Beyond "dependent development" in a high-tech industry? The interplay between domestic institutions and transnational sectoral governance in the trajectories of emerging Polish IT firms

Abstract

The present study adds to the ongoing discussions on the economic and industrial change in postcommunist Central Europe by investigating in-depth the case of a relatively successful development of two large domestic IT firms from Poland. The case is theoretically interesting because it calls into question the dominant perspective on industrial transformation in the region which focuses on the role of foreign direct investment (FDI). The presented empirical analysis uses rich historical data to reconstruct the strategies of the two Polish firms regarding: sales market operations, corporate finance, and productive organization. The study's general assumption is that the relatively successful development of the two analyzed companies has been shaped by the interplay between home-country conditions and the governance structure of the transnational enterprise IT (EIT) industry. The conducted analysis indicates, first, that the firms have benefited from a well-functioning local capital market, the domestic supply of high-skilled labor, and some characteristics of the home country sales market. Second, the study reveals that the firms' development has been conditioned by the ongoing "modularization" processes in the EIT sector. In their initially home market oriented operations, the analyzed firms focused on the downstream segments of the EIT value chain while sourcing the more high-tech components (e.g. databases) from collaborations with foreign suppliers. In general, the results of the study suggest that a more nuanced perspective on the ongoing processes of industrial change in Central Europe than the one proposed in the existing literature is needed.