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Growth, Integration and Spillovers in the Central and East European Software Industry

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  • Slavo Radosevic

    (UCL School of Slavonic and East European Studies)

Abstract

This paper explores growth and competitive advantage in CEE software firms; it looks at the role of strategic partnerships and industry (spillover) effects. The empirical analysis is based on survey data from 224 software firms from six CEE countries (Bulgaria, Czech R, Estonia, Serbia, Slovenia, Romania). The results of the descriptive analysis are interpreted from the perspective of the role of capabilities in industrial development. The analysis shows that the patterns of growth are a mix of sector, region and sub--region specific determinants and show important national differences. This suggests that the CEE software industry cannot be considered as a homogenous phenomenon. There is no general tendency towards an expansion in exports; based on our sample only Romania is developing an export oriented software industry. Research shows that the CEE software industry is populated by young, dedicated, domestic firms, which are independent, and privately owned and which are mainly oriented towards localisation of software. They are strongly dependent for trade and production on alliances and strategic partnerships with foreign partners and a small share of technology based partnerships. There is an extensive process of industry upgrading underway, involving country and sub-region specific changes. The spillover effects are significant, through links with clients and intensive intra-industry knowledge transfer through high employment turnover and potentially high knowledge transfer from foreign to local projects. Differences between central and eastern Europe are strong in terms of degree of diversification of software supply, industrial upgrading and quality of demand. The pattern of software development in CEE differs from that in other emerging markets in the sense that it is domestic market oriented, but with an emerging export market for services. Its further growth and upgrading will be strongly dependent on the acquisition of organisational capabilities by local firms.

Suggested Citation

  • Slavo Radosevic, 2006. "Growth, Integration and Spillovers in the Central and East European Software Industry," UCL SSEES Economics and Business working paper series 69, UCL School of Slavonic and East European Studies (SSEES).
    • Handle: RePEc:see:wpaper:69
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    1. Christopher Gerry & Carmen A. Li, 2004. "Revisiting Consumption Smoothing and the 1998 Russian Crisis," UCL SSEES Economics and Business working paper series 43, UCL School of Slavonic and East European Studies (SSEES).
    2. Mickiewicz, Tomasz & Gerry, Christopher J. & Bishop, Kate, 2005. "Privatisation, corporate control and employment growth: Evidence from a panel of large Polish firms, 1996-2002," Economic Systems, Elsevier, vol. 29(1), pages 98-119, March.
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    Cited by:

    1. Slavo Radosevic & Esin Yoruk, 2012. "SAPPHO Revisited: Factors of Innovation Success in Knowledge-Intensive Enterprises in Central and Eastern Europe," DRUID Working Papers 12-11, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.

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