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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.

Suggested Citation

  • Alexander SCHMITT & Johannes VAN BIESEBROECK, 2013. "Proximity strategies in outsourcing relations: the role of geographical, cultural and relational proximity in the European automotive industry," Working Papers of Department of Economics, Leuven ces13.02, KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven.
  • Handle: RePEc:ete:ceswps:ces13.02
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    Cited by:

    1. Keith Head & Thierry Mayer, 2019. "Brands in Motion: How Frictions Shape Multinational Production," American Economic Review, American Economic Association, vol. 109(9), pages 3073-3124, September.
    2. Alessandro Manello & Giuseppe G. Calabrese & Piercarlo Frigero, 2016. "Technical efficiency and productivity growth along the automotive value chain: evidence from Italy," Industrial and Corporate Change, Oxford University Press, vol. 25(2), pages 245-259.
    3. Jorge MONGAY, 2017. "Market Economies Potentialities and Cultural Clusters. A Global and Longitudinal Study," Expert Journal of Economics, Sprint Investify, vol. 5(1), pages 1-13.
    4. Dodourova, Mariana & Bevis, Keith, 2014. "Networking innovation in the European car industry: Does the Open Innovation model fit?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 69(C), pages 252-271.
    5. 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.
    6. Giovanna Magnani & Antonella Zucchella & DinorĂ  Eliete Floriani, 2015. "Relativity and asymmetry in distance. The role of strategic distance in the internationalization decisions of Brazilian and Italian firms," DEM Working Papers Series 111, University of Pavia, Department of Economics and Management.
    7. repec:men:journl:v:4:y:2018:i:1:p:31-47 is not listed on IDEAS
    8. repec:eee:iburev:v:27:y:2018:i:1:p:1-20 is not listed on IDEAS
    9. Blevins, Dane P. & Moschieri, Caterina & Pinkham, Brian C. & Ragozzino, Roberto, 2016. "Institutional changes within the European Union: How global cities and regional integration affect MNE entry decisions," Journal of World Business, Elsevier, vol. 51(2), pages 319-330.
    10. repec:eee:jbrese:v:90:y:2018:i:c:p:48-58 is not listed on IDEAS
    11. Zimmermann, Angelika & Ravishankar, M.N., 2016. "A systems perspective on offshoring strategy and motivational drivers amongst onshore and offshore employees," Journal of World Business, Elsevier, vol. 51(4), pages 548-567.
    12. repec:ntu:ntugeo:vol6-iss2-18-082 is not listed on IDEAS

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