Central European Business Review 2016, 5(1):37-44 | DOI: 10.18267/j.cebr.143

Global Crisis and Upgrading of MNCs' Manufacturing Subsidiaries: A Case Study of Hungary

Andrea Szalavetz
Andrea Szalavetz, Senior research fellow, Institute of World Economics, MTA KRTK, 45, Budaörsi út, H-1112 Budapest, Hungary, szalavetz.andrea@krtk.mta.hu

The purpose of this paper is to investigate the impact of MNCs' crisis-driven cost-cutting and organizational restructuring actions on their local subsidiaries in Hungary. We hypothesize that much of the cost-cutting minded and efficiency-focused organizational transformation prompted by the global crisis of 2008 can actually be beneficial to some subsidiaries. Drawing on interviews carried out at 13 manufacturing subsidiaries, we find that upgrading occurs partly as a consequence of MNCs' pressure to reduce costs and improve efficiency, partly as an outcome of organizational restructuring and resources reallocation, and partly as a result of an increasing delegation of advanced functions to production subsidiaries. Although the Hungarian subsidiaries were on the receiving end: they hosted some of the relocated production activities, the main managerial implication is that caution is needed, success often breeds failure. The resulting overconfidence may prevent local managers and policy-makers from monitoring and analyzing industry-specific technological and market trends to detect opportunities and threats as early as possible.

Keywords: crisis adaptation; manufacturing subsidiaries; upgrading; Hungary
JEL classification: D22, D23, D81, F23

Received: January 4, 2016; Revised: March 15, 2016; Published: March 30, 2016  Show citation

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Szalavetz, A. (2016). Global Crisis and Upgrading of MNCs' Manufacturing Subsidiaries: A Case Study of Hungary. Central European Business Review, 5(1), 37-44. doi: 10.18267/j.cebr.143
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