Sourcing from China: Connecting Inward and Outward Internationalisation Through Absorptive Capacity
Keywords:
Inward Internationalisation, International Sourcing, Outward Internationalisation, Export, SMEs, Inward-Outward Internationalisation Connections; Global Value ChainAbstract
The capabilities of small and medium enterprises (SMEs) to partake in the global value chain (GVC) are remarkable. However, the capabilities of SMEs to connect between the sourcing side of GVC to the export side of GVC through learning processes should also be addressed for the SMEs’ competitive gains. Therefore, the objective of this study is to investigate firm’s absorptive capacity in connecting their inward to outward internationalisation by employing a qualitative case study design using two cases involving Malaysian SMEs’ internationalisation as well as semi-structured interviews with the SMEs’ Managing Directors for two years, and the data were then triangulated through documentation. Based on the research findings, the absorptive capacity of SMEs should be equipped with inter-firm knowledge sharing and “guanxi” relationship in order to utilize the newly acquired knowledge by means of a reciprocal action and trust involving the focal firm and their suppliers in China. This enables SMEs to benefit from the flows of knowledge in inward and outward internationalisation, thus able to export to China even though they only began from international sourcing.
Downloads
References
Abdullah, T., Deraman, S.N.S., Zainuddin, S.A., Azmi, N.F., Abdullah, S.S., Anuar, N.I.M., Mohamad,
S.R.,Zulkiffli, W.F.W., Hashim, N.A.A.N., Abdullah, A.R., Rasdi, A.L.M., & Hasan, H. (2020). Impact Of Social Media Influencer On Instagram User Purchase Intention Towards The Fashion Products: The Perspectives Of Students. Journal of Molecular & Clinical Medicine, 7(8),2589-2598.
Anuar, N.I.M., Mahdi, N.M.N., Hashim, N.A.A.N., Mohamad, S.R., Zainuddin, S.A., Azmi, N.F., & Zulkiffli, W.F.W. (2020). The Barriers towards the Adoption of E-Wallet Payment System. International Journal of Engineering Research and Technology, 13(11), 3772-3777.
Aziz, R. C., Hashim, N. A. A. N., Omar, R. N. R., Yusoff, A. M., Muhammad, N. H., Simpong, D. B., Abdullah, T., Zainuddin, S. A., & Safri, F. H. M. (2019). Teaching and Learning in Higher Education: E- Learning as a Tool. International Journal of Innovative Technology and Exploring Engineering (IJITEE), 9(1), 458-463.
Autio, E., Sapienza, H. J., & Almeida, J. G. (2000). Effects of age at entry, knowledge intensity, and imitability on international growth. Academy of Management Journal, 43(5), 909-924.
Cohen, W. M., & Levinthal, D. A. (1989). Innovation and learning: the two faces of R & D. The Economic Journal, 99(397), 569-596.
Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 128-152.
Chetty, S. (1996). The case study method for research in small-and medium-sized firms. International Small Business Journal, 15(1), 73-85.
Crossan, M. M., Lane, H. W. and White, R. E. (1999). An organizational learning framework, From intuition to institution. Academy of Management Review, 24(3): 522-37.
Eriksson, K., Majkgård, A. and Sharma, D. D. (2000). Path dependence and knowledge development in the internationalization process. MIR. Management International Review: 307-28.
Eriksson, T., Nummela, N., & Saarenketo, S. (2014). Dynamic capability in a small global factory. International business review, 23(1), 169-180.
Flatten, T. C., Engelen, A., Zahra, S. A., & Brettel, M. (2011). A measure of absorptive capacity: Scale development and validation. European Management Journal, 29(2), 98-116.
Fletcher, M., & Prashantham, S. (2011). Knowledge assimilation processes of rapidly internationalising firms. Journal of Small Business and Enterprise Development.
Gerschewski, S., Evers, N., Nguyen, A. T., & Froese, F. J. (2020). Trade shows and SME internationalisation: Networking for performance. Management International Review, 1-23.
Ghoreishi, B., Esfahani, M.K., Lushabi, N.A., Amini, O., Aghamolaie, I., Hashim, N. A. A. N., & Alizadeh,
S. M. S. (2020). Assessment of Geotechnical Properties and Determination of Shear Strength Parameters. Geotechnical and Geological Engineering, 39(1), 479.
Gunawan, J., & Rose, E. L. (2014). Absorptive capacity development in Indonesian exporting firms: How do institutions matter?. International Business Review, 23(1), 45-54.
