetretene Diskrepanz kein unerwartbares Ergebnis darstellt angesichts der ungleichen Ausstattungen von internationalen Unternehmen und lokaler Industrie und auch nicht vorrangig – wie es sog. Global Player-Strategien vielfach zugeschrieben wird – aus der Tendenz zur Außenorientierung auf das Konzernnetzwerk zu erklären ist. Vielmehr hat sich am Fall gezeigt, daß die begrenzte regionale Integration ganz wesentlich auch ein Ergebnis der Politik ist, die die tschechische Regierung in den wichtigen Anfangsjahren der Transformation verfolgte und die die erforderliche autochthone Restrukturierungsleistung nicht hervorgebracht hat. -- This paper is concerned with a transnational business cooperation. A profile of the development in cooperation is reconstructed, which is shaped by interlocking tendencies of globalisation and transformation. In this regard, the study is part of a larger, more encompassing study of industrial renewal in Eastern Europe, set into motion partially as a result of foreign direct investment from large multinational corporations. The main item of interest is one of the most prominent east-west corporation projects in the transformation countries: the cooperation between the Czech automotive manufacturer Skoda and the German Volkswagen Group. On the basis of numerous samples collected over several years, the central conflicts and strategic turning points in the relationship are examined. The collection of data involves a multilevel analysis – from strategic political to the operative production and management levels – reconstructing the various viewpoints of cooperation partners. Decisive for success provided to be not only Volkswagen’s substantial transfer of expertise and management to locations in the Czech Republic, but moreover the manner in which this was performed. Above all, utilization of the existing pool of competency proved to be the factor, which provided stability required for the learning process. Results of the study are discussed with special attention to international and regional integration of transnational corporations. In the case of Skoda, an especially positive development is demonstrated, regarding modernisation, the level of competitiveness, and the competence structure. Entry into western markets on a large scale was successfully achieved. In comparison to this international integration, regional integration remained largely underdeveloped. In looking at this problem, the authors come to the conclusion that the incurred discrepancy was not unexpected, considering the unequal assets of international corporations and local domestic industry. This discrepancy – found in the results – was not caused by the trend of multinationals to orient themselves outwardly (on their own international production network) as often attributed to the so-called global players’ strategies. Rather, this case demonstrated that limited regional integration is in large part a result of policies, pursued by the Czech government during the important early transformation years and which failed to result in the necessary national reconstruction effects.

Kooperation und Asymmetrie: das Entwicklungsprofil eines betrieblichen Ost-West-Projekts

"Das vorliegende Papier befaßt sich mit einer transnationalen Unternehmenskooperation. Rekonstruiert wird das Entwicklungsprofil der Kooperation der beiden Automobilhersteller Skoda und Volkswagen, das durch das Ineinandergreifen der beiden aktuellen Tendenzen von Transformation und Globalisierung geprägt ist. Als für den Kooperationserfolg entscheidend zeigte sich nicht nur der von Volkswagen geleistete beträchtliche Know-how- und Managementtransfer an den tschechischen Standort, sondern auch die Art und Weise im Vorgehen. Vor allem das Anschließen an die bestehenden betrieblichen Kompetenzpotentiale erwies sich dabei als Faktor, der der Kooperation die notwendige Tragfähigkeit für den anstehenden großen Lernschritt ermöglicht hat. Die Studie diskutiert die Befunde auf drei Ebenen der Integration: der betrieblichen, der regionalen und der internationalen. Gegenüber der überaus gelungenen internationalen Integration zeigt sich die regionale Integration des Unternehmens als erheblich zurückgeblieben. Mit Blick auf dieses Problem kommen die Autorinnen zu dem Schluß, daß die eingetretene Diskrepanz kein unerwartbares Ergebnis darstellt angesichts der ungleichen Ausstattungen von internationalen Unternehmen und lokaler Industrie und auch nicht vorrangig - wie es sog. Global Player-Strategien vielfach zugeschrieben wird - aus der Tendenz zur Außenorientierung auf das Konzernnetzwerk zu erklären ist. Vielmehr hat sich am Fall gezeigt, daß die begrenzte regionale Integration ganz wesentlich auch ein Ergebnis der Politik ist, die die tschechische Regierung in den wichtigen Anfangsjahren der Transformation verfolgte und die die erforderliche autochthone Restrukturierungsleistung nicht hervorgebracht hat." (Autorenreferat)"This paper is concerned with a transnational business cooperation. A profile of the development in cooperation is reconstructed, which is shaped by interlocking tendencies of globalisation and transformation. In this regard, the study is part of a larger, more encompassing study of industrial renewal in Eastern Europe, set into motion partially as a result of foreign direct investment from large multinational corporations. The main item of interest is one of the most prominent east-west corporation projects in the transformation countries: the cooperation between the Czech automotive manufacturer Skoda and the German Volkswagen Group. On the basis of numerous samples collected over several years, the central conflicts and strategic turning points in the relationship are examined. The collection of data involves a multilevel analysis - from strategic political to the operative production and management levels - reconstructing the various viewpoints of cooperation partners. Decisive for success provided to be not only Volkswagenżs substantial transfer of expertise and management to locations in the Czech Republic, but moreover the manner in which this was performed. Above all, utilization of the existing pool of competency proved to be the factor, which provided stability required for the learning process. Results of the study are discussed with special attention to international and regional integration of transnational corporations. In the case of Skoda, an especially positive development is demonstrated, regarding modernisation, the level of competitiveness, and the competence structure. Entry into western markets on a large scale was successfully achieved. In comparison to this international integration, regional integration remained largely underdeveloped. In looking at this problem, the authors come to the conclusion that the incurred discrepancy was not unexpected, considering the unequal assets of international corporations and local domestic industry. This discrepancy - found in the results - was not caused by the trend of multinationals to orient themselves outwardly (on their own international production network) as often attributed to the so-called global playersż strategies. Rather, this case demonstrated that limited regional integration is in large part a result of policies, pursued by the Czech government during the important early transformation years and which failed to result in the necessary national reconstruction effects." (author's abstract

