Supply market attractiveness: Employing FDI insights to expand the global sourcing criteria set

Part of the Advanced Studies in Supply Management book series (ASSM)


Given an increased focus on globalization and the worldwide procurement of goods, firms have to make decisions about which target region to source from. Since regional characteristics can have an impact on short as well as long term success of sourcing performances, purchasers are required to consider carefully whether regions have advantages over others. In this paper, we address regional characteristics that guide sourcing decisions, factors that influence the perception of supply market attractiveness among purchasers. Based on the theories of global sourcing and foreign direct investment, we provide an overview of attributes that are relevant according to literature. In particular, our contribution is to extend the criteria set of global sourcing by employing insights of foreign direct investment (FDI) literature. Further, through building on interviews and discussions with practitioners, we show what purchasers actually consider an attractive market. We conclude by providing a framework for the selection of a supply market and show how knowledge of FDI can support global sourcing decision making.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Acs, Z. & Storey, D. 2004. Introduction: Entrepreneurship And Economic Development.Google Scholar
  2. Ambroziak, A. 2014. New Cohesion Policy Of The European Union In Poland. Springer.Google Scholar
  3. Arauzo-Carod, J. M., Liviano-Solis, D. & Manjón-Antolín, M. 2010. Empirical Studies In Industrial Location: An Assessment Of Their Methods And Results*. Journal Of Regional Science, 50, 685–711.Google Scholar
  4. Arnold, U. 1989. Global Sourcing: An Indispensable Element In Worldwide Competition. Management International Review, 14–28.Google Scholar
  5. Arnold, U. 1997. Beschaffungsmanagement, Stuttgart, Schäffer-Poeschel.Google Scholar
  6. Basile, R. & Kayam, S. 2015. Empirical Literature On Location Choice Of Multinationals. Complexity And Geographical Economics. Springer.Google Scholar
  7. Bénassy-Quéré, A., Coupet, M. & Mayer, T. 2007. Institutional Determinants Of Foreign Direct Investment. The World Economy, 30, 764–782.Google Scholar
  8. Böckem, S. & Tuschke, A. 2010. A Tale Of Two Theories: Foreign Direct Investment Decisions From The Perspectives Of Economic And Institutional Theory. Schmalenbach Business Review, 62, 260–290.Google Scholar
  9. Botrić, V. & Škuflić, L. 2006. Main Determinants Of Foreign Direct Investment In The Southeast European Countries. Transition Studies Review, 13, 359–377.Google Scholar
  10. Bregman, R., Peng, D. X. & Chin, W. 2015. The Effect Of Controversial Global Sourcing Practices On The Ethical Judgments And Intentions Of Us Consumers. Journal Of Operations Management, 36, 229–243.Google Scholar
  11. Brixy, U. & Grotz, R. 2007. Regional Patterns And Determinants Of Birth And Survival Of New Firms In Western Germany. Entrepreneurship And Regional Development, 19, 293–312.Google Scholar
  12. Chaudhuri, S. & Mukhopadhyay, U. 2014. Foreign Direct Investment In Developing Countries: A Theoretical Evaluation, Springer.Google Scholar
  13. Chen, H. & Chen, T.-J. 1998. Network Linkages And Location Choice In Foreign Direct Investment. Journal Of International Business Studies, 445–467.Google Scholar
  14. Cho, J. & Kang, J. 2001. Benefits And Challenges Of Global Sourcing: Perceptions Of Us Apparel Retail Firms. International Marketing Review, 18, 542–561.Google Scholar
  15. Crozet, M., Mayer, T. & Mucchielli, J.-L. 2004. How Do Firms Agglomerate? A Study Of Fdi In France. Regional Science And Urban Economics, 34, 27–54.Google Scholar
  16. Dumludag, D., Saridogan, E. & Kurt, S. Determinants Of Foreign Direct Investment: An Institutionalist Approach. Seventh Conference Of The European Historical Economics Society, Lund University, 2007.Google Scholar
  17. Dunning, J. H. 1998. Location And The Multinational Enterprise: A Neglected Factor? Journal Of International Business Studies, 45–66.Google Scholar
