Abstract
Global sourcing strategy has become one of the most important topics for multinational corporations (MNCs) to cope with the increasing global competition. Although the topic has been advanced in theory, many MNCs still have difficulties in implementing a global sourcing strategy. Designing an efficient organizational structure for global sourcing is essential in order for strategies to be successful. Thus far, extant research has mainly focused on organizational design from the headquarters’ perspective. Based on an analysis of integrative mechanisms and sourcing-related contextual factors, this study aims to identify how contextual factors influence the global sourcing organizational design of centralized organizations at both the subsidiary and headquarter levels. A case study was conducted with nine cases in one MNC: the findings indicate a high importance of contextual factors for the configuration of organizational design. This study addresses the headquarters and subsidiary levels and analyzes the implementation of theoretical concepts. The derived propositions help managers to clearly understand contextual factors and effectively respond to environmental and internal issues with specific organizational design choices.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Similar content being viewed by others
References
Adler, N. J. “Cross-Cultural Management: Issues to be faced,” International Studies of Management and Organization, (13:1/2), 1983, pp. 7–45.
Allred, B. B. and K. C. Swan. “Contextual influences on international subsidiaries’product technology strategy,” (10:2), 2004, pp. 259–286.
Arnold, U. “Organization of Global Sourcing: Ways Toward an Optimal Degree of Centralization,” European Journal of Purchasing and Supply Management, (5:3), 1999, pp. 167–174.
Baker, S. and K. Baker. On Time/on Budget: A Step-By-Step Guide for Managing any Project. Prentice Hall, Englewood, 1992.
Baliga, B.R. and A.M. Jaeger. “Multinational corporations: control systems and delegation issues,” Journal of International Business Studies, (15: 2), 1984, pp. 25–40.
Baligh, H. H.; Burton, R. M. and B. Obel. “Organizational consultant: Creating a useable theory for organizational design,” Management Science, (42:12), 1996, pp. 1648–1662.
Baumueller, M. Managing Cultural Diversity: An empirical Examination of Cultural Networks and Organizational Structures as Governance Mechanisms in Multinational Corporations. Lang Publishing, Bern, 2007.
Birou, L.M. and S.E. Fawcett. “International Purchasing: Benefits, Requirements, and Challenges,” International Journal of Purchasing and Materials Management, (29:2), Spring 1993, pp. 27–37.
Bozarth, C., Handfield, R. and A. Das. “Stages of global sourcing strategy evolution: an exploratory study,” Journal of Operations Management, (16:2/3), 1998, pp. 241–255.
Burns, T. and G. M. Stalker. The Management of Innovation, Tavistock Press, London, 1968.
Cantwell, J. “Location and the multinational enterprise,” Journal of International Business Studies, (40:1), 2009, pp. 35–41.
Carter, J.R., and R. Narasimhan. “Purchasing and supply management: future directions and trends,” International Journal of Purchasing and Materials Management, (34:2), 1996, pp. 2–12.
Cavusgil, S.; Knight, G. and J. Riesenberger. International business: strategy, management, and the new realities. Pearson Prentice Hal, Upper Saddle River, NJ, 2008.
Chang, Y.-C., Polachek, S. W. and J. Robst. “Conflict and trade: the relationship between geographic distance and international interactions,” Journal of Socio-Economics, (33:4), 2004, pp. 491–509.
Child, J. D. “Organizational Structure, environment and performance: The role of strategic choice,” Sociology, (6:1), 1972, pp. 1–22.
Child, J. D. “Predicting and Understanding Organization Structure,” Administrative Science Quarterly, (18:2), 1973, pp. 168–185.
Child, J. D. “Managerial and Organizational Factors associated with Company Performance – Part II. A Contingency Analysis,” Journal of Management Studies, (12:1), 1975; pp. 12–27.
Child, J. D. and D. Faulkner. Strategies of Co-operation: Managing Alliances, Networks and Joint Ventures. Oxford University Press, Oxford, 1998.
Chimanzi, J. “The Impact of Integration Mechanisms on Marketing/HR Dynamics,” Journal of Marketing Management, (20:7/8), Sep2004, pp. 713–740.
Cho, J. and J. Kang. “Benefits and Challenges of Global Sourcing: Perceptions of US Apparel Retail Firms,” International Marketing Review, (18:5), 2000, pp. 542–561.
