Global Sourcing Decision‐Making Processes: Politics, Intuition, and Procedural Rationality

Published date01 June 2015
Date01 June 2015
Global Sourcing Decision-Making Processes: Politics, Intuition, and
Procedural Rationality
Alina Stanczyk
, Kai Foerstl
, Christian Busse
, and Constantin Blome
EBS Universit
at f
ur Wirtschaft und Recht
EBS Universit
at f
ur Wirtschaft und Recht & German Graduate School of Management & Law (GGS)
Swiss Federal Institute of Technology Zurich
University of Sussex
Global sourcing (GS) is a rmly established phenomenon in modern business practice that requires specic expertise from different organi-
zational functions, such as purchasing, production, logistics, and research and development to analyze and select sourcing alternatives
effectively. In this context, global sourcing decision-making (GSDM) processes pose major challenges because two dimensions of functional
politics, namely goal misalignment and power imbalance across functions, appear to inuence procedural rationality in a manner not understood
to date. Likewise, intuition also seems to play a role for the procedural rationality of GSDM processes. To elucidate the conditions under which
procedural rationality is hampered or enhanced by politics and intuition, we studied ve cross-functional GSDM processes, in front of extant
strategic decision-making literature. We derive formal propositions on how functional politics and intuition inuence the procedural rationality
and present contingencies for the divergent role of intuition as well as functional politics in GDSM processes. Our research contributes to exist-
ing GS literature by providing a theoretical model of important microfoundations of how GSDM processes evolve. The ndings also guide
managers on how to structure GSDM processes such that GS projects can be conducted in a more rational fashion.
Keywords: global sourcing; decision-making; functional politics; procedural rationality; intuition; case study
Global trade and thus global sourcing (GS) are ancient phenom-
ena that have existed at least since the second century BC when
the Silk Road was established (Xie et al. 2007). Today, GS is a
rmly established phenomenon in modern business practice
because it enables rms to simultaneously achieve competitive
and comparative advantages (Kogut 1985; Arnold 1989; Kotabe
and Murray 2004). Academic literature has paid considerable
attention to GS antecedents and consequences (Birou and Fawc-
ett 1993; Alguire and Frear 1994; Min 1994; Fawcett and Scully
1998; Leonidou 1999; Petersen et al. 2000; Quintens et al.
2006a; Kotabe and Mudambi 2009). This stream of literature has
specically focused on the benets and applicability of low-cost
country sourcing, while less focus has been placed on the study
of the decision-making process as a whole. In this context, it is
important to distinguish between the global sourcing decision-
making (GSDM) process and GS as a specicoutcome of this
decision-making process. For instance, if a U.S. rm decides to
source locally after it has considered multiple Asian and South
American sources, then the decision-making process would still
be a GSDM process given that alternative suppliers from around
the globe were considered.
GS is dened as the coordination and integration of common
activities, items, processes, designs, and technologies, across
buying centers and across organizational functions (Trent and
Monczka 2005; Van Weele 2010). The decision-making process
for a specic GS task involves gathering and analyzing diverse
information concerning the technical, logistical, operational, and
nancial parameters provided by alternative suppliers. Sourcing
teams are expected to make high-quality decisions based on pre-
cise, accurate, and timely information (Driedonks et al. 2010). In
this paper, we shift the focus to procedural rationality as an ante-
cedent of good GSDM. Procedural rationality relates to the
degree to which parties involved in decision-making processes
demonstrate a desire to make the best possible decision under
the given circumstances (Simon 1978). Specically, our study
seeks to shed some light on when and how procedural rationality
could be hampered in corporate practice.
The multidimensionality of GS decisions requires manifold
expertise from different functions, such as purchasing, produc-
tion, logistics, and research and development (R&D) for many
purchasing categories (Trent and Monczka 2003; Brodbeck et al.
2007; Van Weele 2010). Specically, diverging functional opin-
ions concerning the common goal of the process among team
members often pose a major challenge to GSDM processes (Gel-
derman and Semeijn 2006; Moses and
om 2008). Such
misalignment jeopardizes analytical scrutiny during the process
of information gathering, analyzing solutions, and nal decision
making (Dean and Sharfman 1993; Smart and Dudas 2007). In
addition, unequal power distribution across the functions is said
to potentially hamper procedural rationality (Eisenhardt and
Bourgeois 1988), particularly for complex and meaningful deci-
sion tasks (Shrivastava and Grant 1985; Dean and Sharfman
1996). However, it has also been suggested that political behav-
ior does not necessarily cause irrationality in the decision-making
processes; rather, it can also serve as an internal adoption mecha-
nism in rapidly changing environments inside rms that ensures
that all aspects of the decision are well debated (Bourgeois and
Eisenhardt 1988; Elbanna 2006). Moreover, strategic decision-
making literature (Elbanna and Child 2007) and recent research
on sourcing team effectiveness (Kaufmann et al. 2014) do men-
tion intuition and politics in decision making as preconditions to
ensure procedural rationality of cross-functional decision making.
