Globalization and Entrepreneurship

Globalization and Entrepreneurship

Policy and Strategy Perspectives

The McGill International Entrepreneurship series

Edited by Hamid Etemad and Richard Wright

The contributors to this collection provide a wealth of new analyses of both traditional and emerging aspects of entrepreneurship, from a variety of national perspectives and from a variety of disciplines. Globalization has begun to dismantle the barriers that traditionally segregated local business opportunities and local firms from their international counterparts. Local markets are becoming integral parts of broader, global markets. As globalization proceeds apace, entrepreneurs and small businesses will play a more prominent role on the global business arena. The volume is divided into three sections. The first looks at the internationalization process itself while the second focuses on factors facilitating this process in small and medium-sized firms. The last section examines emerging dimensions in management policy.

Chapter 3: Integrated Outsourcing: A Tool for the Foreign Expansion of Small-business Suppliers

Sônia Dahab and José Paulo Esperança

Subjects: business and management, entrepreneurship, international business


3. Integrated outsourcing: a tool for the foreign expansion of smallbusiness suppliers Sônia Dahab and José Paulo Esperança INTRODUCTION The ‘make-or-buy decision’ is a classical issue in management textbooks from such diverse fields as accounting, business strategy and corporate finance. However, the professional manager is usually restricted to the somewhat trivial suggestion of acting in whatever manner minimizes costs. Not only is cost difficult to calculate, but there is also a significant intertemporal dimension as an investment decision tends to be associated with the ‘make’ choice. Quite often, some level of investment is also required from the supplier, in the context of the ‘buy’ decision. The growing prominence of this topic in the research of the 1990s demonstrates that the answer to the ‘make-or-buy’ question is far from settled. It is also a fascinating topic from the researcher’s perspective, given the deep implications for understanding the nature and boundaries of the firm in the context of the markets versus hierarchies dichotomy (Williamson, 1975). From the corporate manager’s perspective, a revolution is in the making. A prime example is the sheer shift from manufacturing to buying found in such industries as car parts and packages. Data from The Carmaker (July 1997) show that the production of metal cans by companies in the American food industry has declined from 54 per cent in 1985 to a paltry 19 per cent in 1996. An article in the 5 September 2000 issue of The Economist tells of a significant...

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