Ib2 Grpb L5 Determinents Of Inter-firm Sourcing And Market Performance - Zhang Ruixian

 INTRA-FIRM

SOURCING i.e. the “make” option or vertical intergration

 INTER-FIRM

SOURCING i.e. the “buy” option from independent suppliers/reliance upon market forces

 Internal

sourcing increase in multinational firms recently  Firms adopt internal sourcing in the production of propietary product to protect advantages  Affiliated firms react differently to economic factors than unaffiliated firms  Roles of product, form and industry characteristics on internal sourcing



Determinants of internal sourcing of major components and market performance Product-related variables: Product innovation Process innovation Asset specificity Firm-related variables: Nationality Management Attitude Industry-related variables: Switching costs Numbers of suppliers Numbers of substitutes

Global competitive strategy: Internal sourcing of major components

Performance: Strategic Financial

Product-related variables:  Product

innovation

H1a: product innovation positively related to internal sourcing  Process

innovation

H1b: process innovation negatively related to internal sourcing  Asset

specificity

H2: Asset specificity positively related to internal sourcing

Firm-related variables:  Management’s

attitude

H3: Management’s favorable attitude is positively related  National

Difference in Sourcing

Behavior H4: Japanese MNC emphasis more than European MNC.

Industry-related variables:  Switching

costs

H5a: Switching cost is positively related  Number

of suppliers

H5b: number of suppliers negatively related

 Number

of substitutes

H5c: number of substitutes negatively related

 Product’s

H6a:

strategic market performance positively related

 Product’s

financial market performance H6b: is not positively related.

Sample: the global 500 in various industries  Measure: Multi-item measure in market performance, product innovation and process innovation  Analysis results: 

Significant : Process innovative, Asset specificity, Management’s attitude, Nationality, Number of substitutes, strategic dimension etc

Insignificant:

Product innovation, Switching cost, number of suppliers, financial dimension etc

1. 2.

3. 4. 5.

Product and firm related variable more significant than industry related variable Internal sourcing appropriate if specific assets used in a product; effective global sourcing is securing management involvement Negative relationship both for no. of substitutes and process innovation Japanese MNC source more internally Internal sourcing provides higher strategic market performance

1. 2. 3. 4.

Cross sectional, failed to analysis the nature of determinants The sample only includes large firm, not generalizable to small firms Not covered quasi-firm or networking source Not study the firm’s competitive strategy