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Proximity strategies in outsourcing relations: the role of geographical, cultural and relational proximity in the European automotive industry

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  • Alexander SCHMITT
  • Johannes VAN BIESEBROECK

Abstract

Trends towards international fragmentation of production and modular process technologies have increased the importance of proximity in the supply chain of sophisticated manufactured goods. Using a rich and novel data set for the European automotive industry, we simultaneously evaluate the relative importance of geographical, cultural and relational proximity in sourcing strategies. The estimates indicate that each dimension provides an independent benefit and also which measures have the largest relative importance. We also find that the positive effects attributed to some measures reflect past relationships rather than predict new ones. In particular, co-location and a low cultural distance should be interpreted as outcomes of a sourcing strategy, not as predictors for sourcing success. We investigate to what extent firms from different countries follow different strategies and which choices suppliers can make to boost their attractiveness as outsourcing partner.

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Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces13.02.

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Date of creation: Feb 2013
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Handle: RePEc:ete:ceswps:ces13.02

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Cited by:
  1. Wang, Jue & Liu, Xiaming & Wei, Yingqi & Wang, Chengang, 2014. "Cultural Proximity and Local Firms’ catch up with Multinational Enterprises," World Development, Elsevier, vol. 60(C), pages 1-13.

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