Abstract
Škoda plays an important role in the Czech economy and in its regional economic development through the production network of its suppliers. It has profoundly affected the post-1990 transformation of the Czech automotive components industry.
Its case is interesting for several reasons: Škoda represents an example of a successful transformation from a state-owned enterprise into a highly competitive capitalist firm; it illustrates the potential impacts of FDI in less developed countries; it represents an example of the incorporation of a less developed country firm into the global production network of a core-based global firm; and it is an example of what I call a Tier Two lead firm. A Tier Two lead firm is a foreign-owned lead firm whose autonomy and decision-making power are limited by foreign ownership.
Despite its success, Škoda's foreign ownership and its dependence on VW also illustrate the potential drawbacks of the acquisition and subsequent foreign control of firms located in less developed economies.