Hashim, N.A.A.N, Bakar, N.A., Remeli, M.R., Samengon, H., Omar, R.N.R., Nawi, N. M.M.,Razali, N.A.M., & Mahshar, M. (2020). Travel Mobile Technology Applications and Domestic Tourist Behavior: Analyzing the Reliability and Validity of Instruments. IOP Conference Series: Materials Science and Engineering, 993, 012095.
Hashim, N.A.A.N,Aziz, R.C., Ramlee, S.I.F., Zainuddin, S.A., Zain, E.N.M., Awang, Z., Mohamad, S.R. & Yusoff, A.M. (2020). E-Learning Technology Effectiveness in Teaching and Learning: Analyzing the Reliability and Validity of Instruments. IOP Conference Series: Materials Science and Engineering, 993, 012096
Hashim, N.A.A.N., Awang, Z., Yusoff, A.M., Safri, F.H.M., Fatt, B.S., Velayuthan, S.K., Hashim, H., & Novianti, S. (2020). Validating the Measuring Instrument for Determinants of Tourist's Preferences Toward Revisit Intention: A Study of Genting Highland. Journal of Advanced Research in Dynamical and Control Systems,12(7), 2236-2240.
Holm, D. B., Eriksson, K., & Johanson, J. (1996). Business networks and cooperation in international business relationships. Journal of International Business Studies, 27(5), 1033-1053.
Hong, M., Sun, S., Beg, R., & Zhou, Z. (2020). Malaysia's Exports to China: Does Diplomatic Relationship Matter?. Economic Papers: A journal of applied economics and policy, 39(1), 72-88.
Inan, G. G., & Bititci, U. S. (2015). Understanding organizational capabilities and dynamic capabilities in the context of micro enterprises: a research agenda. Procedia-Social and Behavioral Sciences, 210(2), 310- 319.
Johanson, J., & Vahlne, J. E. (1990). The mechanism of internationalisation. International Marketing Review, 7(4).
Johanson, J., & Vahlne, J. E. (2009). The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies, 40(9), 1411- 1431.
Karlsen, T., Silseth, P. R., Benito, G. R., & Welch, L. S. (2003). Knowledge, internationalization of the firm, and inward–outward connections. Industrial marketing management, 32(5), 385-396.
Kano, L., Tsang, E. W., & Yeung, H. W. C. (2020). Global value chains: A review of the multi-disciplinary literature. Journal of International Business Studies, 1-46.
Kim, L. (1998). Crisis construction and organizational learning: Capability building in catching-up at Hyundai Motor. Organization Science, 9(4), 506-521.
Lane, P. J., Koka, B. R. and Pathak, S. (2006). The reification of absorptive capacity, A critical review and rejuvenation of the construct. Academy of Management Review, 31(4): 833-63.
Madhok, A. (1995). Opportunism and trust in joint venture relationships: An exploratory study and a model. Scandinavian Journal of Management, 11(1), 57-74.
McDougall, P. P., Shane, S., & Oviatt, B. M. (1994). Explaining the formation of international new ventures: The limits of theories from international business research. Journal of business venturing, 9(6), 469-487.
Meyer, K. E., Estrin, S., Bhaumik, S. K. and Peng, M. W. (2009), Institutions, resources, and entry strategies in emerging economies, Strategic Management Journal, 30(1), 61-80.
Meyer, K. E., & Gelbuda, M. (2006). Process perspectives in international business research in CEE. Management International Review, 46(2), 143-164.
Mohamad Anuar, N. I. (2018). Inward and outward internationalization in Malaysian small and medium enterprises (SMEs): a learning approach (Doctoral dissertation, University of Glasgow).
Mohamad Anuar, N. I., Nik Mahdi, N. M., Al Mamun, A., Mukhtar, D., Abd Rashid, N., and Mandrinos, S. (2018). Connecting Inward and Outward Internationalisation of Malaysian SMEs: A Learning Approach. The Journal of Social Sciences Research, 264-275.
Mohamad, S.R., Zainuddin, S.A., Nik Hashim, N.A.A., Abdullah,T., Anuar, N.I.M., Deraman, S.N.S., Azmi,N.F., Mohd Razali, N.A., & Zain, E.N.M. (2020). Validating The Measuring Instrument For The Determinants Of Social Commerce Shopping Intention Among Teenagers. European Journal of Molecular & Clinical Medicine, 7(6), 1877-1881.
