An examination of the strategic and operational impact of global sourcing on UK small firms

Abstract

This paper presents three in-depth case studies of UK small manufacturers from the electronics manufacturing industry with global supply chains. There is no overlap in products, suppliers or customers and over time, each has developed a distinct and different strategy for managing an extended supply chain. The outcomes and experiences though are not markedly different. The operational challenges they encounter around quality and delivery, as well as the strategic dimensions of information asymmetry and capability fit are discussed. The study identifies the financial risks the firms are exposed to, the constraints to innovation and the wider strategic implications for long-term business performance.

Küresel Tedarikçi Riskine Farklı Bir Yaklaşım: Finans Temelli Bir Model Önerisi

“…Some of the studies on low cost country sourcing is concerned with the strategic dimension of global supply. Hätönen and Eriksson (2009) and Javalgi et al (2009) discuss the strategic aspects of global supply in developing countries, while Hanna and Jackson (2015) demonstrate the strategic and operational impacts of global sourcing.…”

Managing distance in international purchasing and supply: a systematic review of literature from the resource-based view perspective

“…The key types of operating routines that are associated in the literature with LCCs seem to be the formal approach to the assessment of the feasibility of LCC sourcing (Kamann & van Nieulande, 2010;Caddick & Dale, 1987), as well as assessment of the total cost of such sourcing arrangements (Horn et al, 2013;Platts & Song, 2010;Weber et al, 2010;Zeng & Rossetti, 2003). In general, the operating routines that are linked to the challenges of IPSM, seem to be associated with, for example, such themes as supplier selection (Handfield 1994), managing logistics (Sawhney & Sumukadas, 2005;Murphy & Daley, 1994), development and the management of supplier relationships (Hanna & Jackson, 2015;Kaufmann & Carter, 2006) and the overall sourcing decision making process (Liu & McGoldrick, 1996;Cavusgil et al, 1993).…”

“…However, international purchasing offices (IPO) serve as important knowledge managers for MNCs because they search for new suppliers, exchange information and transfer know-how from the buyer to the supplier (Nassimbeni & Sartor, 2006;Nassimbeni & Sartor, 2007). A firm's financial resources also play a role in managing the challenge of source-user distance, as firms committed to long international supply pipelines are exposed to financial risks (Hanna & Jackson, 2015), and the capacity of a firm to mitigate offshoring challenges has been said to depend on its level of financial and human resources. We conclude that the challenge of source-user distance in IPSM (motivating the firm to develop operational capabilities) is clearly linked to the routine and resource requirements of firms.…”

“…The early results of Kotable and Murray (1990;also Murray et al, 1995) seem to suggest that international outsourcing and innovation do not travel well together. Hanna and Jackson (2015) suggest global sourcing constrains innovation in the case of SMEs. However, other results show that 'global purchasing has no direct impact on product innovation performance' (von Haartman & Bengtson, 2015, p. 1295.…”

Effect of best management practices on the performance and productivity of small firms

“…Management practices thus handle a large amount of diverse information, mainly taking the form of rules, routines, documentation and formalized structures (Child and Mansfield, 1972;Bagnoli and Vedovato, 2014;Centobelli et al 2017a;). In a recent flurry of research, it has been shown that "best" management practices improve firm productivity (Aboelmaged, 2014;Hanna and Jackson, 2015). For instance, Bloom and Van Reenen (2007) and Bloom et al (2011) examined the role of product market competition, among other factors, in determining the degree to which best management practices are adopted by firms in the United States, Britain, Germany, and France.…”