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INTRODUCTION
Global sourcing refers to the integration of purchasing
units across a firms worldwide locations, looking for
common items, processes, design, technologies, knowledge and suppliers (Faes, Matthyssens and Vandenbempt
2000; Rozemeijer 2000; Monczka and Trent 2003).
Rather than merely searching for cost savings by centralization and harmonization of activities (e.g., Arnold
1997; Faes et al. 2000; Rozemeijer 2000; Rozemeijer, Van
Weele and Weggeman 2003), integration (or coordination) means the extent to which the purchasing activities
of the worldwide units are mutually supportive, and
unity of effort is achieved, to accomplish the firms
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FIGURE 1
The General Information Processing Framework (adapted from Tushman and Nadler 1978)
Task Characteristics
Task Environment
Uncertainty
Facing the
Subunits
Information
Processing
Requirements
Information
Processing
Capacity
Inter-unit Task
Interdependence
Vertical
Integration
Mechanisms
Lateral
Integration
Mechanisms
FIT
Effectiveness
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one firm. Although this approach has not yet been taken
very often, a noteworthy exception to this is a study on
integration analyzing 15 large MNCs, suggesting that
integration of purchasing units indeed varies across categories (Matthyssens and Faes 1997).
nization. The final contingency of interunit task interdependence of the IPF has not been addressed in the
sourcing context. This, however, is not surprising because
purchasing literature has mostly focused on uncertainty
from the perspective of a single purchasing unit.
RESEARCH METHODOLOGY
Research Design
Owing to the lack of theory on global sourcing organizations (Quintens et al. 2005) especially in terms of
providing theoretical explanations for relationships
among concepts (the questions of How and Why in
the definition of good theory [Bacharach 1989; Wacker
2008]), this research started without precise hypotheses
or propositions. Our research design can best be described as theory elaboration (Vaughan 1992; Lee 1999;
Gilbert 2005). In comparison with testing an existing
theory (Popper 1959) or developing a new theory (Glaser and Strauss 1967; Eisenhardt 1989), the key idea of
theory elaboration as applied in this paper is to extend
the IPF to the global sourcing context, thereby providing
theoretical explanations for the use of different integration mechanisms across different categories. The
TABLE I
Factors Affecting Uncertainty in the Purchasing Context
Contingency
Definition
Example
References
(1) Purchase
novelty
Cardozo (1980),
Hill (1972),
McQuiston
(1989)
(2) Product
complexity
Hill (1972),
McQuiston
(1989), Xideas
and Moschuris
(1997)
(3) Purchase
importance
Cardozo (1980),
Hill (1972),
Bunn (1993)
(4) Demand
volatility
Walker and
Weber (1984)
A turbulent environment
characterized by a rapid rate of
change and lacking transparency of
supply markets, making the situation
more uncertain
Cardozo (1980),
Bunn (1993),
Xideas and
Moschuris
(1997)
(5) Supply
Degree of global availability of
market
the item, uncertainty in
characteristics production and supply, stability
of supply
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TABLE II
Addressing Validity Criteria, Based on Miles and Huberman (1984) and Yin (2003)
Validity Criterion
Objectivity/Confirmability:
relative neutrality and reasonable
freedom from unacknowledged
researcher biases
Reliability/Dependability/Auditability:
whether the process of the study is
consistent, reasonably stable over time
and across researchers and methods
External Validity:
establishing a domain in which the
studys findings can be generalized
Utilization/Application/Action
Orientation:
what the study does for its participants,
both researchers and researched, as
well as for the consumers
outcome of the paper can therefore be classified as middle-range theory (Merton 1968; Bourgeois 1985; Layder
1993) which is defined as theory that generalizes beyond
a particular case but within a particular context or setting
(Woodside, Liukko and Vuori 1999; Ketokivi 2006).
In order to elaborate the IPF in the global sourcing
context, we collected empirical data following a multiple
case study design with a replication logic (Yin 2003). We
selected this case study research design for three reasons.
First, our research aim is to understand how and why
contingencies lead to differences in integration mechanisms at the category level (Meredith 1998; Yin 2003).
Second, research on global sourcing organizations is in
its exploratory stage and existing knowledge on the factors
affecting organization design at the category level is
scarce (Yin 2003; Voss, Tsikriktsis and Frohlich 2002;
Quintens et al. 2005). And finally, there has been a call for
more case studies on global sourcing (Trent 2004; Dubois
and Araujo 2007). The ways by which validity criteria
(Miles and Huberman 1994; Yin, 2003) in qualitative
research were addressed are shown in Table II.
In the case selection, we focused on MNCs because they
are more likely to be engaged in global sourcing (Bozarth
et al. 1998). Details about the case firms are presented in
Table III.
