Multinationals and Transition: Business Strategies, Technology and Transformation in Central and Eastern Europe

209 Pages·2004·1.127 MB·English

by  Julia Manea, Robert Pearce (auth.)

Multinationals and Transition
Also by Robert Pearce
GLOBALISING RESEARCH AND DEVELOPMENT (with Satwinder Singh)
INTERNATIONAL ASPECTS OF UK ECONOMIC ACTIVITIES (with Peter J. Buckley)
GLOBAL COMPETITION AND TECHNOLOGY
MULTINATIONALS, TECHNOLOGY AND NATIONAL COMPETITIVENESS (with
Marina Papanastassiou)
PROFITABILITY AND PERFORMANCE OF THE WORLD’S LARGEST INDUSTRIAL
COMPANIES (with John H. Dunning)
THE GROWTH AND EVOLUTION OF THE MULTINATIONAL ENTERPRISE
THE INTERNATIONALISATION OF RESEARCH AND DEVELOPMENT BY
MULTINATIONAL ENTERPRISES
THE TECHNOLOGICAL COMPETITIVENESS OF JAPANESE MULTINATIONALS
(with Marina Papanastassiou)
THE WORLD’S LARGEST INDUSTRIAL ENTERPRISES (with John H. Dunning)
US INDUSTRY IN THE UK (with John H. Dunning)
Multinationals and Transition
Business Strategies, Technology
and Transformation in Central
and Eastern Europe
Julia Manea and Robert Pearce
© Julia Manea and Robert Pearce 2004
Softcover reprint of the hardcover 1st edition 2004 978-0-333-96874-1
All rights reserved. No reproduction, copy or transmission of this
publication may be made without written permission.
No paragraph of this publication may be reproduced, copied or transmitted
save with written permission or in accordance with the provisions of the
Copyright, Designs and Patents Act 1988, or under the terms of any licence
permitting limited copying issued by the Copyright Licensing Agency,
90 Tottenham Court Road, London W1T 4LP.
Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The authors have asserted their rights to be identified
as the authors of this work in accordance with the Copyright,
Designs and Patents Act 1988.
First published 2004 by
PALGRAVE MACMILLAN
Houndmills, Basingstoke, Hampshire RG21 6XS and
175 Fifth Avenue, New York, N.Y. 10010
Companies and representatives throughout the world
PALGRAVE MACMILLAN is the global academic imprint of the Palgrave
Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd.
Macmillan® is a registered trademark in the United States, United Kingdom
and other countries. Palgrave is a registered trademark in the European
Union and other countries.
ISBN 978-1-349-42874-8 ISBN 978-0-230-51181-1 (eBook)
DOI 10.1057/9780230511811
This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources.
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Manea, Julia.
Multinationals and transition:business strategies, technology and
transformation in Central and Eastern Europe/Julia Manea and
Robert Pearce.
p. cm.
Includes bibliographical references and index.
1. International business enterprises—Europe, Central. 2. International
business enterprises—Europe, Eastern. 3. Business planning—Europe,
Central. 4. Business planning—Europe, Eastern. 5. Investments,
Foreign—Europe, Central. 6. Investments, Foreign—Europe, Eastern.
I. Pearce, Robert D., 1943– II. Title.
HD2755.5.M354 2004
338.8′8843—dc22 2003065252
10 9 8 7 6 5 4 3 2 1
13 12 11 10 09 08 07 06 05 04
Contents
List of Tables vii
List of Abbreviations ix
1 Multinational Strategy and Industrial Transformation 1
From foreign direct investment to multinational strategy 1
Strategic motivations of MNEs 3
Industrial transition: from restructuring to sustained
development 5
Needs of industrial transition 8
Creative transition 11
MNE strategies and the phases of transition 13
The surveys 18
Aims and structure 23
2 Technology and Strategic Motivations
for Investment in Transition Economies 2288
Introduction 28
MNEs’ motivations for CEE investments 29
Sources of technology applied in MNEs’ CEE operations 36
Results 43
Conclusions 48
3 Reasons for Investing in CEE, Technology
and Strategic Evolution of Subsidiaries 52
Introduction 52
Reasons for investing 53
Reasons for investing and sources of technology 59
Results 65
Conclusions 71
4 Market Orientation and the Strategic
Development of MNEs in CEE 7755
Introduction 75
Markets supplied 77
Conclusions 82
v
vi Contents
5 Strategies of MNEs’ Subsidiaries in Romania 8855
Introduction 85
Classification of subsidiaries 86
Reasons for investing in Romania 87
Strategic roles of subsidiaries in Romania 90
Markets supplied by subsidiaries 93
Types of products produced 95
Sources of technology used by subsidiaries 99
Conclusions 102
