Networks and Competitiveness in Polish Foreign-Owned and Domestic Firms

Abstract

In contrast to other studies of competitiveness which often focus on the country and industry level, this is a study of competitiveness in Poland at the firm level. In this analysis, we will focus primarily on how cooperation with external actors such as investors, creditors, customers, suppliers, local governments affects changes in Polish firms’ competitiveness.Why the focus on cooperation with external partners? A review of the literature on enterprise upgrading (see Woodward et al., 2005) finds a general consensus that in the process of upgrading, an important role is played not only by activities occurring within the enterprise, but also by its cooperation with other organizations and its ability to learn from such cooperation. The networks of the firm within which it pursues such cooperation and realizes gains therefrom are among its most important assets, and its skills in developing such networks and extracting gains from them are of crucial interest in studying the processes of firms’ upgrading and their integration into the European and global economy. Additionally, a large literature exists concerning the special role of enterprise networks in the innovation process. Their importance is due to the fact that they make it possible for the transfer of knowledge to the firm from other firms as well as from research institutions to take place. However, the literature also shows that firms must make some efforts of their own to generate knowledge in order to be able to absorb it from outside as well. The relevant literature on the post-Communist transition countries shows a severe adverse shock to network activity at the beginning of the transition. The same is true of innovation activity. However, in the near absence of firms’ own R&D activity, technological upgrading is occurring through the import of machinery and use of licensing, and the East Asian experience indicates that this may indeed be the beginning of a long-term trajectory leading to world-class technological and innovative capabilities. This is also reflected in a gradual shift of exports to goods with higher levels of skilled labor inputs (see Woodward et al., 2005).In this study we therefore set out to deepen the available knowledge about the networks of Polish manufacturing firms. Among the questions touched upon in this analysis are: Do foreign-owned companies have less developed networks of Polish suppliers than domestically owned companies? What is the role of the science and technology sector in industrial innovation? What benefits do firms derive from cooperation with various types of partners? To achieve a mix of mature and emerging industries, we selected four manufacturing industries for analysis:• electronics• auto/auto parts• pharmaceuticals• food and beveragesWe proceed as follows: here in the introduction, we briefly overview of the recent development and performance of the four industries in Poland. In the second section, we present case studies of eight firms – two from each of the four industries studied. These case studies were carried out in 2003. In the third section, we analyze data collected from a sample of 226 companies in 2004. Finally, in the fourth section, we summarize and conclude.