Research Handbooks in Business and Management series
Edited by John R. Bryson, Jennifer Clark and Vida Vanchan
Chapter 22: Škoda Auto: the transformation from a domestic to a Tier Two lead firm
The automotive industry is considered to be a key industrial sector of strategic importance because of its size, links to other industries, employment effects and its potential regional development effects through the development of networks of component suppliers. As such, the governments of both developed and developing countries have supported the development of the automotive industry through various measures and economic policies (Dicken, 2011). Between 1990 and 2012, the production of cars in Central and Eastern Europe (CEE) increased 2.5 times to 5.3 million units and that of East-Central Europe (ECE) quadrupled to 3.3 million units. This rapid development was orchestrated by core-based transnational corporations (TNCs) through large inflows of foreign direct investment (FDI). As a result, the automotive industry has become a leading industrial sector in terms of its share of industrial production, employment and overall exports in countries such as Czechia, Hungary, Poland and Slovakia (e.g. Pavlinek, 2002a, 2002b; Pavlinek et al., 2009).
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