Linking Product and Process Innovations and Modes of International Sourcing in Global Competition: A Case of Foreign Multinational Firms

Abstract

In increasingly complex global competition, multinational firms, U.S. and foreign alike, have stepped up international sourcing of components and finished products to serve various markets. Since an increasing portion of global competition is shaped by European and Japanese multinational firms with due emphasis on product quality and manufacturing, it is an opportune time to examine the like among their product development, manufacturing, and sourcing activities. Those European and Japanese multinational firms marketing products in the United States are chosen as subjects of this study.

The purpose of this paper is twofold. First, a taxonomy of sourcing strategies is developed to systematically identify a variety of sourcing patterns. This taxonomy helps resolve some of the conceptual ambiguities and paves the way for further empirical investigation. Second, based on a few variables identified in the taxonomy, performance implications of various sourcing strategies are explored.