In our pursuit to achieve a theoretical sample, three
MNCs were studied from different industries (gas, pharmaceutical, automotive), thus varying the following attributes: Company sizes, degrees of multinationality and
global sourcing ratios. All three case firms have extensive
global sourcing experience with hybrid purchasing
structures in place. The primary structural dimension
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TABLE III
Case Firm Characteristics
Firm
Firm
Sizea
Gas
Pharma
Auto
Size of
Purchasing
Departmenta
Purchasing
Structure
Extent of
Multinationalityb
Global Sourcing
Experience
(Years)
Global
Sourcing
Ratio (%)c
25,000
300
80
370
4050
300,000
720
70% foreign
spend
75% foreign
spend
20% foreign
spend
41,000
Matrix: region/
category
Category
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Matrix: region/
category
Data Collection
As the aim of the paper is to develop middle-range
theory, the theoretical framework (IPF) dictates the form
of the required data (Layder 1993). The primary data
were collected between July 2006 and June 2007 using
semistructured interviews. A total of 15 interviews (five in
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DATA ANALYSIS
Data analysis was carried out in two major phases. First,
within-case analysis focused on each case separately and,
TABLE IV
Case Firm Characteristics
Firm
Gas
Gas
Gas
Gas
Pharma
Pharma
Pharma
Pharma
Auto
Auto
Auto
Auto
Product Type
Category
Description
All materials required for daily use in the offices (pens, paper,
coffee, etc.)
Raw materials Liquid crystals
Substances with characteristics of liquids and crystals and
essential component of product with highest growth rates in
firm
CAPEX
Innovative analytical Special instruments that are necessary for daily use in
instruments
laboratories
Services
Market research
Market data (market share of competitors, market volume,
services
growth rates, etc.)
MRO
Wear parts
Components that need to be replaced regularly during
production
Raw materials Steel
Critical component required for many parts of cars
CAPEX
Robots
Industrial robots required in many production steps such as
welding
Services
Agency services
Creative services for marketing and branding purposes
MRO
IT consumables
All supplementary material for IT (mice, batteries, discs, etc.)
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Wear parts, IT
Full purchasing authority
consumables, office is decentralized to sites
supplies
Economies of
process
Strategic purchasing
centralized at category
manager (specification
setting, market analysis,
sourcing strategy,
contract placement)
Operational purchasing
at each site (ordering,
expediting)
Centralization
Liquid crystals,
gas, steel, market
research, IThardware
Case
Economies of
information/
learning
Economies of
scale
Motive
Manuals, guidelines
and instructions with
best-practice
purchasing process
and related tools
Global database
with manuals and
instructions
IT system to leverage
information on best
price, suppliers and
contracts across sites
Knowledge database
with detailed
information,
templates, etc. about
project, best practices
IT system to leverage
information on local
needs, prices,
contract structures
and suppliers across
all sites
Standardized
purchasing process with
clear definition of roles
and responsibilities
Purchasing processes
differ across sites, but
comparable outputs
for each major activity
defined
Decision gates for
important activities
(supplier selection,
category strategy)
defined a priori by
category manager
Information Systems
Formalization
TABLE V
Lateral Mechanisms
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Economies
of process
Economies of
information/
learning
Economies
of scale
Motive
Straight
rebuy
Modified
rebuy
Robots
Wear parts,
Working
clothes, office
suppliers
New buy
Consulting,
agency
services
Straight
rebuy
Market
research
services
New buy
Straight
rebuy
IT-Hardware
Innovative
analytical
instruments
Straight
rebuy
Purchase
Novelty
Liquid
crystals,
gas, steel
Case
Low volume,
low criticality
High volume,
high criticality
High volume,
high criticality
High volume,
low criticality
Medium
volume, high
criticality
Medium
volume, high
criticality
High volume,
high criticality
Purchase
Importance
Regular
and recurring
demand
Regular
and recurring
demand
Demand
Volatility
Irregular
demand
Irregular and
infrequent
demand
Standardized
item
Irregular
demand, high
quantity of
orders
Highly
customized
Highly
customized
Specifications Regular
set by supplier and recurring
demand
Standardized
item
Standardized
item
Category
Complexity
TABLE VI
Supply Environment
Pooled
Reciprocal
Reciprocal
Reciprocal
Reciprocal
Reciprocal
Reciprocal
Type of
Interdependence
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REFERENCES
Alguire, M.S., C.R. Frear and L.E. Metcalf. An
Examination of the Determinants of Global
Sourcing Strategy, Journal of Business and Industrial
Marketing, (9:2), 1994, pp. 62-74.
Arnold, U. Global Sourcing: An Indispensable Element
in Worldwide Competition, Management International Review, (29:4), 1989, pp. 14-28.
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