Drawing on global production network research and conceptual explanations of the changing spatial divisions of labour, this article investigates the transformative effects of the dynamic interplay between strategic coupling and multiscalar changes across labour regimes in Central and Eastern European post-socialist sectoral trajectories. It interrogates critically whether sectors across peripheral regions have been able to slot themselves into lead firms’ transnational production systems, resulting in processes of value creation, value capture or value destruction. The empirical analysis reveals that the capacity of domestic resources to purposively match and align themselves to global lead firms and their strategic objectives is influenced by local historical legacies, spatiality, elite agency and labour agency, which combined to shape distinct meso-level transformations. The methodology is based on analysing the post-socialist transformation of three sectors in Romania, which have different historical legacies, institutional configurations, and spatial and temporal vectors of development, allowing us to trace interactions between different modes of strategic coupling or decoupling and labour regime reconfiguration. The central thrust of the article highlights how different modes of strategic coupling into global production networks, or decoupling from global production networks, are causally linked to the reconfiguration of labour regimes, leading to long-term regional socio-economic transformations.

Processes of outsourcing and offshoring have driven the changing spatial divisions of labour through foreign investment and development of peripheral regions into key offshore destinations for business services. This paper focuses on the role of elites, transnational and domestic, in the transformation of Romania into a major business services offshoring location in Central Eastern Europe (CEE) over the last two decades. The paper reveals the role of elite agency in connecting domestic resources to business services global production networks (GPNs) in order to drive domestic institutional transformation. A lot has been written about the agency of labour; yet there is a gap in our understanding of the agency of elites, specifically how transnational elites articulate with other elites at the national-, meso- and micro-level and produce institutional changes. Drawing on literature on enclave creation and dual economies, the paper illustrates how the alliance between domestic and transnational elites shaped transformation across the sector by implementing labour market flexibilisation and by crafting a ‘sound’ business environment in terms of infrastructure, investment incentives and bureaucratic framework to emulate institutional conditions of the home country. The development of the Romanian business services sector into an ‘enclave economy’ has become dependent on collaborative networks with domestic universities and intermediary organisations, which played a key role in facilitating foreign investment attraction and linking domestic resources to the needs of multinational firms.