Abstract
This research, which focuses on Korean firms, aims to explore the intricacies of the network relationships between buyers and suppliers. Since the influence and strategies of the inter-firm network of overseas Korean firms have not been satisfactorily explored yet, this study attempts to fill the gap by exploring the motives and selection criteria of these firms. The findings revealed that there were three main motives for Korean firms to establish inter-firm networks with suppliers in Malaysia, which are locational decisions, low-cost sourcing, and easiness for procurement. Findings also showed that Korean firms select their suppliers based on seven criteria which are business structure, production capability, partner experience, quality policy, price competitiveness, business potential and relationship. The study suggested practical recommendations for potential suppliers of Korean firms in developing supplier-buyer relationships.
Highlights
The importance of networks has emerged as one of the domain frameworks to explain the global phenomenon of internationalisation across most industrial sectors (Johanson & Kao, 2010)
Locational Decision The findings indicated that locational decision was one of the motives for inter-firm network
Business Structure Parallel to the selection criteria proposed by Dicken and Hassler (2000), the findings have indicated that business structure is one of the main criteria for choosing a supplier by Korean firms
Summary
The importance of networks has emerged as one of the domain frameworks to explain the global phenomenon of internationalisation across most industrial sectors (Johanson & Kao, 2010). The inter-firm network may differ for every industrial sector due to differences in their reaction to transaction cost based variables and risks, when firms conduct business in foreign markets, they use a variety of networks, such as finance, supply, transportation, content, service, and social (Walker & Hampson, 2003). These different types of networks are important in the early stage of international expansion for strategic decision concerning control, risk, and supply chain. Inter-firm network is composed of sets of independent parties, which cooperate for mutual benefits with shared information and frequent interactions
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