Clusters and the development of supplier networks for transnational companies

12th General Conference of EADI, Geneva, 24-28 June, 2008

Clusters and the development of supplier networks for

transnational companies

Magdolna Sass, Institute of Economics of HAS

Miklós Szanyi, Institute for World Economics of HAS


Cluster concept

• Aim: enhancing global competitiveness at regional level

• Core: cooperation on various corporate functions (slaes, purchase, training, innovation logistics, marketing…)

• Tools: shared use of cluster services,

personal and informal contacts,

knowledge generation and distribution

size increase joint appearance


Cluster features

• Regional concentration of activity• Sectoral focus (traded clusters)• Heterogenious structure of participants• Cooperation and competition• Innovation (knowledge generation and sharing)• Critical mass (size, financial independence)• Life cycle


Suppliers

• Main form of relationship between companies with foreign participation and local companies

• One of the main channel for spillovers• Can be perceived as clusters (lower level)• Base for deeper and closer cooperation between

companies• Relatively low level in Hungary (a supplier

relationship with an affiliate has been expected to „restructure” or induce to restructure domestic companies, raising their productivity, competitiveness etc.)


Factors influencing the share of local supplies in total inputs

1. Mode of FDI entry2. Sector3. Export-oriented versus domestic market oriented4. Gap (level of difference) between the „domestic” and

„foreign” sector 5. Age of the investment6. Quality of (potential) local suppliers7. Nationality of the investor8. Global strategies of TNCs9. Affiliates’ role in global TNC network

Clusters from supplier networks?• Privatization vs. greenfield: not highly relevant (clustering is

new phenomenon)• Sectoral affiliation (traded clusters) most globalized (mobile)

industries • Participation most likely who paid attention to supplier

network development (until now little TNC involvement)• Unprepared local participants (lack of trust, short term

horizon)• Clustering is more complex and difficult issue• TNCs’ involvement over time: proof of benefits of clustering• Eminent role of social capital building, role of potent cluster

management12th General Conference of

EADI, Geneva, 24-28 June, 2008

Clusters and the development of supplier networks for transnational companies

Documents

Transcript of Clusters and the development of supplier networks for transnational companies