Research Area 3

Business Strategies and Frameworks of Political Economies

Sebastian Henn, Thomas Glauben and Thorsten Posselt

Recent economic development in many national economies of Eastern Europe has been characterised by three major distinct albeit interdependent trends: The first trend of marketisation in the 1990s abandoned the system of state-controlled prices and introduced market prices. State-owned businesses underwent privatisation and money and commodity flows were stabilised. Tax reforms were carried out and new institutions required for the functioning of markets established (e.g., Smith/Swain 1998; Zecchini 1997). Despite the shrinking of most economies in the 1990s, many have developed dynamically as suggested by GDP growth, declining unemployment, growing exports and increasing currency stability. Yet, the overall macro-economic situation as well as the situation in several economic sectors (e.g. food and agriculture) remains challenging. Many countries underperform in productivity and the reduction of deficits of the state budgets and/or the trade balances, as well as legal uncertainty, corruption and bureaucracy (Becker et al. 2010; Gros/Steinherr 2004).

The second trend of integration in the global economy is reflected by growing trade relations between Eastern European (EE) and non-EE countries and international engagement in EE markets. Eastern European countries attract with enormous market potential and low labour cost. While they thus have become important locations for external investors, firms from EE-countries have vice versa been engaging in transnational activities (»emerging multinationals«) or are being integrated in global production networks (Bandelj 2011; Carter/Turnock 2005; Neuhaus 2005). As a consequence, economic actors in Eastern Europe are increasingly orientating towards a multi-centred economic world.

The third trend refers to the challenges of transition towards knowledge-based economies in which innovations matter for economic growth. Although the narrow socialist innovation systems have been restructured, they are still widely unable to generate knowledge on an enterprise level (Freeman 2005). Enterprise R&D has strongly declined with the break-up of large enterprises and experienced the sharpest declines in funding. Industry-university linkages have so far only poorly developed. In the years to come, Eastern European countries will therefore have to advance their innovation dynamics (Radosevic 2005).

On a corporate scale, the states reached and the actual trends in developing capitalist markets, establishing links with new partners in the global economy by integrating into or developing (new) global production networks and generating and circulating new knowledge about markets and technologies in order to successfully compete on a global scale are very diverse on a wide scale of strong global players (sometimes still in strong connection to state-policies) to completely dependent suppliers. Even though this implies multifaceted challenges, only little is known about the strategies that firms implement, how these strategies are shaped by the institutional frameworks and how they affect economic structures on different spatial levels (local, regional, national, supranational) or which effects result from the strong dependence on natural resources and extractive industries. This research area aims to further explore these issues by addressing the following research fields and questions:

Corporate coping strategies and state intervention (Thorsten Posselt):
How do firms adapt to changing business environments? Which measures do state actors implement to support firms in adopting to changing business environments? Which effects do the representation of women and the consideration of gender diversity have on strategies and, accordingly, on organisational performance?

Trade patterns and regional specialisations (Thomas Glauben, Nadir Kinossian, Linde Götz, Sören Prehn):
How have international trading patterns changed in different sectors? How do the new patterns affect market structures, competition and the formation of prices on national and international markets? How do value chains change and how do commodity prices along the value chain change due to modified trade patterns? How have consumption patterns changed in different regions?

In- and outward-bound foreign direct investments (Sebastian Henn, Thorsten Posselt):
How have patterns of foreign direct investment changed during the past decades? How do the technology levels of selected EE-countries correspond with the capital inflows they experienced over the past two decades? Which role does cross-border patent trading and licensing play in knowledge and technology transfer into and across Eastern Europe?

Translocal knowledge flows (Sebastian Henn, Nadir Kinossian, Thorsten Posselt):
To what extent do FDI generate knowledge and technology flows into resp. out of Eastern Europe? Which role do trade fairs, business conferences and other events play for the exchange of knowledge with other regions/countries? Which kinds of practices can be observed for different types of knowledge flows and how can these practices be explained?

Evolution of new economic spaces (Sebastian Henn, Nadir Kinossian, Thomas Glauben):
Where do emerging industries establish themselves? How does this affect the change of regional production systems? How have regional production systems changed over the past 20 years? How do local production systems link to other regions/countries?

Patterns of urban and regional resilience (Johannes Ringel, Tanja Korzer, Felix Arglist):
How do regions absorb the impacts of urbanisation processes? What are the obstacles for responsible and sustainable urban management? What can actors learn from successful approaches and development patterns in order to be able to respond to future challenges at the urban level?