Re-Bundling and the Development of Hollow Clusters in the East German Chemical Industry

Abstract

After the reunification, drastic economic restructuring processes occurred in East Germany due to a double transition: the transformation of the political and economic system, and the Fordist crisis associated with ongoing globalization processes. The challenges and shifts were particularly strong in the chemical industry, which had developed a structure of mass production characterized by an unsustainable exploitation of natural and economic resources. Drawing on a conception that views transformation and restructuring as a process of regional ruptures and re-bundling, rather than one that focuses on the lock-in of old industrialized regions, this article investigates the extent to which restructuring activities have been able to generate self-sustaining regional economies and networks in the East German chemical industry.The article is based on empirical research conducted in the regions of Leuna, Schkopau and Bitterfeld-Wolfen, which provides evidence that restructuring in the chemical industry did not create fully fledged clusters with strong interfirm linkages.Although the regional economies of the East German chemical industry were well linked to West Germany and to international markets through corporate ties, networks for learning and innovation remained weak.The development of these ‘hollow clusters’ was due to the persistence of a small industry basis, the dominance of branch operations with few local ties, and the limited importance of start-up firms. Such conditions, consequently, limit the prospects for growth in the East German chemical industry, suggesting that more diversified regional policies must be developed in the future.

Industrial specialization and economic performance: A case of Czech microregions

“…Conglomerates typically had their headquarters in one region, often a metropolitan region, and many subordinated production plants with hardly any strategic functions located in small and medium-size cities. This organizational pattern almost led to the destruction of local external linkages, deregionalization of production (Grabher 1994b;Krätke 1997), and the development of 'hollow clusters' (Bathelt 2009), despite high levels of industrial concentration and specialization (Schamp 2000).…”

“Good” Corporate Governance in Transformation Countries — A Comparison of Experts' Perceptions in East Germany, Estonia and Hungary

“…In this context, East Germany still has a substantial economic growth problem connected with a clear lack of "big players" producing considerable spillover effects (Windolf and Schief, 1999;Barthelt, 2009). Consequently, labor relations must be rated precarious despite supervisory board representation and works councils being guaranteed by law (Steger, 2005).…”

Post‐Reunification Restructuring and Corporate Re‐bundling in the Bitterfeld‐Wolfen Chemical Industry, East Germany

“…Analyses focusing on lock‐in processes and development paths are useful when conducting retrospective analyses of long‐term regional developments, but they do not adequately address crisis‐driven processes of reorganizing, modernizing and recombining existing resources and integrating them with new resources that are redeployed through sectoral shifts or result from mobilizing extra‐regional resources. In order to focus on this process of recombining resources and analyzing the related negotiations, struggles and responses to structural crises, this article employs a conception of regional ruptures and re‐bundling that avoids notions of continuous adjustments in technological development by integrating political and economic crises into regional analysis (Bathelt and Boggs, ; Bathelt, ).…”

“…Changes may be driven by the restructuring activities of a few dominant firms, or they may follow from collective activities and the involvement of other local firms. Interactive learning and innovation processes may enable the region's actors to re‐bundle technological trajectories if they are able to mobilize or redirect resources and agents towards collective action (Bathelt, ). Of course, not every new bundle of economic activities has the potential to generate a new regional trajectory.…”

“…Earlier research has shown that regional restructuring after reunification has led to de‐industrialization processes across the manufacturing landscape of eastern Germany, affecting in particular the chemical industry and its traditional agglomerations (Bathelt, ). In their broad analysis of the subject, Kollmorgen () and Land () emphasized that the severity of restructuring was due to a double shock and the ensuing transition.…”