Local Sourcing Practices of Foreign Owned Multinational Subsidiaries Operating in Poland

Abstract

Much of the current literature on Central and Eastern Europe (CEE) focuses on macroeconomic issues, including macroeconomic reforms and the development of the transition process. However, one needs also to question the ‘micro’ side and see, for example, the contribution foreign direct investment made to the transition process and the activity of foreign multinational enterprises. This chapter will first define what is meant by the transition process and outline current trends in FDI activity in Poland. It will then set out to analyse the impact of local sourcing activities on the transitional economy of Poland. Based on the theoretical literature of Dunning (1993) and others, a set of criteria have been developed for evaluating the effects of multinational enterprise supplier linkages to national economic competitiveness. These include linkages introducing complementary assets — for example, technology — raising standards of product quality and stimulating local entrepreneurship. These effects are analysed by drawing on empirical evidence from foreign-owned manufacturing multinational firms operating in Poland. The findings define the impact of these firms by comparing their sources of supply when entering the Polish market with the present-day situation. The findings indicate that foreign multinationals are starting to make a more favourable impact on the Polish economy through the use of increased supplier linkages, though at a very slow pace.