Designing Global Sourcing Strategy for Cost Savings and Innovation: A Configurational Approach

Abstract

Despite the well-acknowledged benefits of global sourcing (e.g., location specific advantage) in the international business literature, research driven mainly by the transaction cost economics and resource based view has cautioned about its potential negative effects (e.g., hidden costs, hollowing out effect) which might offset its potential gain, leading to a failure to achieve expected outcome and capture the value created in global sourcing activities. We argue that this issue is primarily explained by the misalignment between a firm's global sourcing strategy and value expected from its global sourcing activities. This study examines the role of global sourcing strategy on financial and innovation performance of global sourcing activities. Using a fuzzy set qualitative comparative analysis on 235 firms engaging in global sourcing of business service activities, we identify configurations of global sourcing strategy-concerning (1) disaggregation, (2) dispersion of activities and (3) governance structure-that lead to high financial and innovation performance. The findings suggest that global sourcing strategy leading to high financial performance differs largely from global sourcing strategy leading to high innovation. While most studies selectively focus on one or two components of global sourcing strategy, our study highlights the need for firms to jointly consider the combined effect of degree of disaggregation, degree of dispersion of business service activities and governance structure as well as taking into account the expected outcome when crafting their global sourcing strategy.

Research Published in Management International Review from 2006 to 2020: A Bibliometric Analysis and Future Directions

“…The authors explored these key themes through their impacts on corporate governance (Daniel et al, 2012 ) , offshore outsourcing (Manning et al, 2011 ), gender and cultural stereotyping (Hutchings et al, 2013 ), global supply chains (Sinkovics et al, 2011 ), and other institutional factors relating to compliance with local laws, politics, and cultural values. The themes of cultural issues have been explored in the contexts of offshoring, global sourcing (Lin, 2020 ), and international expatriates. This suggests that, during this period (2016–2020), MIR authors explored topics related to outsourcing and IM issues.…”

Manufacturing internationalization: from distance to proximity? A longitudinal analysis of offshoring choices

“…We summarize here the main findings. For a more systematic review, the interested reader might see Schmeisser (2013) Most offshoring studies have focused the drivers and motivations of the phenomenon and their link with the configuration of firms' activities abroad (Lin, 2020). While many drivers were identified by the different studies (for an overview see MacCarthy and Atthirawong, 2003), the majority of scholarly (e.g.…”

Global supply chain competitiveness: The synergistic role of integrated logistics and global sourcing

“…•Cost-The main objective of the product sourcing strategy is to leverage the lower operating costs in overseas nations (Lin, 2020). However, the procurement organization faces added expenses not factoring in transactional domestic costs.…”