Appendix: process of classification of subsidiaries 104
6 MNEs’ R&D and the Technological Transition
in CEE 110088
Introduction 108
Knowledge capabilities in transition economies: a resource
and a constraint 109
Incomplete and distorted national innovation systems
in transition economies 111
A brief assessment of the NSIs of CEE 114
MNE as a technology catalyst in transition economies 118
R&D strategy of MNEs and NSIs of transition economies 120
MNEs’ R&D in CEE 123
MNEs’ R&D in Romania 138
Conclusions 146
7 Input Supply Linkages of MNE Subsidiaries in CEE:
Dependence or Development? 115511
Introduction 151
Foreign-owned firms, local input linkages and economic
development: the debate 152
Sources of inputs used by MNE subsidiaries in CEE 161
Subsidiary-level influences on MNEs’ purchasing
patterns in CEE 165
Sources of inputs used by MNE subsidiaries in Romania 172
Conclusions 176
8 Conclusions 118800
Bibliography 187
Index 194
List of Tables
1.1 Population surveyed and response 19
1.2 Characteristics of responding HQs by home region
and industry 20
1.3 Location of MNEs’ CEE subsidiaries 21
1.4 Structure of respondents to Romanian subsidiary
survey, by home country and industry 23
2.1 Evaluation of the motivations of MNEs’ subsidiaries
in CEE economies 29
2.2 Anticipated changes in importance of motivations
of MNEs’ subsidiaries in CEE economies 33
2.3 Anticipated changes in importance of motivations
of MNEs’ subsidiaries in CEE economies by current
strength of efficiency-seeking 35
2.4 Evaluation of technologies used in MNE subsidiaries
in CEE economies 38
2.5 Summary of predicted relationships 44
2.6 Regressions with sources of technology as dependent
variables 45
3.1 MNEs’ evaluation of reasons for investing in CEE countries 54
3.2 Summary of predicted relationships 64
3.3 Regressions with reasons for investing as dependent
variables and sources of technology as independent
variables 66
4.1 MNEs’ evaluation of markets supplied by subsidiaries
in CEE countries 78
4.2 Regressions with markets supplied as dependent variables 79
5.1 Classification of MNEs’ subsidiaries in Romania 86
5.2 Subsidiaries’ evaluation of reasons for their investment
in Romania 88
5.3 Strategic position of subsidiaries in Romania in their
MNE group’s operations 91
5.4 Importance of markets supplied by subsidiaries
in Romania 93
5.5 Types of products produced in subsidiaries in Romania 96
5.6 Relative importance of sources of technology used
by subsidiaries in Romania 100
vii
viii List of Tables
A5.1 MNE subsidiaries’ strategic motivations in Romania,
by industry and home country 105
A5.2 Degree of knowledge-seeking in MNEs’ subsidiaries
in Romania, by industry and home country 106
6.1 Resources devoted to R&D in CEE prior to the
transformational recession 115
6.2 Number of US patents by country of institution, 1969–96 116
6.3 Location of MNEs’ R&D facilities in CEE countries 124
6.4 Evaluation of reasons for setting up R&D units in CEE 126
6.5 Roles played by R&D units of MNEs in CEE 132
6.6 Evaluation of reasons for not having R&D in CEE 134
6.7 Scientific collaborations with CEE organizations 137
6.8 Evaluation by subsidiaries of reasons for setting up
an R&D laboratory in Romania 139
6.9 Evaluation by subsidiaries of reasons for not setting up
an R&D laboratory in Romania 142
6.10 Extent of subsidiaries’ technological interactions with
local organizations in Romania 145
7.1 Component and input suppliers to MNEs’ CEE country
operations 162
7.2 Regression tests of use of types of suppliers with
strategic roles of subsidiary as independent variables 166
7.3 Regression tests of use of types of suppliers with
sources of technology used by subsidiaries
as independent variables 167
7.4 Component and input suppliers to MNEs’ Romanian
subsidiaries 173
7.5 Nature of advice provided by Romanian subsidiaries
to local suppliers 175
List of Abbreviations
AR average response
CEE Central and Eastern Europe
ES efficiency-seeking
FDI foreign direct investment
GNP gross national product
IIL internationally interdependant laboratories
KS knowledge-seeking
LA location advantage
LIL locally-integrated laboratories
MNE multinational enterprise
MS market-seeking
NIC newly industrializing country
NSI national system of innovation
OA ownership advantage
OPT outward-processing trade
R&D research and development
S&T science and technology
SL support laboratories
SME small and medium-sized enterprise
ix