Mehr als ein Nullsummenspiel? Die neue Standortkonkurrenz zwischen Ost und West

"Discussions about the international development of labour markets tend to just look at Western countries: the USA, the Netherlands, Sweden, Denmark. The countries neighbouring to the East don't seem to play a major role in this at all. This contribution will examine precisely this question, picking out as its central theme the growing significance of Eastern Central European transformation economies for industrial production locations by using the example of the substantial inflow of foreign direct investment. Here, the auto industry has proven to be one of the leading sectors. Even if the aggregate sums of direct investment flowing into Central and Eastern Europe are naturally small in comparison with the 'Triad' of the USA, Japan, and Western Europe. The development still signalizes the region's growing importance in locational competition. For the most part, the strong magnetic effect arises from the comparative advantage of low-costs combined with high-skill conditions. This combination distinguishes the Eastern Central European countries from traditional low-wage economies, but also increasingly leaves them competing with highly developed industrial states like Germany. Upgrading the transformation countries may well be desirable from a European standpoint. However, the combination of the existing constellation with increasingly intensified internationalization through direct investment clearly highlights how far this upgrading is linked with the danger of production and work migrating to the East." (author's abstract)Bei der Debatte um die internationale Entwicklung der Arbeitsmärkte wird meist nur auf die westlichen Länder geblickt: USA, Niederlande, Schweden, Dänemark. Die östlichen Nachbarländer scheinen dabei keine größere Rolle zu spielen. Die Autorinnen gehen eben dieser Frage nach und thematisieren am Beispiel des großen Zuflusses an ausländischen Direktinvestionen die zunehmende Attraktivität der ostmitteleuropäischen Transformationsökonomien für industrielle Produktionsstandorte. Die Automobilindustrie erweist sich hier als eine der führenden Branchen. Auch wenn die Gesamtsumme der Direktinvestionen, die nach Mittel- und Osteuropa fließt, im 'Triadenvergleich' USA, Japan und Europa naturgemäß klein ausfällt, signalisiert die Entwicklung eine wachsende Bedeutung der Region in der Standortkonkurrenz. Die starke Magnetwirkung ergibt sich wesentlich aus dem komparativen Vorteil von 'low cost' zu 'high skill'-Bedingungen, den die ostmitteleuropäischen Länder gegenüber den herkömmlichen Niedriglohnländern besitzen, der sie aber auch mehr und mehr in Konkurrenz zu hochentwickelten Industrieregionen wie Deutschland treten läßt. Diese Konstellation in Verbindung mit der intensivierten Internationalisierung durch Direktinvestitionen macht deutlich, wie sehr sich das aus einer europäischen Sicht wünschenswerte 'upgrading' der Transformationsländer an die Gefahr der Abwanderung von Produktion und Arbeit im Westen knüpft. (HH

Mehr als ein Nullsummenspiel? Die neue Standortkonkurrenz zwischen Ost und West

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