Sourcing strategies, practices and effects on organisational performance

Today's highly competitive world requires successful businesses to 'reinvent' themselves almost continuously. Manufacturers face tremendous challenges on a variety of fronts. Sourcing has emerged as an integral part of firms' competitive advantage building. One of the distinguishing attributes of effective sourcing strategy is that it plays an integrative role in the firm's strategic planning process. This means firms must have comprehensive strategic decision-making procedures. The study is based on Transaction Cost Economics (TCE) theory and Resource-Based View (RBV) and the results lend support to types of sourcing strategies that have significant effects on both financial and non-financial performance. Specifically both models indicated the 'Make' and 'Buy' Strategies affect non-financial performance more than the financial performance. The results also show both sourcing strategies received most of the supply from local suppliers. All the findings provide new insights into the understanding of sourcing strategies of manufacturing based firms.