Table Of ContentINTERNATIONAL INDUSTRIAL NETWORKS AND INDUSTRIAL
RESTRUCTURING IN CENTRAL AND EASTERN EUROPE
International Industrial
Networks and Industrial
Restructuring in Central and
Eastern Europe
Edited by
Slavo Radosevic
School of Slavonic and Eastern European Studies,
University College London, U.K.
and
Bert M. Sadowski
Eindhoven Centre on Innovation Studies,
University of Technology Eindhoven, The Netherlands
KLUWER ACADEMIC PUBLISHERS
NEW YORK,BOSTON, DORDRECHT, LONDON, MOSCOW
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To
Isa Karina
and
Despina & Nicholas
TABLE OF CONTENTS
Preface.......................................................................................................................xi
Listoftablesandfigures..........................................................................................xiii
AbouttheEditor.........................................................................................................x
Contibutors...............................................................................................................xv
CHAPTER 1Slavo Radosevic and BertM. Sadowski
INTRODUCTION......................................................................................................1
CHAPTER 2Slavo Radosevic and Bert M. Sadowski
INTERNATIONAL INDUSTRIAL NETWORKS AND INDUSTRIAL
RESTRUCTURING DURING POST-SOCIALIST TRANSFORMATION...........15
2.1. Different theoretical perspectives on international strategic
alliances and their empirical relevance..................................................16
2.2. International industrial networks and industry restructuring
in Post-Socialist transformation: A review of keyissues......................28
2.3. Summary and conclusions.....................................................................35
PART I INTERNATIONAL INDUSTRIAL NETWORKS AND INDUSTRIAL
RESTRUCTURING IN CENTRAL EUROPE
CHAPTER 3Slavo Radosevic
THE DYNAMICS OF INTERNATIONAL INDUSTRIAL
NETWORKS IN CENTRAL EUROPE...................................................................41
3.1. Alliances and growth of enterprises in Central Europe:
A conceptual framework........................................................................42
3.2. An empirical analysis of international strategic alliance activity:
Some stylised facts................................................................................46
3.3. Discussion..............................................................................................51
3.4. Conclusions...........................................................................................55
CHAPTER 4Stanislaw Kubielas
PRODUCT FRAGMENTATION AND ALLIANCES IN THE CENTRAL
EUROPEAN COMPUTER AND SOFTWARE INDUSTRIES..............................59
4.1. ProductfragmentationandstrategicalliancesinthePCindustry..........60
4.2. Productfragmentation and alliances in the software industry...............66
4.3. Conclusions...........................................................................................76
CHAPTER 5 Bert M. Sadowski
FOREIGN DIRECT INVESTMENTS AND STRATEGIC ALLIANCES IN
INDUSTRIAL RESTRUCTURING OF TELECOMMUNICATION
MANUFACTURING IN CENTRAL EUROPE......................................................79
5.1. The challenges and the legacy for central European manufacturers......80
5.2. The role of international strategic alliances in the evolution of
telecommunication manufacturing in centralEuropeancountries.........85
5.3. Summary and conclusions.....................................................................92
vii
CHAPTER 6Slavo Radosevic
FOREIGN DIRECT INVESTMENT AND ALLIANCES IN GLOBAL
INDUSTRIALINTEGRATIONOFELECTRONICSINCENTRALEUROPE... 95
6.1. From socialist electronics conglomerates to highly integrated
productionsubsidiariesandsubcontractors...........................................96
6.2. Production upgrading and technological integration of the Central
Europeanelectronicsindustry..............................................................102
6.3. Conclusions.........................................................................................106
CHAPTER 7Slavo Radosevic and Deniz Eylem Yoruk
THE GROWTH OF ENTERPRISE THROUGH ENTREPRENEURSHIP AND
NETWORKALIGNMENT....................................................................................109
7.1. Historyandprofile...............................................................................110
7.2. Contractmanufacturing:Abasisforsurvivalandgrowth...................113
7.3. VideotongoesEasternEuropean?.......................................................116
7.4. Videotonholding as a network organizer............................................117
7.5. Industrialparksandlocalnetworks.....................................................118
7.6. Productive rents, entrepreneurship and networks................................119
7.7. Onestepback,twostepsahead?..........................................................121
7.8. Thestrategicchallenge:Howtoavoidthesubcontractingtrap?.........124
7.9. TheEffectsofVideoton’sgrowth:Relocationsandclustering?.........126
7.10. Summary and conclusions...................................................................126
PART II INTERNATIONAL INDUSTRIAL NETWORKS AND INDUSTRIAL
RESTRUCTURING IN RUSSIA AND THE UKRAINE
CHAPTER 8 Natalya Ivanova
COOPERATE TO SURVIVE: STRATEGIC ALLIANCES IN THE RUSSIAN
