A Taxonomy of Sourcing Strategic Types for MNCs Operating in China |
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| Authors: | Masaaki Kotabe Hongxin Zhao |
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| Affiliation: | (1) The Washburn Chair of International Business and Marketing, Temple University, USA;(2) The Fox School of Business & Management, The Institute of Global Management Studies, Temple University, 349G Speakman Hall (006-00), Philadelphia, PA, 19122, USA.;(3) John Cook School of Business, The Boeing Institute of International Business, Saint Louis University, 3674 Lindell Boulevard, St. Louis, MO, 63108, USA. |
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| Abstract: | This paper presents a taxonomic study of sourcing strategy types and their relationships to subsidiary profitability. Using the taxonomic approach, this study identifies five sourcing strategy types based on the decision rules of direction and volume of sourcing activities, namely market access, offshore platform, offshore manufacturing, local sourcing, and complex sourcing. We validated these sourcing types by linking them to a set of business and investment strategic factors. Based on a sample of 319 foreign subsidiaries in China, the results confirm the taxonomy of sourcing types indicating that sourcing strategy types indeed vary along the strategic factors including wage rates, R&D intensity, subsidiary size, capital commitment, ownership control and partner type. |
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| Keywords: | sourcing offshore production China foreign direct investment |
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