Abstract
<p>This paper aims to understand factors determining location decision, or country selection of Readymade Garments (RMG) outsourcing in global supply chain management. In the process, this article fills a knowledge gap by proposing a unique model that relates country determinant factors and firm’s motives to location choice specific for RMG outsourcing moderated by firm’s size and age. The overall framework enlightens the scholars about the significance of distinguishing factors as the basis for differential outsourcing location decisions. Multinational managers may find it useful to identify the optimum outsourcing location decisions considering idiosyncratic factors that are unique to RMG outsourcing location decision. </p>
Highlights
In today’s business world global sourcing has become a common trend
The theory assert that an enterprise makes foreign direct investment (FDI) in different countries depending on three independent advantages or variables OLI: ownership (O); internalization (I); and localization (L)
It is evident from our literature review that studies on factors determining outsourcing location decision are rare or unavailable
Summary
In today’s business world global sourcing has become a common trend. Due to fierce competition (Arlbjorn & Luthje, 2012), shrinking product life cycle, evolving new knowledge, technology, and innovation, changing customer taste and preferences and stakeholder’s pressure, companies today constantly needs to change their value chain. For some companies, revamping value chain resulted in doing business globally This has provided them with access to cheap labor and raw materials, low cost production, access to new technology, quality, flexibility, increased responsiveness, reduced cycle time, better financing, markets, arbitrage opportunities, and better incentive offered by the host (Ferdows, 1989; Jiang, Frazier, & Prater, 2006; Kogut & Kulatilaka, 1994; Venkatraman, 2004). The 106-year-old Hong-Kong based supply chain orchestration Company Li & Fung started its operations by linking Asian apparel suppliers with American and European apparel brands. Today, it offers supply chain design and management services that include product design services, logistics and distribution services for companies around the globe. Samsung went for offshoring to have control over the entire value chain, while Apple relied heavily on outsourcing of more standardized activities keeping the R&D and marketing activity internally
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