Cohen, M.A. and S. Mallik. “Global Supply Chains: Research and Applications,” Production and Operation Management, 6 (3), 1997, pp. 193–210.
Cousins, P.D. and B. Lawson. “The effect of socialization mechanisms and performance measurement on supplier integration in new product development,” British Journal of Management, (18:3), 2007, pp. 311–326.
Crane, A. “Are You Ethical? Please Tick Yes or No. On Researching Ethics in Business Organizations,” Journal of Business Ethics, (20:3), 1999, pp. 237–248.
Deal, T. E. and A. A. Kennedy. Corporate cultures: The rites and rituals of corporate life, Addison-Wesley Publications, Reading, MA, 1982.
Donaldson, L. The Contingency Theory of Organizations. Sage Publications, Thousand Oaks, CA, 2001.
Doz, Y.L. and C.K. Prahalad. “A process model of strategic redirection in large complex firms: the case of multinational corporations.” In: Pettigrew, A. (Ed.), The Management of Strategic Change. Basil Blackwell, Oxford, 1987.
Dubois, A. and L. Araujo. “Case research in purchasing and supply management: Opportunities and challenges,” Journal of Purchasing & Supply Management, (13:3), 2007, pp. 170–181.
Eisenhardt, K.M. “Building Theories from Case Study Research,” Academy of Management Review, (14:4), 1989, pp. 532–550.
Eisenhardt, K.M. and M.E. Graebner. “Theory Building from Cases: Opportunities and Challenges,” Academy of Management Journal, (50:1), 2007, pp. 25–32.
Egelhoff, W.G. “Information Processing Theory and the Multinational Enterprise,” Journal of International Business Studies, (22:3), 1991, pp. 341–368.
Ensign, P. C. “The multinational corporation as a coordinated network: Organising and managing differently,” Thunderbird International Business Review, (41:3), 1999, pp. 291–322.
Faes, W., Matthyssens, P. and K. Vandenbempt. “The Pursuit of Global Purchasing Synergy,” Industrial Marketing Management, (29:6), 2000, pp. 539–553.
Frear, C.R., Metcalf, L.E. and M.S. Alguire. “Offshore Sourcing: Its Nature and Scope,” International Journal of Purchasing and Materials Management, (28:3), Summer 1992, pp. 2–11.
Galbraith, J.R. “Environmental and Technological Determinants of Organizational Design.” In J.W. Lorsch and P.R. Lawrence (Eds.), Studies in Organization Design, Richard D. Irwin and The Dorsey Press, Homewood, IL, 1970, pp. 113–139.
Galbraith, J.R. Designing Complex Organizations, Addison-Wesley, Reading, MA, 1973.
Galbraith, J.R. Organization Design, Addison-Wesley, Reading, MA, 1977.
Galbraith, J.R. Designing the Global Corporation, Jossey-Bass, San Francisco, CA, 2000.
Ghemawat, P. “Distance still matters. The hard reality of global expansion,” Harvard Business Review, (79:8), 2001, pp. 137–147.
Ghoshal, S. and C. A. Bartlett. „The Multinational Corporation as an Interorganizational Network,” Academy of Management Review, (15:4), 1990, pp. 603–625.
Ghoshal, S. and N. Nohria. “Internal differentiation within multinational corporations,” Strategic Management Journal, (10:4), Jul/Aug 1989, pp. 323–337.
Gibbert, M., Ruigrok, W. and B. Wicki. “What passes as a rigorous case study?,” Strategic Management Journal, (29:13), December 2008, pp. 1465–1474.
Guinipero, L. and R. Monczka. “Organizational Approaches to Managing International Sourcing,” Journal of Physical Distribution and Logistics, (20:4), 1990, pp. 3–12.
Gupta, A. and V. Govindarajan. “Knowledge flows and the structure of control within multinational corporations,” Academy of Management Review, (16:4), 1991, pp. 768–792.
Glaser, B.G. and A.L. Strauss. The Discovery of Grounded Theory, Aldine, Chicago, 1967.
Hall, E. T. and M. R. Hall. Understanding Cultural Differences. Intercultural Press, Yarmouth, Maine, 1990.
Hall, W. Managing Cultures: Making Strategic Relationships Work. John Wiley & Sons, New York, 1995.
