Competitiveness and changing patterns of embeddedness in Romania

Abstract

Purpose

Strategies of embedding into the local environment are considered critical for multinational companies (MNCs) operating in Central and Eastern Europe. The purpose of this paper is to analyze such strategies in Romania.

Design/methodology/approach

The theoretical framework draws on social network theory to investigate the extent, structure, and features of embedding in the context of four case studies.

Findings

The results suggest a shift in how MNCs respond to a changing competitive landscape in Romania. The findings indicate that, contrasting proficient strategies of establishing numerous connections at entry, the most valuable approaches are currently aimed at building a diverse but non‐redundant network of relationships that gives the company access to information and flexibility to react quickly to changes. Direct relationships with the government are found to be potentially detrimental, even if they may have been important at market entry.

Research limitations/implications

The limitations of the research relate to the subjective nature of the testimony‐based material.

Practical implications

The findings suggest that the local subsidiary management should stay connected with organizations that allow access to information about their industries, applicable legislation and future competitive pressures, while corporate headquarters need to give local management enough decision‐making freedom for the subsidiary to evolve with the environment.

Originality/value

The paper enhances knowledge of a strategic approach used extensively in transition and emerging markets, and adds to the understanding of MNCs' strategies in Romania.

Citation

Wright, R. (2010), "Competitiveness and changing patterns of embeddedness in Romania", Competitiveness Review, Vol. 20 No. 2, pp. 126-138. https://doi.org/10.1108/10595421011029848