Efficiency vs. effectiveness orientation of global sourcing strategy: A comparison of U.S. and Japanese multinational companies

Academy of Management Executive

Volumn 12, Issue 4, 1998, Pages 107-119

  Kotabe, Masaaki ^a,b  

^a Department of International Business and Marketing ^*

^b TEMPLE UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0000248479     PISSN: 10795545     EISSN: None     Source Type: Journal    
DOI: 10.5465/ame.1998.1334000     Document Type: Article

References (33)

1. This broad view of global sourcing strategy is investigated in Kotabe, M. 1992. Global sourcing strategy: R&D, manufacturing, and marketing interfaces, New York: Quorum Books.
2. World investment report 1996: Investment, trade, and international policy arrangements. 1996. New York: United Nations.
3. Organization for Economic Cooperation and Development. 1993. Intra-firm trade, Paris: OECD.
4. Swamidass, P. M. 1993. Import sourcing dynamics: An integrative perspective. Journal of International Business Studies, 24, Fourth Quarter: 671-91.
5. Murray, J. Y. 1996. A currency exchange rate-driven vs. strategy-driven analysis of global sourcing. Multinational Business Review, 4, Spring: 40-51.
6. Business Week. 1992. Guess who isn't buying American: For many U.S. companies, imported goods are cheaper and better-made. November 2: 26-27.
7. Technically speaking, suppliers in a Japanese vertical keiretsu are not necessarily owned in any significant way by a principal company. In most cases, a principal company own no more than 10 percent of the stock of its suppliers, and those suppliers also hold some of the principal company's shares. Such a mutual partial ownership is designed to enhance mutual trust and long-term commitment to each other. A transfer of executives, engineers, and some R&D funding from the principal company to its keiretsu member suppliers in exchange for the suppliers' commitment to the principal company is so common that a keiretsu can be considered a highly integrated corporate system (thus, intrafirm sourcing) rather than a buyer-supplier relationship on a spot or contractual basis.
8. Kotler, P., L. Fahey, and S. Jatusripitak. 1985. The new competition. Englewood Cliffs, NJ: Prentice-Hall.
9. Birou, L. M. and S. E. Fawcett. 1993. International purchasing: Benefits, requirements, and challenges. International Journal of Purchasing and Materials Management, 29, Spring: 28-37.
10. See, for example, Kotabe, M. 1992. Global sourcing strategy: R&D, manufacturing, and marketing interfaces. New York: Quorum Books;
11. and Johansson, J. K. and G. S. Yip. 1994. Exploiting globalization potential: U.S. and Japanese strategies. Strategic Management Journal, 15, October: 579-601.
12. Levy, D. L. 1997. Lean production in an international supply chain. Sloan Management Review, 38, Winter: 94-102.
13. See, for example, Kotabe, M. and K. S. Swan. 1994. Offshore sourcing: Reaction, maturation, and consolidation of U.S. multinationals. Journal of International Business Studies, 25, First Quarter 1994, 115-40;
14. and Murray, J., M. Kotabe, and A. R. Wildt. 1995. Strategic and financial performance implications of global sourcing strategy: A Contingency Analysis, Journal of International Business Studies, 26, First Quarter.
15. Cohen, S. S. and J. Zysman. 1987. Why manufacturing matters: The myth of the post-industrial economy. California Management Review, 29, Spring: 9-26.
16. Ho, R. 1997. Small product-development firms show solid growth. Wall Street Journal, April 22: 2. This article shows that entrepreneurial companies have begun to fill a void of new product development role as large companies trim their internal R&D staff and expenditures in the United States. Although it makes a financial sense, at least, in the short term, those outsourcing companies will face the same long-term concern.
17. Markides, C. and N. Berg. 1988. Manufacturing offshore is bad business. Harvard Business Review, 66, September-October: 113-120.
18. Bermingham, J. A. 1996. Executive insights: Roles of R&D and manufacturing in global marketing management. Journal of International Marketing, 4 (4): 75-84.
19. Clark, K. B. and S. C. Wheelwright (Ed.). 1995. The product development challenge: Competing through speed, quality, and creativity. Boston, MA: Harvard Business School Press.
20. Starr, M. K. and J. E. Ullman. 1988. The myth, of industrial supremacy. In M. Starr (Ed.), Global competitiveness, New York: W. W. Norton and Co.
21. Kotabe. 1992. Global sourcing strategy.
22. Czinkota, M. R. and M. Kotabe. 1990. Product development the Japanese way. Journal of Business Strategy, 11, November/ December: 31-36.
23. Dutta, S. 1993. Fuzzy logic applications: Technological and strategic issues. IEEE Transactions on Engineering Management, 40, August: 237-254.
24. Czinkota and Kotabe. 1990.
25. Business Week. 1997. Can Detroit make cars that baby boomers like? December 1: 134-148.
26. For empirical and historical evidence, see Levin, R. C., A. K. Klevorick, R. R. Nelson, and S. G. Winter. 1987. Appropriating the returns from industrial research and development. Brookings Papers on Economic Activity, Issue 3: 783-831;
27. and Baumol, W. J., R. R. Nelson, and E. N. Wolff. 1994. Convergence of productivity: Cross-national studies and historical evidence. New York: Oxford University Press.
28. In the 1960s and 1970s, many U.S. firms had their own manufacturing subsidiaries in Southeast Asian countries. However, when U.S. parent companies increased procurement of components from abroad for production in the United States in the mid-1970s, many of those subsidiaries were either not used strategically for integrated global manufacturing purposes or sold away to local interests. Selling of U.S. assets in Southeast Asia was partly due to the local government's "fade-out" policy, mostly in the 1960s, to gradually increase local participation in U.S.-owned businesses, and also partly due to U.S. firms' desire to reduce fixed cost in order to lower break-even point.
29. Kumpe, T. and P. T. Bolwijn. 1988 Manufacturing: The new case for vertical integration. Harvard Business Review, 66, March-April: 75-81.
30. Schlender, B. R. 1991. Apple's Japanese ally. Fortune, November 4: 151-152.
31. For fear of such a possibility, Apple later severed a production arrangement with Sony.
32. Lloyd, B. 1994. IBM: Decline or resurrection? Management Decision, 32 (8): 5-10.
33. Morgan, J. C. and J. J. Morgan. 1991. Cracking the Japanese market: Strategies for success in the new global economy. New York: The Free Press.