Hamel, G. and C.K Pralahad. Competing for the Future, Harvard Business School Press, Cambridge, MA, 1994.
Hartmann, E., Trautmann, G. and C. Jahns. “Organisational design implications of global sourcing: A multiple case study analysis on the application of control mechanisms,” Journal of Purchasing & Supply Management, (14:1), 2008, pp. 28–42.
Hedlund, G.. “Autonomy of subsidiaries and formalisation of headquarters-subsidiary relationships in Swedish MNCs.” In: Otterbeck, L. (Ed.), The Management of Headquarter–Subsidiary Relationships in Multinational Corporations. St. Martin’s Press, New York, 1981.
Hedlund, G. and D. Rolander. “Action in Heterarchies - new approaches to managing the MNC.” In: Barlett, C. A., Doz, Y. L. and G. Hedlund (Eds.), Managing the Global Firm. Routledge, London, New York, 1990.
Hellriegel, D. and J.W. Slocum. Management, South-Western College Publishing, Cincinnati, Ohio, 1996.
Hickson, D.; Pugh, D. S. and D. Pheysey. “Operations technology and organization structure: An empirical reappraisal,” Administrative Science Quarterly, (14:3), 1969, pp. 378–397.
Hofstede, G. Culture’s consequences: International differences in work-related values. Sage Publications, Newbury Park, 1980.
Hollensen, S. Global Marketing – A Decision-oriented Approach, Prentice Hall, Harlow, 2007.
Jarvenpaa, S. and B. Ives. “Organizing for global competition: the fit of information technology,” Decision Sciences, (24:3), 1993, pp. 547–579.
Katz, D. and R. L. Kahn. The Social Psychology of Organizations, Wiley, New York, NY, 1966.
Kim, K., Park, J.H. and J.E. Prescott. “The global integration of business functions: a study of multinational businesses in integrated global industries,” Journal of International Business Studies, (34:4), July 2003, pp. 327–344.
Kogut, B. and H. Singh. “The effect of natural culture on the choice of entry mode,” Journal of International Business Studies, (19:3), 1988, pp. 411–432.
Kotabe, M. “Efficiency vs. Effectiveness Orientation of Global Sourcing Strategy: A Comparison of U.S. and Japanese Multinational Companies,” The Academy of Management Executives, (12:4), 1998, pp. 107–119.
Kotabe, M. and J. Y Murry. “ Global sourcing strategy and sustainable competitive advantage,” Industrial Marketing Management, (33:1), 2004, pp. 7–14.
Kotabe, M., Mol, M. J. and J. Y Murray. “Global Sourcing Strategy,” In Kotabe, M.and Helsen, K. (Eds.), The SAGE Handbook of International Marketing, Sage Publications, Thousand Oaks, CA., 2009.
Kotabe, M. and G. S. Omura. “Sourcing strategies of European and Japanese multinationals: a comparison,” Journal of International Business Studies, (20:1), 1989, pp. 113–130.
Kouvelis, P., Chambers, C. and H. Wang. “Supply Chain Management Research and Production and Operations Management: Review, Trends, and Opportunities,” Production and Operations Management, (15:3), Fall 2006, pp. 449–469.
Lawrence, P. R. and J. W. Lorsch. Organization and Environment: Managing Differentiation and Integration, Harvard University, Boston, 1967.
Martinez, J. and C. Jarillo. “The Evolution of Research on Coordination Mechanism in Multinational Corporations,” Journal of International Business Studies, (20:3), 1989, pp. 489–514.
McCutcheon, D.M. and J.R. Meredith. “Conducting Case Study Research in Operations Management,” Journal of Operations Management, (11:3), 1993, pp. 239–256.
Meijboom, B. and B. Vos. “International manufacturing and location decisions: balancing configuration and co-ordination aspects,” International Journal of Operations & Production Management, (17:7/8), 1997, pp. 790–805.
Miles, R. E. and C. C. Snow. “Fit, Failure and the Hall of Fame,” California Management Review, (26:3), 1984, pp. 10–28.
Miles, M.B. and A.M. Huberman. Qualitative Data Analysis: A Sourcebook of New Methods, Sage Publications, Newbury Park, CA, 1994.
