Santiago Chile October 18-19, 2012

Santiago Chile

October 18-19, 2012

Martine Boutary Marie-Christine MONNOYERProfesseur Professeur IAE Toulouse (France)ESC Toulouse (France) CRM

When SMEs think about delocalization….

Is theory able to bring help to managers and hope to workers ?

ECLAC 2012, M. Boutary -MC Monnoyer

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Research question


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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.

1.Relocation, a blur concept


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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)


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2. Relocation, an international way to reduce costs


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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

2.Relocation, a new way to discover new markets


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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

3.What’s about SMF ?


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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 ?

3.Strategies and constraints


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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)

4.SMF are anchored in an environment and influenced by by institutional isomorphism


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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

4.SMF are anchored in an environment and influenced by institutional isomorphism


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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)

To conclude


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Relocation : a non linear decisional process

This theoretical corpus: ::A base to analyse managerial decision


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Thank you,

Santiago Chile October 18-19, 2012

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Transcript of Santiago Chile October 18-19, 2012