  18. Dunning, J. H. & Lundan, S. M. 2008. Multinational Enterprises And The Global Economy, Cheltenham, Edward Elgar Publishing.Google Scholar
  19. Dyer, J. H. & Singh, H. 1998. The Relational View: Cooperative Strategy And Sources Of Interorganizational Competitive Advantage. Academy Of Management Review, 23, 660–679.Google Scholar
  20. Ellram, L. M., Tate, W. L. & Petersen, K. J. 2013. Offshoring And Reshoring: An Update On The Manufacturing Location Decision. Journal Of Supply Chain Management, 49, 14–22.Google Scholar
  21. Fern, E. F. 1982. The Use Of Focus Groups For Idea Generation: The Effects Of Group Size, Acquaintanceship, And Moderator On Response Quantity And Quality. Journal Of Marketing Research, 1–13.Google Scholar
  22. Gripsrud, G. & Benito, G. R. 2005. Internationalization In Retailing: Modeling The Pattern Of Foreign Market Entry. Journal Of Business Research, 58, 1672–1680.Google Scholar
  23. Handfield, R. B. 1994. Us Global Sourcing: Patterns Of Development. International Journal Of Operations & Production Management, 14, 40–51.Google Scholar
  24. Handfield, R. B. & Nichols, E. L. 2004. Key Issues In Global Supply Base Management. Industrial Marketing Management, 33, 29–35.Google Scholar
  25. Hausmann, U. Neither Industrial District Nor Innovation Milieu: Entrepreneurs And Their Contexts. An Actor-Oriented Framework And Case Studies From Greater London And Zurich. Paper Prepared For The 36th Congress Of The European Regional Science Association. August, 1996. 26–30.Google Scholar
  26. Hoffmann, P. 2012. Innovative Supply Risk Management. Supply Management Research. Springer.Google Scholar
  27. Holcomb, T. R. & Hitt, M. A. 2007. Toward A Model Of Strategic Outsourcing. Journal Of Operations Management, 25, 464–481.Google Scholar
  28. Horn, P., Schiele, H. & Werner, W. 2013. The “Ugly Twins”: Failed Low-Wage-Country Sourcing Projects And Their Expensive Replacements. Journal Of Purchasing And Supply Management, 19, 27–38.Google Scholar
  29. Koo, J. 2007. Determinants Of Localized Technology Spillovers: Role Of Regional And Industrial Attributes. Regional Studies, 41, 995–1011.Google Scholar
  30. Kotabe, M. & Mudambi, R. 2009. Global Sourcing And Value Creation: Opportunities And Challenges. Journal Of International Management, 15, 121–125.Google Scholar
  31. Kotabe, M. & Murray, J. Y. 2004. Global Sourcing Strategy And Sustainable Competitive Advantage. Industrial Marketing Management, 33, 7–14.Google Scholar
  32. Krugman, P. & Venables, A. J. 1995. Globalization And The Inequality Of Nations. National Bureau Of Economic Research.Google Scholar
  33. Lavie, D. 2006. The Competitive Advantage Of Interconnected Firms: An Extension Of The Resource-Based View. Academy Of Management Review, 31, 638–658.Google Scholar
  34. Lewin, J. E. & Sager, J. K. 2009. An Investigation Of The Influence Of Coping Resources In Salespersons’ Emotional Exhaustion. Industrial Marketing Management, 38, 798–805.Google Scholar
  35. Lorentz, H., Töyli, J., Solakivi, T. & Ojala, L. 2015. The Effect Of Low-Cost Country Sourcing On Supply Chain Administration Cost. International Journal Of Logistics Research And Applications, 18, 1–15.Google Scholar
  36. Maltz, A., Carter, J. R. & Maltz, E. 2011. How Managers Make Sourcing Decisions About Low Cost Regions: Insights From Perceptual Mapping. Industrial Marketing Management, 40, 796-804.Google Scholar
  37. Martin, X., Swaminathan, A. & Mitchell, W. 1998. Organizational Evolution In The Interorganizational Environment: Incentives And Constraints On International Expansion Strategy. Administrative Science Quarterly, 566–601.Google Scholar
  38. Monczka, R., Handfield, R., Giunipero, L. & Patterson, J. 2009. Purchasing And Supply Chain Management, Singapore, Cengage Learning.Google Scholar
  39. Naghavi, A., Spies, J. & Toubal, F. 2011. International Sourcing, Product Complexity And Intellectual Property Rights. Nota Di Lavoro//Fondazione Eni Enrico Mattei: Economy And Society.Google Scholar
  40. Nassimbeni, G. 2006. International Sourcing: Empirical Evidence From A Sample Of Italian Firms. International Journal Of Production Economics, 103, 694–706.Google Scholar
