International Production Networks and Enterprise Transformation in Central Europe

Abstract

Foreign investors influence the transition in Central and Eastern Europe in particular through their impact on the enterprise restructuring in the region. In addition to corporate governance and financial and managerial resources, they bring Central European firms into the networks of international business. This article focuses on the evolution of the supplier network of VW-Skoda and the worldwide trends in the car industry. Relationships within the networks, like that led by VW, are growing increasingly complex, and thus create mutual dependencies. This creates difficult challenges for firms aiming at supplying major multinational manufacturers.

The paper concludes that networks are an essential mechanism in business-to-business markets and, therefore, enterprise transformation in transition economies cannot be explained satisfactorily without considering the evolution of business networks.