Holger Schiele

When do industries cluster? A proposal on how to assess an industry's propensity to concentrate at a single region or nation

Abstract Often the literature on clustering implicitly assumes national or regional–sectoral agglomeration to be a general phenomenon applying to all or most businesses. We argue that not all industries are equally affected by the process of clustering. Therefore, the question on how to assess the relevance of clustering for a particular company or industry becomes important. It is deduced that those industries with a divisible production process and a transportable product or service fulfil the necessary conditions for clustering. A long value-chain including multiple distinct competencies, innovation-intensity characterised by “network-innovations” and the volatility of markets further increase the potential for an industry to cluster. Besides providing a heuristic for strategic management, this paper alerts regional planners that only in those regions whose economic structure is characterised by industries subject to clustering, the promotion of local network-building is relevant.

Early Supplier Integration: The Dual Role of Purchasing in New Product Development

Interest in early supplier integration in new product development (NPD) has increased as an open innovation approach has become more common in firms. To support supplier integration, the purchasing function of a firm can assume a new ‘dual’ role: contributing to NPD while also managing overall costs. Previous research has offered few insights into how the purchasing function should best be organised so that it will fulfil this dual role. This paper reports on the results of a consortial benchmarking study in which an industry–academic consortium visited and analysed six best-practice firms. The findings describe how innovative firms organise their purchasing function, distinguishing between ‘advanced sourcing’ and ‘life-cycle sourcing’ units. The results include the tools that these firms use, such as regular innovation meetings with suppliers and technology roadmaps linking firm strategy, innovation strategy and sourcing strategies. The paper also recommends that researchers shift from a narrow focus on a single project to a broader consideration of supplier and organisational issues in NPD.

Accessing Supplier Innovation By Being Their Preferred Customer

OVERVIEW: In the context of open innovation, firms increasingly rely on the collaboration of suppliers in their innovation processes. However, not all competent suppliers are willing to collaborate with all buyers, which is why achieving preferred customer status with key suppliers becomes important. This paper presents the results of a consortial benchmarking project that studied the supplier relationship management tactics of several best-practice firms. It identifies characteristics of suppliers who innovate well with their customers and emphasizes the importance of a firm establishing itself as an attractive customer as a prerequisite of successful buyer-supplier collaborations. This paper proposes additional sourcing criteria to identify innovative suppliers and introduces a supplier portfolio model based on customer attractiveness and supplier competence.

Estimating cost-saving potential from international sourcing and other sourcing levers: Relative importance and trade-offs

Purpose – Research results concerning the cost‐saving potential of international sourcing have been ambiguous and the topic has been covered in isolation without accounting for influences of alternative cost‐saving approaches. This paper aims to analyze the expected financial impact of international sourcing in relation to savings potential attributed to other sourcing tactics, such as, e.g. collaborative product improvement. Furthermore, the paper tests for potential trade‐offs between different levers.Design/methodology/approach – Data stem from results of 134 cross‐functional cost‐saving workshops using an identical methodology. Workshop participants identified and estimated cost‐saving projects considering seven sourcing levers. Results were recorded in a standardized way and analyzed scrutinizing secondary data.Findings – Contrary to other studies, data revealed that international sourcing projects averaged 3.4 percent savings expectations. More than 80 percent of total savings potential was attribut...

Location, location: the geography of industry clusters

Purpose – The purpose of this paper is to explore the implications of regional‐sectoral agglomerations – clusters – for the strategic management of firms. Concentration of firms along a single value chain is a common phenomenon in modern economies, but has seldom been reflected in the realm of strategic management.Design/methodology/approach – The paper draws back on Porters cluster model and the innovative milieu approach. A case‐study methodology consisting of a combination of action research and semi‐structured interviews is applied to four cases, illustrating the managerial implications of firm membership in industry clusters.Findings – The existence of regional‐sectoral clusters has a substantial impact on the strategic position of firms. An assumption underlying most current strategic management thinking, namely that spatial factors are not relevant, must be challenged. The paper illustrates options for firms located within as well as outside clusters.Research limitations/implications – This resear...

Towards a social exchange theory perspective on preferred customership — concept and practice

In the situation of an increase of the role of suppliers, for instance in innovation processes and a scarcity of suppliers, buying firms find themselves in competition for the benevolence of suppliers. In this conference contribution, we introduce the concept of preferred customer status, i.e. a buyer is awarded preferential treatment by its key suppliers when compared to the supplier’s other customers. As there is a lack of knowledge of what motivates suppliers to treat certain buyers better than others, our research focuses on the suppliers’ evaluation of customers and how it can be influenced by buyers. Based on social exchange theory, we propose a conceptual model that contains customer attractiveness, supplier satisfaction and knowledge of alternative customers as factors influencing suppliers to award preferred customer status to a certain customer. Besides, based on a novel World-Cafe method, we show what practices CPOs and consultants experience to be important in increasing attractiveness of customers and satisfaction of suppliers. We conclude by suggesting future research directions in this field.

