The International Transfer of Production Models: Some Lessons from German FDI in Hungary

With the fall of the Berlin wall the notion of different national business systems or, to put it in another term, the variety of capitalism, gained much attention in the field of political economy. Although discussions about different capitalist models, such as the "Model Deutschland"-discussion were well under way in the beginning of the 80s, the vanishing of the communist system as an alternative seems to have spurred the discussion tremendously. Up to now the core topic of this debate is the question whether the different national systems are converging into a single model (no matter whether this model already exists or is still emerging as a kind of "third" model) or whether the models more or less stay as diverse as they are (or even get more diverse). One point frequently mentioned to prove either convergence or divergence of national business systems is the role played by multinational corporations (MNCs), i.e. companies that are by definition located in more than just one national business system. Two main issues are discussed here: first what is the impact of cross-border transfer of production models on the business systems of host countries and second what impact does the specific bargaining power of potentially mobile MNCs has on the development of the business system of the home country. Looking at the transfer of production models by German MNCs to Hungary via foreign direct investment (FDI), this paper is more strongly related to the first issue. Following some introductory remarks on different theoretical approaches to corporate internationalisation, the paper first tries to develop an appropriate theoretical framework to deal with the international transfer of production models inside MNCs. The next section will then raise the question, whether there is a unified and stable German Model to be transferred. Finally, the paper takes a first (preliminary) empirical look at what German investors transfer when going to Hungary, how these transfer processes occur and what strategic role the Hungarian subsidiaries play.