Research background and purpose:
The ongoing integration of global production networks and the rising significance of intangible assets are fundamentally transforming the competitive landscape and organizational structures of European firms. These changes have heightened concerns about workforce polarization, especially the shrinking opportunities for low-skilled labor, as firms increasingly focus on knowledge, innovation, and participation in global value chains. The literature emphasizes the dual role of intangible assets and offshoring in driving both strategic change and growing employment inequality among different skill groups. This study examines how the internationalization of production and investments in intangible assets affect employment distribution among high-, medium-, and low-skilled workers in enterprises across CEE-11 and EU-15 countries.

Design/methodology/approach:
Employment share equations for low-, medium-, and high-skilled labor are estimated using Seemingly Unrelated Regression (SUR) techniques, with model specification derived from the translog cost function. Using a balanced panel dataset for CEE-11 and EU-15 countries, this method allows for the identification of group-specific effects of offshoring and detailed intangible asset investment on skill-specific employment structures.

Findings:
The results show that offshoring consistently increases the share of high-skilled labor in both regions, but its displacement effects vary: in CEE-11 countries, offshoring significantly reduces low-skilled employment, while in EU-15 countries, it mainly displaces medium-skilled workers. Intangible capital further speeds up workforce polarization by disadvantaging low-skilled workers and benefiting those with higher skills. These patterns highlight the need for reskilling initiatives and flexible talent management to stay competitive in a changing labor market.

Value added and limitations:
These findings highlight the importance of reskilling initiatives and flexible talent management for maintaining competitiveness in a changing labor market. The analysis is limited by using aggregate country group data and available indicators for skills and intangible assets. Future research should address these limitations by investigating sector- and occupation-specific effects and further distinguishing between types of offshoring to gain deeper insights into labor market transformation.