Variegated firm finance and global production networks : car component manufacturers in Hungary and Eastern Germany

Abstract

This study explores the financial dimension of global production networks, a major lacuna in global production networks theory only recently beginning to be addressed. It conceptually challenges accounts of capitalism as a uniform process by evidencing spatially variegated practices of capital sourcing by car component manufacturers in Hungary and Eastern Germany. It aims to determine how such patterns can be explained and understood by the firms’ agency and embeddedness both in variegated forms of capitalism and, through ownership, within global production networks. The study further aims to assess potential implications on the firms’ governance and on local and regional development prospects. The research applies a mixed-methods approach combining quantitative analysis of data collected from publicly available sources with qualitative data from secondary sources. Based on a conceptual framework combining existing literature on variegated capitalism, global production networks and geographies of firm finance, it analyses the capital sources of around 160 Hungarian and 160 Eastern German car component manufacturers in the light of their location, size and ownership, arguing that financing practices (i) are not uniform but variegated, depending on historical, socio-institutional and political/regulatory contexts of regions in which firms operate, and on the firms’ agency also shaping this context and (ii) are shaped by the firms’ integration and relative position within networks of firms, shareholders, financial institutions and capital market investors. The thesis empirically evidences geographical variegation in the capital sourcing patterns of the firms analysed and provides empirical evidence of variegation at regional levels. It highlights the important financial dimensions of global production networks by showing how firms owned by other firms within a global production network are financed in a way fundamentally different from those that are not. It also contributes to a better theorisation of less studied variegations of capitalism such as formerly state-socialist regions, supporting calls for a more fine-grained and nuanced analysis of geographies of finance both at and beneath the national level.