Exploring the antecedents of preferential customer treatment by suppliers: a mixed methods approach

Purpose – This paper aims to understand the factors that influence a supplier’s choice to treat selected customers more preferentially than others. Suppliers often lack the resources to treat all their customers equally, instead having to make choices to treat some customers as preferred. Empirical evidence indicates that preferential treatment by suppliers provides substantial benefits for the purchasing firm. Design/methodology/approach – This study applies a mixed-methods approach. First, a qualitative analysis of a sample of buyers from an automotive manufacturer was conducted. In the second step, the findings were triangulated via a quantitative survey among key account managers of the automotive firm’s suppliers. Findings – This paper is the first to provide quantitative data collected from a large sample of automotive suppliers about the drivers of preferential customer treatment. The authors were able to show that the growth opportunities for suppliers and customers’ operative excellence, reliability and relational behavior are factors that induce suppliers to award preferential customer treatment. In contrast, innovation potential for suppliers, customers’ support of suppliers, supplier involvement and contact accessibility do not show a significant effect on suppliers’ behavioral intentions toward preferential customer treatment. Originality/value – The mixed-methods approach is introduced as a form of academic enquiry in supply chain management. The factors influencing preferential customer treatment by suppliers are explored in discussions with purchasers and validated in a subsequent survey among suppliers. Recommendations for managerial practice and theory are drawn.

Information Asymmetries as Antecedents of Opportunism in Buyer-Supplier Relationships: Testing Principal-Agent Theory

ABSTRACT Purpose: A severe problem in supplier selection refers to moral hazard: suppliers not behaving in the expected way once contracted. Principal-agent theory could provide insights on how to reduce this problem. Because buyer–supplier relationships can be interpreted as principal-agent situations, the application of agency theory should facilitate improved supplier selection. Although theoretically compelling, empirical tests verifying this assumption are not prevalent. Regarding the advancement of theory, this paper tests whether both ex ante and ex post information asymmetries influence moral hazard. In particular, in the context of a globalizing economy with a subsequent increase in information asymmetries as a problem in supplier selection, this conceptual approach may be contributive. Design/methodology/approach: The authors use a set of 87 buyer–supplier relationships to conduct a test, applying a partial least squares model with latent variables. A particularity of the data set is that it contains information on ongoing as well as on discontinued relationships. Findings: The analysis indicated that both ex ante information asymmetries (operationalized by a reputation variable) and ex post asymmetries (operationalized by a monitoring variable) have shown to be significant and strong antecedents explaining the occurrence of moral hazard. Interestingly, and opposed to the common assumption, the length of a relationship and the amount of direct meetings have not revealed any explanatory significance. Buyer dependency hardly showed influence on supplier opportunism. Research limitations/implications: Data were collected from a multitude of buyer–supplier relationships from a single firm in the chemical-pharmaceutical industry. Generalizations to other industries still need to be tested. Socially desirable answering behavior cannot fully be excluded because relationship discontinuation is not a desirable situation. In terms of theory implications, this research adds to the notion that both hidden action and hidden intention can lead to moral hazard. Practical implications: An agency-based analysis can be operationalized with the help of an agency-based supplier classification portfolio. It might be of particular value to firms to discuss those suppliers that scored high in risk of opportunism but did not (yet) reveal any signs of moral hazard. Finally, the strong explanatory power of reputation alerts buyers to pay more attention to behavioral information on the (potential) supplier available in the market. Originality/value: Analyzing the occurrence of moral hazard and including terminated relationships adds to the emerging stream of literature on relationship discontinuation in B2B markets. Further, the strong empirical results may encourage researchers to elaborate on principal-agent theory-based assumptions, adding another layer of explanation to buyer–supplier relationships. Findings show that reputation is unduly neglected as supplier selection criterion in current theory and practice.

The role of domestic and international external cluster linkages explored on the example of buyer-supplier relations in learning regions: a cross-functional assessment

This paper analyses three levels of interaction among firms: regional, domestic and international, the analysis relying on cross-functional supplier evaluations by their customers. The statistical analysis reveals that indeed three groups with different evaluation results can be distinguished. Contrary to expectations, though, regional suppliers were not better evaluated than domestic suppliers, while international suppliers scored weakest. Cross-functional differences in assessment were found, which urges researchers to collect cross-functional data for cluster assessment. We conclude that external linkages play an important role in understanding clusters and that the domestic level has to be taken into consideration of an analytical entity of its own.

Winning the competition for supplier resources: The role of preferential resource allocation from suppliers

Purpose This paper examines the competition between buying firms for the supplier’s competitive resources. The purpose of this paper is to examine how indirect capabilities – the ability to access external resources – can help in obtaining preferential resource allocation from suppliers. Design/methodology/approach Partial least squares structural equation modeling is used to analyze data of 163 buying firms that assess preferential resource allocation from suppliers. Findings Two indirect capabilities (a buying firm’s selection capability and relational capability) positively influence the firm’s competitive advantage. These relations are significantly mediated by preferential resource allocation of suppliers. The impact of preferential resource allocation appeared stronger for manufacturing firms than for service firms. Research limitations/implications This study’s data set represents the buyer’s assessment of suppliers’ resource allocation. Future research should aim for dyadic data for further validation. In addition, due to sample size limitations, this study’s data does not allow sector segmentation. A larger study that provides insights into segmentation is suggested for future research. Practical implications The results inform managers about the relevance of the competition for supplier resources with rival firms that share suppliers, and the influence of this competition on firm competitiveness. Managers should not only focus on the supplier itself, but also on the capabilities of the supply chain management (SCM) function to recognize and integrate the supplier resources. Originality/value This study adds to the extended resource-based view literature by integrating the notion of supplier resource competition. In addition, the study shows the importance of indirect capabilities for obtaining preferential resource allocation from suppliers. Finally, the authors show the importance of separating between service and manufacturing when examining SCM practices.