International sourcing: a must or a choice? A perspective on the role of local supplier relationships in the Italian mechanical industry

Studies on international sourcing strategies and practices are mainly concerned with the behaviour of large firms, which are able to interact with various supply sources in different markets and detain organisational capabilities to engage in such activities. Only a few studies enter into the detail of SME’s international sourcing behaviour. Therefore the main goal of this paper is to investigate whether mid-sized companies might choose to remain closely integrated within the local supply network and which are the main conditions influencing their approach. The research methodology is qualitative and based on the investigation of three case-studies of Italian companies selected among the leading firms in specific subsectors of the mechanical industry in the light of their size, performance and international profile. The empirical analysis shows that the three companies under examination pursue a gradual and balanced approach toward international sourcing opportunities, which are exploited mainly for commercial parts and only to a limited extent for customized parts and components. Local suppliers have been playing the role of “sources” of value in different ways in distinct historical phases, contributing actively in terms of knowledge and competence development, production flexibility and delivery performance, and price efficiency. Within such context, the three companies over time have shown a capacity to adapt their supply management approach to changing market conditions, with the emergence of hybrid and segmented buyer-supplier relations in different historical phases.