Illustrated with the case of Renault-Dacia in Romania we aim to give insights in how and why foreign car makers contribute to upgrading. In addition, we analyse the spatial implications of this process for different parts of the value chain.
We divide the investments of Renault in Romania in different stages. In each stage we analyse in which functions the car maker invests, in which place, why, and which implications this has for upgrading. The empirical data stems from in-depth interviews with Renault managers, engineers and designers in Romania and in France and from further corporate information, including annual reports, press releases and web sites.
We show that Renault contributes to all types of upgrading, starting with product and process upgrading in the first stages, while in later stages it also invests in functional upgrading. It does not only upgrade its own subsidiary, but also suppliers and knowledge institutes. Concerning the value chain, we see that Renault keeps the basic research and control functions in the home base, while it performs all other functions in Romania as well.
Via the concept of upgrading analysed in various investments stages we provide managers insights in which parts of the value chain they should invest when entering a new market.
Although the case Renault-Dacia is relatively well known as an example of a low cost strategy, this article analyses the investment strategy in different stages in time and takes into account various parts of the value chain and upgrading.
This case study has been supported financially by the Institute for Housing and Urban Development Studies (IHS) and the Dutch Ministry of Economic Affairs. The data have been collected during a project of the Dutch Initiative for Sustainable Cities (DISC). The author wants to thank Joep de Roo, Meta van Drunen, Jeroen van Haaren and Bogdan Dragomir for their support during this case study. Finally, the author wants to thank Gert-Jan Hospers for his comments on an earlier version of this paper. Of course, the responsibility of the contents of this article is of the author alone.
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