Naldi, L., & Zahra, S. A. (2007). The effect of upstream and downstream internationalization on the acquisition of market and technological knowledge: the moderating role of prior knowledge. Frontiers of Entrepreneurship Research.
Nassimbeni, G., & Sartor, M. (2007). Sourcing in China: A typology. International Journal of Production Economics, 107(2), 333-349.
Neumayer, E. (2002), Does Trade Openness Promote Multilateral Environmental Cooperation?’, World Economy, 25 (6), 815–32.
Nik Hashim, N.A.A., Yusoff,A.M., Awang,Z., Aziz,R.C., Ramlee, S.I.F., Bakar,N. A., Noor, M.A.M. & Fatt, B.S. (2019). The Effect of Domestic Tourist Perceived Risk on Revisit Intention in Malaysia. International Journal of Innovative Technology and Exploring Engineering (IJITEE),8(10), 4591-4596.
Nik Hashim, N.A.A., Velayuthan, S. K., Yusoff,A.M., Awang, Z., & Muhammad Safri, F.H. (2019). Validating the Measuring Instrument for Motivation Factors towards Visiting Spa and Wellness Tourism Destinations in Kuala Lumpur. International Journal of Innovative Technology and Exploring Engineering (IJITEE), 8(9S), 1106-1108.
Omar, R.N.R., Hashim, N.A.A.N., Zain, E.N.M., Ramlee, S.I.F., Halim, A.F.A., Rohzi, A.F.M., Azlin, H.A.N., & Mat, W.M.N.W. (2020). Factors That Influence Online Behaviour in Purchasing Hotel Room Via Website Among Tourists. European Journal of Molecular & Clinical Medicine,7(7), 219-229.
Oviatt, B. M., & McDougall, P. P. (1994). Toward a theory of international new ventures. Journal of International Business Studies, 25(1), 45-64.
UNCTAD. 2010. Integrating Developing Countries’ SMEs into Global Value Chains. United Nations. Available at http://unctad.org/en/Docs/diaeed20095_en.pdf
Sandberg, S. (2013). Emerging market entry node pattern and experiential knowledge of small and medium-sized enterprises. International Marketing Review, 30(2), 106– 129.
Sharma, D. D., & Blomstermo, A. (2003). The internationalization process of born globals: a network view. International Business Review, 12(6), 739-753.
Welch, L. S., Benito, G. R., Silsetz, P. R. and Karlsen, T. (2002). Exploring inward-outward linkages in firms' internationalization: A knowledge and network perspective. Network Knowledge in International Business, 26, 216.
Yin, R. K. (2003). Case study research: Design and methods (3rd ed.). Thousand Oaks, CA: SAGE Publications.
Yin R. K., (2009). Case study research: Design and methods (4th ed.). Thousand Oaks, CA: SAGE Publications.
Zahra, S. A. and George, G. (2002). Absorptive capacity, A review, reconceptualization, and extension. Academy of Management Review, 27(2): 185-203.
Zainuddin, S.A., Mohamad, S.R., Abdullah, T., Azmi, N.F., Abdullah, S.S., Deraman, S.N.S., Anuar, N.I.M., Zulkiffli, W.F.W., Hashim, N.A.A.N., Abdullah, A.R., Rasdi, A.L.M., & Hasan, H. (2020). Factors Affecting S Commerce Adoption Among Micro and Small and Medium Sized Enterprises In A Sub Urban and Rural Economic Area. Journal of Molecular & Clinical Medicine, 7(8),2570-2576.
Zainuddin, S.A., Hashim, N.A.A.N., Abdullah, T., Mohamad, S.R., Anuar, N.I.M., Deraman, S.N.S., & Awang, Z. (2020). Risk Management as Governmentality in Organization. International Journal of Engineering Research and Technology, 13(12), 4439-4449.
Downloads
Published
How to Cite
Issue
Section
License
You are free to:
- Share — copy and redistribute the material in any medium or format for any purpose, even commercially.
- Adapt — remix, transform, and build upon the material for any purpose, even commercially.
- The licensor cannot revoke these freedoms as long as you follow the license terms.
Under the following terms:
- Attribution — You must give appropriate credit , provide a link to the license, and indicate if changes were made . You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
- No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
Notices:
You do not have to comply with the license for elements of the material in the public domain or where your use is permitted by an applicable exception or limitation .
No warranties are given. The license may not give you all of the permissions necessary for your intended use. For example, other rights such as publicity, privacy, or moral rights may limit how you use the material.