Miller, D. “Environmental Fit versus Internal Fit,” Organizational Science, (3:2), May 1992, pp. 159–178.
Mishler, A. L. “Personal Contact in International Exchanges.” In: H.C. Kelman (Ed.), International Behavior: A social-psychological analysis. Holt Rinehart & Winston, New York, 1965.
Monczka, R.M. and L.C. Giunipero. “International Purchasing: Characteristics and Implementation,” International Journal of Purchasing and Materials Management, (22:4), Fall 1984, pp. 2–9.
Monczka, R. M. and R. J. Trent. “Global Sourcing: A Development Approach,” International Journal of Purchasing and Materials Management, (27:2), 1991, pp. 2–8.
Monczka, R.M. and R. J. Trent. “Understanding Integrated Global Sourcing – A Framework and Case Study,” Revue Internationale de l’Achat, (23:1), 2003, pp. 25–34.
Morschett, D.; Schramm-Klein, H. and J. Zentes. Strategic International Management: Text and Cases, Gabler, Wiesbaden, 2009.
Murray, J. Y., Kotabe, M. and A. R Wildt. “Strategic and financial performance implications of global sourcing strategy: A contingency analysis,” Journal of International Business Studies, (26:1), First Quarter 1995, pp. 181–202.
Nadler, D.A. and M.L. Tushman. Competing by Design – The Power of Organizational Architecture, Oxford University Press, New York, 1997.
Narasimhan, R. and J. R. Carter. “Organisation, Communication and Co-ordination of International Sourcing,” International Marketing Review, (7:2), 1989, pp. 6–20.
Narasimhan, R. and J. R. Carter. “Purchasing and supply management: future directions and trends,” International Journal of Purchasing and Material Management, (32:4), 1996, pp. 2–12.
Nohria, N. and S. Ghoshal. “Differentiated fit and shared values: alternatives for managing headquarters–subsidiary relations,” Strategic Management Journal, (15:6), July 1994, pp. 491–502.
Nobel, R. and J. Birkinshaw. “Innovation in multinational corporations: Control and communication patterns in international R&D operations,” Strategic Management Journal, (19:5), May 1998, pp. 479–496.
Ouchi, W.G. “The relationship between organisational structure and organisational control,” Administrative Science Quarterly, (22:1), 1977, pp. 95–112.
Paulraj, A. and I. J. Chen. “Environmental Uncertainty and Strategic Supply Management: A Resource Dependence Perspective and Performance Implications,” Journal of Supply Chain Management, (43:3), 2007, pp. 29–42.
Petersen, K. J., Frayer, D. J. and T.V. Scannell. “An Empirical Investigation of Global Sourcing Strategy Effectiveness,” Journal of Supply Chain Management,(36:2), 2006, pp. 29–38.
Perlmutter, H. V. “The Tortuous Evolution of the Multinational Corporation,” Columbia Journal of World Business, (4:1), 1969, pp. 9–18.
Perry, C. “Processes of a Case Study Methodology for Postgraduate Research in Marketing,” European Journal of Marketing, (32:9/10), 1998, pp. 785–802.
Prahalad, C. K. and Y. L. Doz. The Multinational Mission: Balancing Local Demands and Global Vision, Free Press, New York, 1987.
Prater, E.; Biehl, M. and M. A. Smith. “International supply chain agility: Tradeoffs between flexibility and uncertainty,” International Journal of Operations and Production Management, (21:5/6), 2001, pp. 823–839.
Quintens, L., P. Matthyssens and W. Faes. “Purchasing Internationalization on Both Sides of the Atlantic,” Journal of Purchasing and Supply Management, (11:2/3), 2005, pp. 57–71.
Quintens, L., Pauwels, P. and P. Matthyssens. “Global Purchasing Strategy: Conceptualization and Measurement,” Industrial Marketing Management, (35:7), 2006, pp. 881–891.
Ragozzino, R. “The Effects of Geographic Distance on the foreign Acquisition of U.S. Firms,” Management International Review, (49:4), 2009, pp. 509–539.
Roth, K. and S. O’Donnell. “Foreign Subsidiary Compensation Strategy: An Agency Theory Perspective,” Academy of Management Journal, (39:3), 1996, pp. 678–703.
Roth, K., and Ricks, D. “Goal configuration in a global industry context,” Strategic Management Journal, (15:2), 1994, pp. 103–120.
