Clusters and the development of supplier networks for transnational companies

Clusters, an important tool for providing matching answers to challenges from transnational companies, are regional concentrations of firms, research and education institutions, regional development bodies and other participants sharing some joint technological platform and aiming to increase their joint competitive strength through collaboration at various levels of activity. Transnationals may become involved in clusters in various countries, e.g. through affiliates in host economies. One form of cluster may be collaboration of transnationals and their partners and suppliers. The paper analyses the main attributes of clusters and the rationale behind them, before considering the inclination of transnationals to develop supplier networks. It goes on to describe the activities and levels of cooperation among transnationals—chiefly original equipment manufacturers (OEMs)—and local suppliers. Based on analysis of supplier network patterns, the paper compares this cooperation content with typical activities in successful clusters. It mainly deals with Hungarian experiences, though most may also be relevant to other transition economies. The main finding is that transnational companies’ primary interest lies elsewhere, not in cluster development, but that in the presence of strong local initiative and professional cluster management they may gain interest in cluster activity of certain types.