Production sourcing strategies and buyer-supplier relationships: A study of the differences between small and large enterprises in the Hong Kong clothing industry

Abstract

Purpose - The main purpose of this paper is to compare the differences between the small and medium-sized enterprises (SMEs) and the large enterprises (LEs) of the Hong Kong clothing industry in terms of the adoption of production sourcing strategies and buyer-supplier relationships. Design/methodology/approach - A questionnaire survey was conducted among 120 small to large-sized clothing firms in Hong Kong. Findings - The results show that there were certain differences between SMEs and LEs with regard to production sourcing: LEs are more able to disperse production globally; LEs are more likely to adopt single sourcing, while SMEs prefer multiple sourcing; SMEs tend to use a combined strategy of in- and outsourcing, whereas LEs select either insourcing or outsourcing; and LEs are more likely to develop a formal strategic alliance with their trading partners. Research limitations/implications - The adoption of sourcing strategies and buyer-supplier relationships may change over time: future research should also be directed towards collecting longitudinal data. Practicalimplications - To compete with LEs, SMEs have to ally strategically with their trading partners. Adopting sourcing strategies in a more cooperative manner is therefore imperative. Nonetheless, both SMEs and LEs should exploit their advantages by adopting proper or innovative combinations of sourcing strategies and buyer-supplier relationships, and hence their respective disadvantages can be offset and their competitive advantages can be enhanced. Originality/value - This paper examines the differences between SMEs and LEs in the adoption of production sourcing strategies and buyer-supplier relationships. This study provides an implication for the management of SMEs and LEs in terms of production sourcing.