  41. Paul, D. L. & Wooster, R. B. 2010. An Empirical Analysis Of Motives For Offshore Outsourcing By Us Firms. The International Trade Journal, 24, 298–320.Google Scholar
  42. Petersen, K. J., Frayer, D. J. & Scannell, T. V. 2000. An Empirical Investigation Of Global Sourcing Strategy Effectiveness. Journal Of Supply Chain Management, 36, 29.Google Scholar
  43. Plaut, T. R. & Pluta, J. E. 1983. Business Climate, Taxes And Expenditures, And State Industrial Growth In The United States. Southern Economic Journal, 99–119.Google Scholar
  44. Pournarakis, M. & Varsakelis, N. 2004. Institutions, Internationalization And Fdi: The Case Of Economies In Transition. Transnational Corporations, 13, 77–94.Google Scholar
  45. Quintens, L., Pauwels, P. & Matthyssens, P. 2006. Global Purchasing: State Of The Art And Research Directions. Journal Of Purchasing And Supply Management, 12, 170–181.Google Scholar
  46. Rasheed, A. A. & Gilley, K. M. 2005. Outsourcing: National-And Firm-Level Implications. Thunderbird International Business Review, 47, 513–528.Google Scholar
  47. Rugman, A. M. 1986. New Theories Of The Multxnational Enterprise: An Assessment Of Internalization Theory. Bulletin Of Economic Research, 38, 101–118.Google Scholar
  48. Sanders, N. R., Locke, A., Moore, C. B. & Autry, C. W. 2007. A Multidimensional Framework For Understanding Outsourcing Arrangements. Journal Of Supply Chain Management, 43, 3–15.Google Scholar
  49. Schiele, H. 2008. Location, Location: The Geography Of Industry Clusters. Journal Of Business Strategy, 29, 29–36.Google Scholar
  50. Schiele, H., Horn, P. & Vos, B. 2011. Estimating Cost-Saving Potential From International Sourcing And Other Sourcing Levers: Relative Importance And Trade-Offs. International Journal Of Physical Distribution & Logistics Management, 41, 315–336.Google Scholar
  51. Sinha, P., Akoorie, M. E., Ding, Q. & Wu, Q. 2011. What Motivates Manufacturing Smes To Outsource Offshore In China? Comparing The Perspectives Of Sme Manufacturers And Their Suppliers. Strategic Outsourcing: An International Journal, 4, 67–88.Google Scholar
  52. Steinle, C. & Schiele, H. 2008. Limits To Global Sourcing?: Strategic Consequences Of Dependency On International Suppliers: Cluster Theory, Resource-Based View And Case Studies. Journal Of Purchasing And Supply Management, 14, 3–14.Google Scholar
  53. Trent, R. J. & Monczka, R. M. 2003a. International Purchasing And Global Sourcing-What Are The Differences? Journal Of Supply Chain Management, 39, 26–36.Google Scholar
  54. Trent, R. J. & Monczka, R. M. 2003b. Understanding Integrated Global Sourcing. International Journal Of Physical Distribution & Logistics Management, 33, 607–629.Google Scholar
  55. Trent, R. J. & Monczka, R. M. 2005. Achieving Excellence In Global Sourcing. Mit Sloan Management Review, 47, 24.Google Scholar
  56. Unctad. 2007. World Investment Report: Transnational Corporations, Extractive Industries And Development. Available: http://Unctad.Org/En/Docs/Wir2007p4_En.Pdf [Accessed 29.09.2015].
  57. Volberda, H. W., Foss, N. J. & Lyles, M. A. 2010. Perspective-Absorbing The Concept Of Absorptive Capacity: How To Realize Its Potential In The Organization Field. Organization Science, 21, 931–951.Google Scholar
  58. Winkler, J. K., Dibbern, J. & Heinzl, A. 2008. The Impact Of Cultural Differences In Offshore Outsourcing – Case Study Results From German–Indian Application Development Projects. Information Systems Frontiers, 10, 243–258.Google Scholar
  59. Yeniyurt, S., Henke, J. W. & Cavusgil, E. 2013. Integrating Global And Local Procurement For Superior Supplier Working Relations. International Business Review, 22, 351–362.Google Scholar
  60. Yeniyurt, S., Townsend, J. D. & Talay, M. B. 2007. Factors Influencing Brand Launch In A Global Marketplace. Journal Of Product Innovation Management, 24, 471–485.Google Scholar
  61. Yin, R. K. 2009. Case Study Research: Design And Methods, Beverly Hills, Ca, Sage Publications.Google Scholar

Copyright information

© Springer Fachmedien Wiesbaden 2017

Authors and Affiliations

  1. 1.School of Management and GovernanceUniversity of TwenteEnschedeNiederlande

Personalised recommendations