Domestic Sourcing by Foreign-Owned Subsidiaries

Abstract

This paper investigates the development of domestic sourcing by foreign-owned subsidiaries (FOS) in the UK. The regional development and international-business literatures are used to develop a conceptual framework on the links between autonomy, the use of networks, and domestic sourcing. Data from a survey of German, French, and US FOS in the UK is used to test the model. The results indicate that increased use of networks and increased operational decision-making autonomy are associated with increased domestic sourcing, but that only a minority of FOS are increasing their use of domestic sourcing. The growing importance of global sourcing is considered as a possible explanation for the low proportion of FOS that are increasing their use of domestic sourcing. The implications for regional-development policy of the findings are also assessed.

The embeddedness of transnational corporations in Chinese cities: Strategic coupling in global production networks?

“…Second, the duration from establishment to 2006 was used to measure the age of firm (AGE). In general, there is a trend of increasing local embeddedness over time, including increasingly using local personnel for top management positions (Iguchi, 2008;Williams, 2005;Williams et al, 2008). Third, firms with more R&D capacities in China tend to have more resources and incentives to develop local technological linkages (Sun & Du, 2011).…”

“…We focus on TNCs' backward and technological linkages with local firms, which are central issues in the literature on embeddedness and are key components in the process of coupling with TNCs in the GPN (Dunning, 1993;Sun & Du, 2011;Williams et al, 2008). We hypothesize that the backward and technological linkages between TNCs and local firms are not automatic.…”

“…The firm-specific decentralization of decision-making is also heterogeneous. The decentralization of routine production arrangement and factory management may only produce marginal benefits in comparison with having autonomy in such strategic decisions as R&D, product design, branding and marketing (Williams et al, 2008).…”

“…Backward linkages, or domestic sourcing, form an important channel that connects TNCs with local firms and have potentially extensive benefits for the domestic sector (e.g. UNCTAD, 2001;Williams, McDonald, Tüselmann, & Turner, 2008). Technological linkages between TNCs and local firms also offer substantial benefits arising from connections within the GPNs (e.g.…”

International Roles of Foreign-Owned Subsidiaries in New Zealand: An Exploratory Study

“…Autonomy is also needed for subsidiaries to take on export roles, and it has been found that autonomous subsidiaries have high propensity to export . As for any initiative, subsidiaries require resource support and are largely dependent on parent firm resourcesliterature suggests that subsidiaries in New Zealand largely draw on parent firm resources (Scott-Kennel, 2001), and though subsidiaries could get funding from external and domestic sources as well, majority get resources from parent firms (Dutton et al, 1999;Williams et al, 2008).…”