Global sourcing strategy and performance: A “fit” versus “balance” perspective

Abstract

Increased global sourcing of manufacturing and service activities has been a prominent part of the restructuring of firms’ supply chains in the 1990s and beyond. Academics and consultancy firms have largely supported the view of global sourcing as one of the key drivers of superior performance. As we are now increasingly discovering, the drawbacks of offshore outsourcing – or, put differently, the advantages of vertical integration – have been underestimated or even neglected. In this chapter, we first discuss the need to balance sourcing levels and then how global sourcing levels must achieve a strategic fit with the environment. Finally, we synthesize these balance and fit perspectives to suggest how, over time, changes in the fit alter the required balance in global sourcing. From this synthesis, we develop a number of future research questions related to important conceptual perspectives on sourcing. For managers we provide indications of how they can achieve a balance and a fit of their sourcing strategies.