How can small domestic companies participate in global value chains? Despite abundant
scienti
c and policy interest in this question, there is little direct evidence on
how supplier-buyer relationships are formed and maintained. We introduce the Central
European Supplier Survey, which merges survey information with
financial statements
for a large sample of manufacturing
rms from Hungary, Romania and Slovakia. In addition
to identifying the scope of supplier-buyer relationships, the Survey also reports
many dimensions of their strength. We quantify relationship strength as a combination
of qualitative measures of supplier-buyer collaboration in product and process innovation
as well as monitoring. Even among arm’s length relationships, such collaboration
is common. Firms, especially large manufacturing
rms within multinational business
groups, invest substantial amounts in their relationships. Domestic SMEs, however,
seem to invest little. Our results suggest that building up valuable networks may
generate a substantial competitive advantage, but this process is hampered by strong
economies of scale or the lack of skills. We argue that a combination of qualitative
and quantitative survey data is necessary to understand the nature of supplier-buyer
relationships more broadly and generate more useful policy advice.
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