31 Pages Posted: 17 Feb 2003
Date Written: July 1, 2002
Since the early 1990s international - or even global - outsourcing of intermediate products from suppliers has been propagated as a key means to improve the performance of firms. It is argued that becoming more lean and internationally focused is beneficial for the buyer as well as for the supplier . Global sourcing is currently believed to be a common phenomenon. Drawing upon a recent survey among a representative sample of 200 large Dutch manufacturing firms this paper gives an answer to the question to what extent internationalization of sourcing is indeed taking place and whether it affects a firm's performance.The analysis reveals that for this sample of firms global sourcing is the exception rather than the rule. Although firms undertake considerable international outsourcing, this is mostly limited to nearby ( European Union) countries. Statistical tests reveal that there is no significant relation between international outsourcing and either market or financial performance. International outsourcing can not be used to adequately explain firm performance. Therefore, an alternative approach is discussed, in which the degree of (international) outsourcing is contingent upon factors like the size and location of the headquarters of the firm.
Keywords: performance, MNCs, global sourcing, regionalization, sourcing strategy
JEL Classification: L2, M, M10, L1
Suggested Citation: Suggested Citation