The establishment and local integration of the Bosch Group in the City of Miskolc

Abstract

A considerable amount of literature has been published on the role played by local governments and other actors in local economic development, and on the objective and subjective factors that affect the inward investment of foreign capital. Nowadays both economic geography and regional studies pay particular attention to processes underway in, and the differing development paths of, Central and Eastern European countries and their cities. The purpose of this paper is to examine the establishment of a large multinational company in a medium-sized Central and Eastern European city, and its integration into the local economy and society, from 2001 until the present day. This paper presents the network of relationships between the city of Miskolc as an investment location and the Bosch Group, and the continuous development of these relationships over more than a decade. It was prepared in parallel with a case study on the establishment and integration of Audi in the Hungarian city of Győr.

The author presents a real case verification of the modern endogenous growth theory through the data originating from primary research, the subsequent analysis and, finally, the conclusions. The main aim of this study is to illustrate the correspondence between the creation of the necessary conditions for long-term competitiveness, sustainable economic development and the production of higher-level local added value. With this objective in mind, the paper identifies the milestones of the local integration process and shows how the company, after the initial “compulsory” activities, achieved deep integration into the local economy and society through the implementation of activities defined and presented as “freestyle” or optional. The study also describes the role a multinational company may have in determining the development path of a given city, and in the success of attaining sustainable local development.

This knowledge contributes to the understanding of the establishment, integration and operation mechanisms of multinational companies, which is of crucial importance in order to unlock the dual economic structure of Hungary and the development of small and medium-sized enterprises. This study allows us to trace Miskolc’s development path over the past decade, its search for a way forward and the beginnings of a change in the city’s image. The city, which has a legacy of heavy industry and which suffered serious problems as a result of the change of regime in 1989, is slowly becoming a liveable and diverse residential location. The described activities, realized with the participation and cooperation of local actors, have significantly enhanced the ascent of Miskolc from a city suffering from structural crisis to an attractive investment location implementing business-friendly incentives.