International Purchasing Offices: An empirical research

International Purchasing Offices (IPOs) play an increasingly important role in the management of international sourcing activities, both in developed and emerging economies. We performed a systematic literature review on IPOs. This allowed us to identify and summarize the main research streams and to highlight some weaknesses (e.g., methodological issues and lacking theoretical foundations) and gaps. We concluded that few significant studies have been devoted to IPOs and proposed some directions for future research organized into three questions: (1) Does an IPO add value to the company? (2) How are the IPOs set up, how do they work, and how do they develop? and (3) What is the role of the IPOs within the global sourcing organisational structure? We conducted an exploratory multiple case study research to face with the second and third questions pursuing three main aims: (1) to propose a typology of IPOs and highlight the relationship between strategy and structure in a global purchasing context; (2) to study IPO macro-organisational structures (i.e., organisational archetypes) and their evolution over time; and (3) to study IPO micro-organisational structures (e.g., individual tasks, activities, and capabilities) and their evolution over time. We identified three types or clusters of IPOs along four dimensions (i.e., motives for sourcing from China, global purchasing strategy for China, IPO structure and IPO followership) and presented a causal model and associated propositions to explain how an IPO may become more strategic for its parent company. We then proposed a dynamic evolution model, consisting of five stages differentiated by number, depth, and breadth of roles, in which IPOs could leapfrog some stages, re-trench (move back to lower stages) and be potentially withdrawn. Finally, we highlighted some resources/capabilities required by IPOs; we proposed a typology of IPO micro-organisational evolutionary behaviours; and we recognized three contingent factors that jointly affect these behaviours (i.e., the architectural and technological complexity of the sourced items, annual volume sourced abroad, and experience in the foreign context)

reshoring does home country matter

Abstract The role of the country, either home or host, in firms' internationalization has been widely analysed in the International Business field. A large number of studies have shown that home country shapes many aspects of firms' internationalization processes such as investment decisions, location selections, and entry modes. However, these studies mainly focus on the firms' foreign expansion. Little is known about the relations between firms' home country and reshoring processes. This paper aims to analyse whether and how reshoring projects are different across countries, thereby further exploring the underlying home country-related factors contributing to reshoring peculiarities. By using a dataset including 529 cross-industry reshoring projects developed by companies headquartered in five countries (i.e., US, Germany, UK, France, and Italy), the study shows that these projects differ in terms of industry, entry mode, firm size and motivations. Thus, reshoring turns out to be a phenomenon where each country has its own peculiarities. The research further sheds light on the possible institutional, cultural/cognitive and industry/resource-related factors underlying these specificities. This study contributes to both reshoring and international business literature by highlighting how reshoring differs across countries. It also provides policy and managerial implications, at a time when several governments are considering the economic and employment potential of this phenomenon

International purchasing offices in China: a dynamic evolution model

“NOTICE: this is the author’s version of a work that was accepted for publication in International Business Review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in International Business Review 23, 580-593. DOI: 10.1016/j.ibusrev.2013.09.006”The salience of the international purchasing office (IPO) in the management of international sourcing activities of multinational corporations (MNCs) has steadily increased, in developed and emerging economies, since the first adoption of this supply chain strategy in the 1980s. The aim of this paper is to develop an activity/role-based evolution model for IPOs, employing multiple case studies: 14 MNCs’ IPOs in China, studied by British, Italian, and Chinese scholars. Applying role theory in a global purchasing context, we identify eight routine roles and four strategic roles played by IPOs and propose that IPOs could lead an MNC's global sourcing in a geographical region. We challenge the unilinear and sequential nature of existing global sourcing process models and propose a dynamic evolution model, consisting of five stages differentiated by number, depth, and breadth of roles, in which IPOs could leapfrog some stages, re-trench (move back to lower stages) and be potentially withdrawn. Finally, we conclude that the stage of an IPO is determined by the strategic importance of China to its parent company

Global purchasing strategy and International Purchasing Offices: Evidence from case studies

“NOTICE: this is the author’s version of a work that was accepted for publication in International Journal of Production Economics. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in International Journal of Production Economics, 154, 284-298. DOI: 10.1016/j.ijpe.2013.09.007”Setting up an International Purchasing Office (IPO) is one of the key steps for firms doing global sourcing. This paper aims to explore the relationship between strategy and structure in a contemporary global purchasing context. We build a theory of IPOs, employing a case study method to address two research questions - what types of IPOs exist in China? And how may an IPO become strategic to its parent's global purchasing? We identify three types or clusters of IPOs along four dimensions: motives for sourcing from China; global purchasing strategy for China; IPO structure and IPO followership. We present a causal model and associated propositions to explain how an IPO may become more strategic for its parent company. In the model we identify that, in addition to the direct link of 'structure follows strategy', IPO followership can be an underlying construct, linking IPO structure and global purchasing strategy for China. The paper opens up new avenues for global sourcing research and provides new insights for managers on global purchasing strategy, specifically with respect to IPO organisational design and capabilities

International purchasing offices in China: roles and resource/capability requirements

This is the author accepted manuscript. The final version is available from Emerald via the DOI in this record.Purpose - The purpose of this paper is to address global sourcing organisational design through the following research questions: how do the roles performed by International Purchasing Offices (IPOs) change over time?; what are the resources/capabilities required by an IPO for an effective performance and how do they change over time?; and what are the contingent factors affecting such changes? Design/methodology/approach - The authors employed an exploratory multiple case study approach and analysed 14 Western IPOs located in China for a period between 2007 and 2012. The data were primarily collected through 34 direct, semi-structured interviews of IPO heads and sourcing managers or senior buyers. Findings - The authors identify and discuss the importance of ten roles played by IPOs and 12 required resources/capabilities. Furthermore, considering the changes that occurred to these IPOs over a five-year period (2007-2012), the authors observe three distinct evolutionary behaviours (i.e. "overall development", "selective development", and "stable configuration") and highlight three contingent factors that jointly affect these behaviours (i.e. the architectural and technological complexity of the sourced items, annual volume sourced abroad, and experience in the foreign context). Originality/value - This paper contributes to the resource-based view of the firm in a global sourcing context by highlighting the resources/capabilities required by IPOs and discussing their characteristics. Furthermore, it proposes a typology of IPO micro-organisational evolutionary behaviours. Finally, it applies contingency theory and identifies three factors that might affect the evolutionary behaviours