AEROSPACE INDUSTRY....................................................................................131
8.1. Internationalstrategic alliances in the Russian space industry............131
8.2. Internationalstrategic alliances in the Russian aviation industry........141
8.3. Internationalstrategic alliances in Russian aerospaceR&D................151
8.4. Summary and conclusions...................................................................153
CHAPTER 9Igor Yegorov
DELAYED RESTRUCTURING THROUGH GRADUAL GLOBAL
INTEGRATION IN AVIATION AND SPACE INDUSTRY INTHE
UKRAINE..................................................................................................................155
9.1. The Ukrainian Aviation industry: The cases of Motor Sich and
Antonov aircraftengine factories........................................................156
9.2. Internationalstrategic alliances in the aviationindustry......................158
9.3. The prospects of restructuring ofthe industry.....................................160
9.4. International strategic alliances in the Ukrainian space sector............162
9.5. Summaryandconclusion.....................................................................165
viii
CHAPTER 10Alexander Dagaev
INTERNATIONAL COOPERATION IN THE RUSSIAN
TELECOMMUNICATION INDUSTRY...............................................................167
10.1. The Russiantelecommunication industry since the 1990s..................167
10.2. The history of strategic alliances formation in the Russian
telecommunication industry.................................................................169
10.3. Summary and conclusions...................................................................176
CHAPTER 11Igor Yegorov
THE AMBIVALENT STATE AND THE USE OF ALLIANCES
FOR GROWTH AND RESTRUCTURING IN THE UKRAINIAN TELECOM
INDUSTRY............................................................................................................179
11.1. Structural changes inthe Ukrainiantelecommunicationsector...........180
11.2. Summary and conclusions...................................................................189
CHAPTER 12Alexander Dagaev
WAITING TO ENTER: INTERNATIONAL ALLIANCES IN THE
RUSSIAN CAR INDUSTRY.................................................................................191
12.1. Why international strategic alliances in the Russian
automobileindustry.............................................................................191
12.2. The organization and development of international cooperation
in thecar industry after August 1998...................................................193
12.3. The role of local authorities in international strategic alliances..........201
12.4. The role of governmentregulations.....................................................202
12.5. Summary and conclusions...................................................................204
CHAPTER 13 Igor Yegorov
MUCHFUSSABOUTNOTHING:RESTRUCTURINGSTALEMATEINTHE
UKRAINIANCARINDUSTRY...........................................................................207
13.1. ThestrategicpartnershipbetweenAvtoZazandDaewoo..................208
13.2. Other international strategic alliances in the industry..........................214
13.3. Perspectivesforcooperationwithotherforeigncompanies................218
13.4. Summary and conclusions...................................................................219
CHAPTER 14 James Henderson and Slavo Radosevic
RESTRUCTURING AND GROWTH OF POST-SOCIALIST ENTERPRISES
THROUGHALLIANCES: LUKoil ANDYUKOS...............................................223
14.1. LUKoil and Yukos: a brief history......................................................224
14.2. The Morphology of LUKOil and Yukos’Alliances............................230
14.3. Conclusions and discussion.................................................................234
CHAPTER 15Slavo Radosevic and Bert M. Sadowski
CONCLUSIONS....................................................................................................237
INDEX...................................................................................................................247
ix
ABOUT THE EDITORS
Slavo Radosevic is Reader in Industrial and Corporate Change at University College
London, School of Slavonic and Eastern European Studies. He has published
extensively on issues of industrial change and innovation in CEE (Industrial and
Corporate Change, Research Policy, Technovation, Structural Change and
Economic Dynamics, Scientometrics, Technology Analysis and Strategic
Management, Technology and Society, Economic Systems, etc). He is the author of
International Technology Transfer and ‘Catch Up’ in Economic Development,
Edward Elgar, 1999. and co-editor with D. Dyker of Innovation and Structural
Change in Post-Socialist Countries : A Quantitative Approach, Kluwer Academic
Publishers, Dordrecht, 1999.
Bert M. Sadowski, works as an Associate Professor at the University of
Technology Eindhoven, the Netherlands. His research interest has been in the areas
of technology management, industrial change and new technologies
(Telecommunications Policy, Research Policy, International Journal of Technology
Management, Information Economics and Policy, Small Business Economics,
Journal of Management Studies). He is author of the book Back to Monopoly:
Opportunities and Constraints for Public and Corporate Networks in Post-
Unification Germany. New York: Avebury.
