Strategic coupling on the European periphery: A case study of a small Hungarian town

Abstract

The FDI-based economic development policies in East-Central Europe and the strategies of transnational firms seeking cost-efficient production locations close to the main markets of the EU have led during the last decades to the integration of the region into different global/regional production networks, mainly in the form of locations for industrial production. While the intensity of re-industrialization largely determines economic growth and spatial socioeconomic inequalities outside metropolitan regions, the long-term success of this model, which tends to result in a dual economy, dependent development, and the ‘middle-income trap’, has been challenged. According to the GPN literature, which comprises the main theoretical basis of our research, the means of integration is the key to understanding the potential outcomes of this economic model. The process seems to depend on the quality of global-local interactions based on enterprise strategies and multi-level regional assets and agency.

Our article focuses on making a comparative analysis of two transnational companies in a small peripheral town and uses the concept of strategic coupling as the analytical framework for the interpretation of the global-local interactions and their developmental outcomes. Based on secondary and primary sources, we examine the key assets and actors in the local environment, follow the development (upgrading trajectories) of subsidiaries, and analyse the dimensions and depth of their local/regional socioeconomic integration. We contribute to the special issue’s main objectives through our case study that reveals strategic coupling dynamics and quality and discusses the chance of more advantageous developmental outcomes in a peripheral location with limited and diminishing local (human) assets.