Entry modes in reshoring strategies: An empirical analysis

Abstract The Entry Mode (EM) choice is a fundamental issue in reshoring initiatives. Despite several authors have studied the determinants of offshoring EM, no study has investigated so far the factors affecting the reshoring EM and its relation with the offshoring EM. The purpose of this paper is to examine which factors influence entry mode choice in reshoring initiatives. We develop a conceptual framework that explains the reshoring EM in terms of country-, industry-, firm- and project-specific factors, in addition to the offshoring EM choice. Next, we test this model by using a sample of 677 cross-industry and cross-country reshoring projects. Based on the results, we find that offshoring EM significantly constrains the subsequent reshoring EM. More in detail, firms adopting offshore insourcing entry modes tend to retain these modes in reshoring. Furthermore, reshoring EM is explained by industry- and project-specific factors, while offshoring EM is influenced by a broader set of industry-, country-, and firm-specific factors. This study fills a gap in the reshoring literature by analysing influential factors in EM choice and by offering a comparison between the determinants of offshoring and reshoring EM

Offshoring and backshoring: A multiple case study analysis

Abstract Motivations underscoring offshoring and backshoring are typically investigated as separate entities in the academic literature. This separation undermines a deeper comprehension of the two phenomena, and implicitly denies the conceptualization of backshoring as a possible step of the firm internationalization process. Our paper seeks to fill this gap by (1) understanding the relations (if any) among offshoring and backshoring motivations at firm level; (2) exploring whether backshoring is a "failure" of the offshoring initiative, or rather the evolution of the firm's competitive and location strategies. A content-based literature review provides the base for the identification of the key motives for offshoring and backshoring, which are then organised using a theory-grounded framework. Next, we conduct a multiple case study analysis based on four companies, searching for common patterns in offshoring and subsequent backshoring initiatives. Cases allow understanding how the motivations (Why) connect with the governance modes (How), and the location choice (Where). Building on the case findings, the paper presents some propositions for future empirical research

Urban production – A socially sustainable factory concept to overcome shortcomings of qualified workers in smart SMEs

Abstract Many of the Industry 4.0 approaches are of a technical nature, and by developing new intelligent technologies and adapting and transferring existing techniques, they will help increase productivity in industry. However, human resources will play a central role also in future factories, thus they are a key factor for implementing Industry 4.0. The role and job profile of employees in the smart factories will change in the future and it will be increasingly challenging for SMEs to compete with large corporations in the fight for skilled workers. In the smart city of tomorrow, production sites will be integrated in the sense of an 'urban production' in a city-friendly way becoming more interesting for talents and qualified work force. Thus, this paper discusses the imminent shortage of skilled workers with a focus on SMEs. The proposed concept of urban production gives an overview of measures to overcome the shortage of qualified workers. The paper aims to show that urban production is a concept to achieve a socially sustainable symbiosis between companies and the city of the future

Performance implications of SA8000 certification

Purpose – The purpose of this paper is to shed light on the relationship between the adoption of Social Accountability 8000 (SA8000) – which is considered the most important ethical certification standard – and firm performance, building on agency and contingency theories. Design/methodology/approach – The authors analyse secondary longitudinal balance sheet data of listed firms employing a rigorous event-study approach and compare SA8000-certified companies to different control groups based on three matching criteria, i.e., industry, size, and pre-certification performance. The authors then study the moderating effects of the cultural features, the country’s development level, and the labour intensity on the causal relationship through multiple regression methods. Findings – The authors find that SA8000 certification positively affects labour productivity and sales performance but has no effect on profitability. Furthermore, the study supports that the relationship between SA8000 and profitability is moderated by two cultural features of the home country of the firms (i.e. power distance and uncertainty avoidance). Originality/value – This is the first study, which empirically tests the effects of the ethical certification SA8000 on firm performance using a cross-country sample. In addition, the authors contribute to the wider debate on the effects of corporate social responsibility practices on firm performance

One-to-one relationships between Industry 4.0 technologies and Lean Production techniques: a multiple case study

Production research literature and industry practice have started to pay increasing attention to the Industry 4.0 (I4.0) phenomenon. Scholars and practitioners identified a strong link between this paradigm and the well-known Lean Production (LP) paradigm. Most studies consider LP as a prerequisite of I4.0 and I4.0 as a tool to overcome LP limits and boost its practices. However, so far, these effects have been studied only at a high level, without an in-depth and comprehensive pairwise analysis at a practice-technology level. Moreover, few empirical studies have been carried out on this topic. Our paper attempts to fill these gaps by conducting a multiple case studies research to explain the one-to-one relationships between LP techniques and I4.0 technologies, and vice versa. More specifically, the one-to-one analysis examines the enabling effect of LP on I4.0 and the empowering effect of I4.0 on LP. Based on the empirical analyses, we propose a framework on the relationships between the two paradigms structured into six areas drawn from previous research (i.e., manufacturing equipment and processes, shop-floor management, workforce management, new product development, supplier relationships, customer relationships). Such representation clarifies the interdependence of the two paradigms in the whole supply chain