Rozemeijer, F. “How to Manage Corporate Purchasing Synergy in a Decentralised Company? Towards Design Rules for Managing and Organising Purchasing Synergy in Decentralised Companies,” European Journal of Purchasing and Supply Management, (6:1), 2000, pp. 5–12.
Rozemeijer, F., van Weele, A. and M. Weggeman. “Creating Corporate Advantage through Purchasing: Toward a Contingency Model,” The Journal of Supply Chain Management, (39:1), 2003; pp. 4–13.
Scott, R.W. Organizations: Rational, Natural and Open Systems, Prentice Hall, Englewood Cliffs, 1992.
Smircich, L. “Concepts of Culture and Organizational Analysis,” Administrative Science Quarterly, (28:3), 1983, pp. 339–358.
Sousa, C. M. and F. Bradley. “Cultural distance and psychic distance: refinements in conceptualisation and measurement,” Journal of Marketing Management, (24:5/6), 2008, pp. 467–488.
Strauss, A. and J. Corbin. Basics of qualitative research: Grounded theory procedures and techniques, Sage Publications, Newbury Park, CA, 1990.
Thompson, J. D. Organizations in Action: Social Science Bases of Administrative Theory, McGraw-Hill, New York, 1967.
Thompson, J.D. Organisations in Action—Social Science Bases of Administrative Theory, Transaction Publishers, New Brunswick, 2003.
Trautmann, G., Turkulainen, V., Hartmann, E. and L. Bals. “Integration in the global sourcing organization – an information processing perspective,” Journal of Supply Chain Management, (45:2), April 2009, pp. 57-74
Trent, J. R., “The use of organizational design features in purchasing and supply management,” Journal of Supply Chain Management, (40:3), 2004, pp. 4–18.
Trent, J. R. and R. M Monczka. “Pursuing competitive advantage through integrated global sourcing,” Academy of Management Executive, (16:2), 2002, pp. 66–80.
Trent, J. R. and R. M Monczka. “ International Purchasing and Global Sourcing – What are the Differences?” Journal of Supply Chain Management, (39:4), Fall 2003, pp. 26–37
Trice, H. M. and J. M. Beyer. The Cultures of Work Organizations, Prentice-Hall, Englewood Cliffs, NJ, 1993.
Tushman, M.L. and D.A. Nadler. “Information Processing as an Integrating Concept in Organizational Design,” Academy of Management Review, (3:3), 1978, pp. 613–624.
Van de Ven, A. H.; Delbecq, A. L. and R. Koenig. „Determinants of Coordination Modes within Organizations,” American Sociological Review, (41:2), 1976, pp. 322–338.
Van Weele, A. J. Purchasing Management: Analysis, Planning and Practice, Chapman & Hall, London, 1994.
Vernon, R. Storm over the multinationals: The real issues. Harvard University Press, Cambridge, MA, 1977.
Walton, L.W. “Telephone Survey: Answering the Seven Rs to Logistics Research,” Journal of Business Logistics, (18:1), 1997, pp. 217–231.
White, R. E. and T. A. Poynter. “Organizing for world-wide advantage.” In: Bartlett, C. A., Doz, Y. L. and G. Hedlund (Eds.), Managing the global firm. Routledge, London, 1990.
Yin, R.K. Case Study Research. Design and Methods, SAGE Publications, Thousand Oaks, CA, 2009.
Yip, G. S., Johansson, J. K. and J. Roos. “Effects of Nationality on Global Strategy,”. Management International Review, (37:4), 1997, pp. 365–385.
Rights and permissions
Copyright information
© 2011 Gabler Verlag | Springer Fachmedien Wiesbaden GmbH
About this chapter
Cite this chapter
Rättich, G. (2011). Global Organizational Design in Purchasing and Supply Management: Headquarters and Subsidiaries in a Contingency Perspective. In: Four Essays on International Entrepreneurship. Gabler. https://doi.org/10.1007/978-3-8349-6900-2_5
Download citation
DOI: https://doi.org/10.1007/978-3-8349-6900-2_5
Publisher Name: Gabler
Print ISBN: 978-3-8349-3163-4
Online ISBN: 978-3-8349-6900-2
eBook Packages: Business and EconomicsBusiness and Management (R0)