Internal integration as a pre-condition for external integration in global sourcing: A social capital perspective

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Abstract

The purpose of this study is to explore the link between integration and global sourcing success in international operations and by doing so, to clarify the ambiguous picture that prevails in the existing literature. Specifically, this quantitative study aims at identifying the role of the buying companies’ internal and external integration with suppliers using a social capital lens. Data were collected from the central purchasing department of a multinational automotive OEM located in Germany. A sample of 82 purchasers was surveyed about their assessment of global sourcing projects, focusing on internal cross-functional integration, external supplier integration and project success. The data were analyzed with structural equation modeling procedures, using SmartPLS. The findings indicate that internal integration is a precondition for external integration with suppliers, which accordingly has a strong positive influence on global sourcing success. Surprisingly, the direct relationship between internal and external integration was not significant, indicating a mediating role of social capital within this relationship. The theoretical originality lies in the use of the social capital theory and its three dimensions: cognitive, structural and relational capital for both internal and external integration, and in the connection between integration and global sourcing success. From a practical perspective, it can be recommended that managers distinguish between an internal and an external perspective. Internally, the focus should lie on the clear communication of common goals and norms, whereas externally, the definition of mutual contact points between organizations is of higher importance
Original languageEnglish
Pages (from-to)54-65
JournalInternational journal of production economics
Volume153
DOIs
Publication statusPublished - 2014

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Social capital
Global sourcing
Point contacts
Purchasing
Lenses
Managers
Communication
Industry
Suppliers
Germany
Structural capital
Multinationals
Cross-functional integration
Social capital theory
Relational capital
Structural equation modeling
International operations
Supplier integration
Project success

Keywords

  • IR-91808
  • METIS-305074

Cite this

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title = "Internal integration as a pre-condition for external integration in global sourcing: A social capital perspective",
abstract = "The purpose of this study is to explore the link between integration and global sourcing success in international operations and by doing so, to clarify the ambiguous picture that prevails in the existing literature. Specifically, this quantitative study aims at identifying the role of the buying companies’ internal and external integration with suppliers using a social capital lens. Data were collected from the central purchasing department of a multinational automotive OEM located in Germany. A sample of 82 purchasers was surveyed about their assessment of global sourcing projects, focusing on internal cross-functional integration, external supplier integration and project success. The data were analyzed with structural equation modeling procedures, using SmartPLS. The findings indicate that internal integration is a precondition for external integration with suppliers, which accordingly has a strong positive influence on global sourcing success. Surprisingly, the direct relationship between internal and external integration was not significant, indicating a mediating role of social capital within this relationship. The theoretical originality lies in the use of the social capital theory and its three dimensions: cognitive, structural and relational capital for both internal and external integration, and in the connection between integration and global sourcing success. From a practical perspective, it can be recommended that managers distinguish between an internal and an external perspective. Internally, the focus should lie on the clear communication of common goals and norms, whereas externally, the definition of mutual contact points between organizations is of higher importance",
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Internal integration as a pre-condition for external integration in global sourcing: A social capital perspective. / Horn, Philipp; Scheffler, Paul; Schiele, Holger.

In: International journal of production economics, Vol. 153, 2014, p. 54-65.

Research output: Contribution to journalArticleAcademicpeer-review

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AB - The purpose of this study is to explore the link between integration and global sourcing success in international operations and by doing so, to clarify the ambiguous picture that prevails in the existing literature. Specifically, this quantitative study aims at identifying the role of the buying companies’ internal and external integration with suppliers using a social capital lens. Data were collected from the central purchasing department of a multinational automotive OEM located in Germany. A sample of 82 purchasers was surveyed about their assessment of global sourcing projects, focusing on internal cross-functional integration, external supplier integration and project success. The data were analyzed with structural equation modeling procedures, using SmartPLS. The findings indicate that internal integration is a precondition for external integration with suppliers, which accordingly has a strong positive influence on global sourcing success. Surprisingly, the direct relationship between internal and external integration was not significant, indicating a mediating role of social capital within this relationship. The theoretical originality lies in the use of the social capital theory and its three dimensions: cognitive, structural and relational capital for both internal and external integration, and in the connection between integration and global sourcing success. From a practical perspective, it can be recommended that managers distinguish between an internal and an external perspective. Internally, the focus should lie on the clear communication of common goals and norms, whereas externally, the definition of mutual contact points between organizations is of higher importance

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