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Santiago Chile October 18-19, 2012

When SMEs think about delocalization…. Martine Boutary Marie-Christine MONNOYER Professeur Professeur IAE Toulouse (France) ESC Toulouse (France) CRM. Santiago Chile October 18-19, 2012.

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Santiago Chile October 18-19, 2012

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  1. When SMEs think about delocalization…. Martine Boutary Marie-Christine MONNOYER Professeur Professeur IAE Toulouse (France) ESC Toulouse (France) CRM Santiago Chile October 18-19, 2012

  2. Is theory able to bring help to managers and hope to workers ? ECLAC 2012, M. Boutary -MC Monnoyer

  3. Research question • Globalisation bring new threats and new opportunities, for all firms, but at the same time a question about relocation to find better production conditions • Up to now, relocation is more frequent for large firms than for SMEs, but new possibility appears for them • Such a strategy has to be analysed more deeply, and not only focused on the national employment consequences • We will open the relocation question on the international development of SMEs • In this paper, we have chosen to gather different theories to obtain a new framework and to improve our knowledge about the SME managers’ relocation decision. ECLAC 2012, M. Boutary -MC Monnoyer

  4. 1.Relocation, a blur concept • Under this word : • Relocation may be partial or complete • With or without local partners • With or without a come back on the native land to finish, and to sell the product or the service • In such a situation, it is quite uneasy to obtain clear figures about investments and employment • Our choice • Relocation with local partners or subsidiaries with a come back on the native land to finish, and to sell the product or the service (Mayrhofer, 2011) ECLAC 2012, M. Boutary -MC Monnoyer

  5. ECLAC 2012, M. Boutary -MC Monnoyer

  6. 2. Relocation, an international way to reduce costs • In a globalised world, technological gaps are no longer an obstacle, but distance (cultural, administrative, geographic, economic) is not a neutral variable. • Production costs are frequently deeply lower in new developed countries, but • Transaction costs may be high with new partners, in risky and emerging countries ECLAC 2012, M. Boutary -MC Monnoyer

  7. 2.Relocation, a new way to discover new markets • In a very competitive world, the firm’s future is linked to its ability to choose the best spot at the best time. • OLI Paradigm : each firm is specific (Dunning, 1988) • Ownerships advantages : assets, technologies and experiences • Localisation : to find the best spots to produce • Internalisation : to control processes and property rights • The Uppsala internationalisation process model : step by step (Johanson et Valhne, 1977,… 2009) • Distance needs to give time to time • But globalisation reduces distance, information… • Each relocation decision seams to be a compromise between the manager’ projects and external pressures ECLAC 2012, M. Boutary -MC Monnoyer

  8. 3.What’s about SMF ? • A SMF is characterised by proximity inside the firm (Torrès, 2003, Julien, 94; Raymond,94) • Internal relationships are easy so, they are frequent, • manager and workers know each other, and are able to achieve various tasks • This knowledge makes easier coordination, production processes may be more flexible • SMF’ strategy is often intuitive, so reactivity appears as an important key of success • A SMF is characterised by proximity outside the firm • With clients and providers Opportunities or threats ? ECLAC 2012, M. Boutary -MC Monnoyer

  9. 3.Strategies and constraints • SMF choose niche strategy (Julien ,94) • They need competitive advantages like new products more services, flexibility, specific knowledge • delocalization seams inappropriate, except…. when knowledge is no longer in the home country (Koromyslov, 2007) • SMF lack of resources (human et financial) • Product innovation, process, organisational innovation, are the way to obtain competitive advantage (Penrose, 59; Grant, 81; Tallman, 2002) ECLAC 2012, M. Boutary -MC Monnoyer

  10. 4.SMF are anchored in an environment and influenced by by institutional isomorphism DiMaggio and Powell, 83; Piotti, 2009 • Coercive : regulation instigated by public institutions or private organisations through contracts or new standards • Normative : derives from professional expertise, experts can even aid in the creation in myths • Mimetic : important under conditions of uncertainty, the legitimacy providers attribute a particular status to the public discourse ECLAC 2012, M. Boutary -MC Monnoyer

  11. 4.SMF are anchored in an environment and influenced by institutional isomorphism • Imitation may be a strategy • Rationality : why do not use the analysis done by others • Legitimacy : we have the same competitors, so look at what the others firms are doing (Peteraf et al, 97) • Justification : • A dependant firm may not choose its own way • An independent firm which is imitating its competitors finds a solution to its moral constraints (Caroll, 91) ECLAC 2012, M. Boutary -MC Monnoyer

  12. To conclude Relocation : a non linear decisional process This theoretical corpus: :: A base to analyse managerial decision ECLAC 2012, M. Boutary -MC Monnoyer

  13. Thank you, ECLAC 2012, M. Boutary -MC Monnoyer

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