Intermediation and manufacturing location decisions: Achieving advantages from distant countries

Thanks to the increasing integration of the world economy, value can be created by exploiting the competitive advantages of suppliers and the comparative advantages of geographical locations, without any limitations imposed by national borders. Therefore, intermediation and manufacturing location decisions have emerged as two essential strategies for manufacturing firms globally. Research, though, has not widely explored how intermediaries can be effectively utilised and how firms should align their competitive priorities with location-specific contextual factors in order to gain advantage. With this observation in mind, the overarching research aim of this dissertation is to advance an understanding of how advantages can be achieved in distant countries through intermediation and manufacturing location strategies. This aim is divided into two precisely focused research objectives: 1) to conceptualise and empirically analyse intermediaries and their utilisation in global sourcing and international trade; and 2) to understand the manufacturing strategies underscoring firms' decisions to locate from emerging to developed economies. The first research objective is addressed in Essays I and II. First, Essay I synthesises the conceptual developments and provides a more integrated understanding of international intermediaries through a systematic literature review. Second, in order to empirically analyse intermediaries and their utilisation, Essay II studies intermediaries in contemporary Chinese sourcing. Specifically, the research objective is addressed by analysing intermediaries' signalling capabilities through the lens of agency theory in an international and cross-cultural setting. Finally, Essay III investigates the second research objective by conducting a comparative analysis of the competitive priorities characterising backshoring companies and Chinese manufacturers locating in high-cost countries. The findings of this dissertation suggest that advantages are achievable in distant countries by recognising intermediaries' signalling capabilities and by aligning firms' competitive priorities and location decisions. Overall, this dissertation contributes new knowledge by challenging some of the fundamental assumptions regarding the advantages obtainable in distant locations. Specifically, the study results suggest that intermediaries are value-creating actors, rather than the dying breed indicated in some of the previous literature. The findings also show that firms' decisions to locate to developed economies are not only strategic asset-seeking, but also involve combinations of competitive priorities specific to firms from different home countries. By studying different yet interconnected international operations phenomena through theoretical lenses grounded in both international business and operations management traditions, this dissertation contributes to the cross-fertilisation between the two research disciplines.