The volume has originated from two generously funded projects on
international strategic alliances and industrial restructuring in Central and Eastern
Europe by the European Commission in the ACE-Phare (P95-2071-R) and ACE-
Tacis (P95-4003-R) Framework Programs as well as the ESRC funded project ‘The
emerging industrial architecture of the wider Europe’ No L213252037. It represents
up-to-date empirical material and links to the current theoretical debate on the issue
of management of international strategic alliances during industrial restructuring in
Central and Eastern Europe.
x
PREFACE
Our interest in this book has been driven by strong professional and personal
motivations to understand processes of transformation from centrally planned
socialist to market based capitalist economies. The contributors to this volume have
been formed by and started their careers in the socialist/communist period and/or
share a profound interest in recent transformations in this region. We believe that
this personal motivation has very much shaped the making of this book and our
relentless desire to explain processes of post-socialist transformation.
Workshops in Maastricht (the Netherlands), at the Balaton Lake in Hungary,
in Brighton (United Kingdom) and in Moscow (Russia) also constituted important
milestones in shaping the book. Several versions of the manuscript, numerous
emails, telephone calls, meetings between the two editors and our belief that the
issues covered in this volume will become even more relevant to the future of
Central and Eastern Europe have gradually led to the final shape of the book. We
hope that the book will contribute to theoretical discussions in the field as well as be
of interest to business strategists, policy makers and students.
We are grateful to a number of people who have been involved in this
process. Our thanks go to David Dyker, whose Scottish enthusiasm for everything
related to Central and Eastern Europe not only shaped this book but also the career
path of both editors. Thanks also to all the contributors who understood our
relentless desire to achieve highest academic standards by pushing for up-to-date
material, clarity and analytical content. Special thanks go to Cathelijne van
Herwaarden and Herma Drees from Kluwer Academic Publishers for their
continuous support and their belief in our project.
This book is dedicated to Isa Karina Sadowski, who yet has to discover her
roots in the East, and to Despina and Nicholas Radosevic, for whom crossing
borders has become a way of life.
Slavo Radosevic
Bert Sadowski
xi
LIST OF TABLES AND FIGURES
Table 2.1: Recent research on international strategic alliance in post-socialist
transformation.................................................................................................18
Table 2.2: Potential and limitations of different theories on international strategic
alliances...........................................................................................................27
Table 2.3: Progress of Institutional Restructuring in Different Transition
Economies.......................................................................................................29
Table 2.4: Extent of Net Foreign Investment in different CEE countries
(1994 – 2002), in mio US$..............................................................................30
Table 2.5: Barriers and opportunities in restructuring of industrial sectors
in CEECs: Markets,finance and technology..................................................33
Table 3.1: Typology of alliances in Central and Eastern Europe..............................43
Table 3.2: List ofcase studies...................................................................................47
Figure3.1:DeterminantsofmodesofgrowthofenterprisesinCEECs...................52
Figure 4.1: Distribution of thePolishPCMarket in 2001 (in%)..............................62
Table5.1: InfrastructuredevelopmentintheCEEcountriesin1989......................80
Table 5.2: Local manufacturing in the CEEcountries priorto 1989........................82
Table 5.3: Technological relatedness of international cooperative ventures...........86
Table 5.4: Complementary assets received through the international
cooperativeventures........................................................................................86
Table 5.5: Complementary assets contributed to the international
cooperativeventure.........................................................................................87
Table 6.1: Electronics production in central Europe and Ireland(in mln US$)........97
Table 6.2: Shares of exports in production in sectors of electronics industry,
1999, in percent..............................................................................................98
Table 6.3: Labour productivity in the electronics industry, in $ 1,000.....................98
Table 6.4: Central European ex-socialist electronics conglomerates in the
post-socialistperiod......................................................................................102
Table 6.5: Foreign R&D and Softwarecentres in Central Europe..........................104
Table7.1:Videoton:employment..........................................................................112
Table 7.2: Videoton: Sectoral distribution of turnover...........................................112
Table7.3:OrganisationalstructureofVideoton.....................................................121
Table 7.4: Number of acquired technologies acrosstypes offirms.......................122
Table 7.5: Number of technological references (partners) across mastered
technologies..................................................................................................123
Figure 7.1: Videoton’s strategic options.................................................................124
Table8.1:Fighter/attackaircraftforecast,1997-2006............................................142
Table 8.2:Tactical Fighter Export through 2005....................................................142
Table 8.3: Technological level of aviation engineering in Russia,
comparison with USA and Western Europe..................................................143
Table 10.1: The dynamics of mobile telecommunications development
in Russia at theend of the 1990's..................................................................171
Figure 10.1: Distribution of Moscow mobile telecommunication market in the
beginning of 1998.........................................................................................172
Table 11.1:Participationof Ukrtelecom in Joint Ventures, 1998...........................181
xiii
