Relational Inhibitors

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The second category of inhibitors deals with the relational inhibitors between buyer and supplier. Following the two elements of our definition of global sourcing, we make a distinction between inhibitors that deal with the internationalization aspect, those related to buyer-supplier relations, and inhibitors to functional integration, those related to the internal management of the entire international network of suppliers. IT reduces the costs associated with the search for, and evaluation of, potential suppliers, especially when buyers and suppliers would not normally link up (Barua, Savindran & Whinston, 1997). The World Wide Web or a dedicated electronic market can serve as means to find, as yet, unknown suppliers. For many international suppliers a web site in another language, such as English, is easy to construct when compared to the effort of building a relationship with a buyer by means of oral communication. Thus, information technology broadens the scope of the sourcing process in the sense that more suppliers are now able to compete for the firm's order and that the pool of suppliers becomes more diverse.

On the functional integration side, there are benefits as well. By using information technology, standardization of communication can be obtained. Many would even argue that this standardization is indispensable. Through the use of standardized communications, problems related to language and business practice differences will, other things being equal, be lessened, as room for misunderstanding will be reduced. Should problems arise, then technologies such as videoconferencing or shared workspaces on an intranet should, again other things being equal, enable these problems to be solved faster, thus lessening their impact. The ease with which integration across borders can occur will drive many firms towards a more integrated, networked form of organization. This is echoed by Cantwell and Santangelo's (1999) contention that firms that invest heavily in IT are able to manage their international processes more flexibly. Similarly, Pinsonneault and Kraemer (1993) found that when organizational decisions were centralized, IT caused further centralization and that a similar effect occurs for decentralization. All of this points to increased functional integration in sourcing through IT.

Ikea has developed routines that allow it to communicate efficiently with suppliers. It uses English as the language to communicate with suppliers and to an increasing extent international business partners share this language. Designs can be exchanged and discussed through electronic links. New technology allows for the visualization of goods. The local trading companies are also mainly steered by electronic links with headquarters. While long distance communication used to be much harder, IKEA is now organized globally. Similarly Ford had learned from its earlier experience that integration across borders would be important. To make the global engineering project viable, a worldwide communication infrastructure was needed, particularly one that would allow for sufficient communication with external suppliers. Ford invested in networked computers for problem-solving, real-time multi-site simultaneous engineering, and information transfer as well as a global inter-company e-mail system. The global scale of production allowed Ford to reduce the number of times certain operations, like calculations, had to be performed. Both Ikea and Ford increased the global scale of operations. By using IT they managed to solve communication problems that existed previously.

Proposition 3: IT alters the relational inhibitors to global sourcing, by enabling more internationalization as well as improved functional integration.

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