The Power of Financial Markets and the Resilience of Operations: Argument and Evidence from the German Car Industry

Abstract

The paper deals with the implications of the increasing influence of financial markets or financial agents on the automotive industry, focusing on the field of operations. It is argued that, while the power of finance and the requirements of financial investors increase, car companies have to deal with persistent or even increasing productionist requirements at the same time. This argument is based on the distinction between external and internal financialisation and on the concept of product strategies, defined by qualitatively different markets and production requirements. The paper is developed with reference to case study material from German automotive companies and concludes that, although there is no smooth financialisation of automotive operations, there is the need to find a new balance between financial and productionist logics. The alternative would be a destabilisation of car companies and the increasing disconnection between top-management and operational management can be taken as an indicator of such a tendency.