Yet, similar to the impact of politics, the extant literature does
Corresponding author:
Kai Foerstl, German Graduate School of Management & Law
(GGS), Bildungscampus 2, 74076 Heilbronn, Germany; E-mail: kai.
Journal of Business Logistics, 2015, 36(2): 160181 doi: 10.1111/jbl.12090
© Council of Supply Chain Management Professionals
not allow for unambiguous reasoning for intuition either (Shriv-
astava and Grant 1985; Papadakis et al. 1998; Elbanna 2006;
Elbanna and Child 2007). Hence, the effect of functional politics
and intuition on GSDM is unclear, which raised our interest in
exploring how these variables can impact procedural rationality
in GSDM.
In corporate practice, many cross-functional teams experience
conicts between team members over goals, schedules, and bud-
gets. Even minimal conicts can result in collaboration costs for
the rm such as delays in completing a project, lower quality or
limited cost savings, which can ultimately transform into real
costs for the rm (Hansen 2009). Such a lack of procedural
rationality in GSDM results in more frequent product quality
problems in offshore sourcing decisions compared to other sourc-
ing alternatives, which indicates that more rigorous and rational
analytic processes might cause companies to refrain from
sourcing from geographically distant suppliers in the rst place
(Steven et al. 2014). Moreover, the recent development toward
near-shoring or re-shoring of European and U.S. rms might to
some extent have its origin in poor historic buying rm decisions
(Ellram et al. 2013), potentially caused by intuitive and politi-
cally charged GSDM processes. Yet, the interfunctional and
interpersonal dynamics occurring during the decision process in
such cross-functional GSDM teams have hitherto been mostly
neglected in empirical investigations (Quintens et al. 2006a;
Pagano 2009).
To summarize, the purpose of our research is to investigate the
inuences of the two behavioral aspects of decision making,
namely politics and intuition, on procedural rationality of GSDM
processes. Due to the lack of theory at the decision process level
of analysis and because of equivocal prior ndings, we relied on
an inductive multiple case study approach to seek an answer to the
following research question: How, when, and why do functional
politics and intuition affect procedural rationality in GSDM?
With our empirical study, we contribute to the extant literature
by providing detailed insights into the origins and characteristics
of functional politics and intuition in GSDM teams. A better
understanding of these barriers should help rms create decision-
making contexts that foster procedural rationality in GSDM,
thereby also contributing to choosing the best possible GS out-
comes. We specically elaborate on the constellations under
which functional politics and intuition in GSDM have a positive
or a negative impact on procedural rationality. We also hope that
our research opens up a new line of enquiry within GS research
that acknowledges internal complexity and cross-functionality
inherent to GSDM (Ellram and Siferd 1998; Smart and Dudas
2007; Moses and
om 2008). With the ndings presented in
this paper we complement the extant research on how to over-
come bounded rationality in supplier selection processes (Kauf-
mann et al. 2009) and supply management (Carter et al. 2007).
The remainder of this article is structured in ve sections. In
the following conceptual background section, we depict our
initial research framework based on a review of GS and corre-
sponding decision-making literature. Subsequently, we describe
our multiple case study methodology. Next, we present the
results of our analysis and develop testable propositions amend-
ing and extending our initial conceptual framework. After dis-
cussing some empirically visible congurations pertaining to the
types of functional politics and intuition, we conclude by
presenting emerging areas for further research that could be
elaborated on in this eld.
By studying the GSDM, we follow a call for more research on
how cross-functional GSDM processes can be conducted effec-
tively (Moses and
om 2008; Driedonks et al. 2010). To
the best of our knowledge there are only two other publications
investigating the decision process in GS, yet they do so in a pre-
scriptive rather than empirically founded manner; these are the
decision framework of Cavusgil et al. (1993) and a study of
Moses and
om (2008) on problems in cross-functional
decision making. Thus, we conclude that the GS literature lacks
empirical insights on how the GSDM process actually takes
place in corporate practice. At this point, it is important to men-
tion that initially we focused on procedural rationality as a core
interest in the GSDM process; however, throughout the research
it emerged that politics and intuition are crucial elements of the
process, without which understanding and capturing procedural
rationality can turn out to be incomplete. In our inductive inves-
tigation, we employed conceptualizations of our core constructs
from the GS and strategic decision-making literature (Figure 1).
Our empirical ndings yield an understanding of how,why, and
when the concepts of politics and intuition affect the procedural
rationality of GSDM (Whetten 1989).
The GSDM process
Previous academic discussion has only briey touched on the
GSDM process, thus the most recent literature reviews on GS by
Quintens et al. (2006a) and Pagano (2009) do not elaborate on
the topic. Conversely, sourcing literature is rich in articles about
the operational aspects of GS concerning the parts of the world
Global sourcing
decision outcome
Established path
in GS literature
Unexplored path
in GS literature
Functional politics
Research scope
Figure 1: Initial research framework.
Global Sourcing Decision Making 161

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