Performance implications of the fit between sourcing configurations and design-manufacturing-service capabilities

Abstract

ABSTRACT Manufacturing firms have increasingly adopted global sourcing and local sourcing simultaneously to acquire competitive advantages, leading to diverse configurations of sourcing practices. Although prior studies have explored the distinct impact of individual sourcing practices, few studies investigate the configuration of multiple sourcing practices. Using the data from an international survey, this study identifies the empirical taxonomy of sourcing practices from the geographical perspective by cluster analysis and investigates the fit between the firm’s sourcing configuration and design-manufacturing-service (DMS) capabilities by profile deviation analysis. The results reveal three types of manufacturing firms with distinct configuration of sourcing practices. Moreover, this study highlights the significant effects of the fit between sourcing configuration and DMS capabilities on firm performance. This study contributes to the sourcing literature by not only finding three typical sourcing configurations but also recognising the ideal fit for achieving superior firm performance. It also provides important managerial insights for practitioners.