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Routes towards supplier and production network internationalisation

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Purpose ‐ The purpose of this paper is to investigate routes towards supplier and production network internationalisation. Design/methodology/approach ‐ Multiple case-study analysis has been applied to a sample of 11 Italian footwear and apparel companies with headquarters located in the North-east of Italy. Within and cross-case analyses illustrate and compare how these firms relocated one or more segments of their supplier and production networks to Romania. Findings ‐ The findings support theories that view internationalisation as an incremental process of experiential knowledge accumulation. The case studies suggest that firms undertake three different routes towards supplier and production network internationalisation: traditional subcontracting; co-ordinated subcontracting; and supply system relocation. These routes' typology is grounded on an original model, which is the theoretical contribution of the paper, which elaborates Johanson and Vahlne's framework adding two variables: the nature of the technological knowledge that needs to be transferred to run the foreign operations and the nature of the customer-supplier (CS) interaction context of the focal firm. Research limitations/implications ‐ The characteristics of the model proposed set the boundaries of the research approach and suggest new avenues for further research. First, the model rests on the idea that no firm can fully control the dynamics of its international network, since these are an emergent process. Consequently, the study does not provide practitioners with a rigid set of normative indications about what factors to consider when designing international supply networks. Secondly, the model does not consider all the factors that impact on the internationalisation of the supplier and production network. Finally, the model is not evolutionary and does not assess the relationships between the internationalisation process (its timing, speed, etc.) and firms' performance. Practical implications ‐ The typology can support managers when framing the problem of choosing among different routes of supplier and production network internationalisation. Furthermore, the findings suggest that these decisions are influenced by the nature of the technological knowledge involved and the CS interaction context. Originality/value ‐ The paper extends the theory of the supply network internationalisation process, proposing a model that captures the variables actually involved in such a process and their dynamic relationships.
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Keywords: Footwear industry; Globalization; Italy; Production planning; Romania; Supplier relations

Document Type: Research Article

Publication date: March 27, 2007

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