Integration in The Global Sourcing Organization

INTEGRATION IN THE GLOBAL SOURCING
ORGANIZATION AN INFORMATION PROCESSING

PERSPECTIVE
GERHARD TRAUTMANN
Siemens AG
VIRPI TURKULAINEN
Helsinki University of Technology
EVI HARTMANN
European Business School
LYDIA BALS
Copenhagen Business School
Global sourcing refers to the integration of decision making across worldwide

purchasing units within a multinational corporation (MNC). In order to
manage the integration challenge, firms have a number of tools, varying
from centralization and formalization to cross-locational teams. In this paper,
we focus on explaining how and why to integrate in different circumstances.
The aim of this paper is to complement prior research on global sourcing
organizations, which is still rather scarce and more exploratory in nature.
By extending the arguments of the information processing perspective of organizations to the global sourcing context, we seek to propel a theoretical
discussion on integration in the global sourcing organization. Based on
the results of 12 case studies in three MNCs, we propose that integration
approaches in global sourcing organizations vary depending on the three
contingencies of category characteristics, supply environment characteristics
and interdependence of the purchasing units.
Keywords: international/global purchasing; organization; case studies
INTRODUCTION
Global sourcing refers to the integration of purchasing
units across a firms worldwide locations, looking for
common items, processes, design, technologies, knowledge and suppliers (Faes, Matthyssens and Vandenbempt
2000; Rozemeijer 2000; Monczka and Trent 2003).
Rather than merely searching for cost savings by centralization and harmonization of activities (e.g., Arnold
1997; Faes et al. 2000; Rozemeijer 2000; Rozemeijer, Van
Weele and Weggeman 2003), integration (or coordination) means the extent to which the purchasing activities
of the worldwide units are mutually supportive, and
unity of effort is achieved, to accomplish the firms
overall goal (March and Simon 1958; Lawrence and

Lorsch 1967).
Management research covers a wide variety of managerial tools to integration, called integration mechanisms. These include centralization, formalization and
information systems, as well as the creation of lateral
relations (e.g., by cross-locational purchasing teams).
Although the terms global sourcing and international
sourcing are sometimes used interchangeably, this paper
makes a clear distinction between them, as the latter
implies that the local purchasing units act independently
(Trent and Monczka 2003). The key distinctive characteristic of global sourcing, and a central focus of this
April 2009
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Journal of Supply Chain Management
paper, is the integration of managerial decision making

among geographically dispersed purchasing units.
While most multinational corporations (MNCs) perceive global sourcing as a strategic necessity (Trent and
Monczka 2003), the implementation of global sourcing
has posed severe challenges (Kaufmann and Hedderich
2004; Kotabe and Murray 2004). The design of global
organizations has turned out to be particularly challenging, yet critical for the success of global sourcing
strategy (Trent and Monczka 2003; Trent 2004; Quintens,
Pauwels and Matthyssens 2006a). On the academic side,
the majority of prior research has taken a strategic perspective on global sourcing, assessing, for example the
pros and cons of a global sourcing strategy (e.g., Alguire,
Frear and Metcalf 1994; Bozarth, Handfield and Das
1998; Cho and Kang 2000). Significantly less attention
has been paid to organizational issues like the integration
of purchasing units (Trent and Monczka 2003; Quintens
et al. 2006a). In particular, Gelderman and Semeijn
(2006) have pointed out that despite an increased focus
on global sourcing, little is known about the actual
integration of purchasing across worldwide business
units. In this paper, we address this gap by focusing on
the following question: How do MNCs effectively integrate global sourcing activities across their geographically
dispersed purchasing units?
Prior research differentiates among three major global
sourcing organizations types (Fearon 1988; Narasimhan
and Carter 1989; Arnold 1999): (1) centralized structures; (2) decentralized structures and (3) hybrid structures. Centralized structures are preferable when several
geographical units buy similar categories (products),
while a decentralized structure becomes attractive when
each unit produces unique or markedly different products. Hence, organizational design of global sourcing
organizations is dependent on the category-related1
synergies across geographical units.
Most companies have adopted a hybrid structure
(Johnson and Leenders 2004), intending to manage the
centralizationdecentralization tradeoff most effectively
(Kaufmann and Hedderich 2004; Kotabe and Murray
2004; Hartmann, Trautmann and Jahns 2008), but still
struggle to fully exploit the benefits of global sourcing.
The key challenge in hybrid structures is to distinguish
between different types of categories, identifying the ones
with synergy potential and determining their appropriate
form of integration across geographical units (Arnold
1989; Matthyssens and Faes 1997; Faes et al. 2000).
However, currently there exists little empirical evidence
or theoretical explanation for how integration is attained
across different types of categories. Therefore, the focus of
this paper is on integration of global sourcing activities at
the category level rather than at the organizational level.
1
A category encompasses a group of similar items that are required

for specific business activities of the firm.
58
From a methodological viewpoint, this paper follows

a theory elaboration research design. We present the information processing framework (IPF) on integration
(Galbraith 1973; Tushman and Nadler 1978), a major
framework for understanding organizational integration,
and extend it to the global sourcing context. Thereby,
in addition to addressing the gap in the existing literature
on integration in global sourcing organizations, we
simultaneously address the plea for cross-disciplinary
research on global sourcing (e.g., Quintens, Pauwels and
Matthyssens 2006b; Wynstra 2006). In order to elaborate
the IPF, we analyze data collected by a multiple case study
design (12 cases in three MNCs).
LITERATURE REVIEW AND THEORETICAL

BASIS
IPF
This paper focuses on integration of geographically
dispersed purchasing units. As integration is inherently
an organization design phenomenon, we build on the
theoretical arguments of organization scholars, especially
those of the information processing view (Galbraith 1970,
1973, 1977; Tushman and Nadler 1978; Nadler and
Tushman 1997). The focal idea of the IPF is that organizations differ in their requirements for information processing and subsequently use different mechanisms for
integration. The general IPF is presented in Figure 1 below.
In effective organizations, there is a fit between the
information processing requirements and the information processing capacity. When the requirements for information processing are high, numerous complex lateral
mechanisms are needed, but when the information
processing requirements are low, the organization can do
well with vertical mechanisms like centralization. Furthermore, due to the costs of integration mechanisms,
increasing the information processing capacity excessively
would not be rational. Instead, the goal is to achieve the
mentioned fit of information processing capacity to the
extent required.
Integration mechanisms (right side of Figure 1) can be
divided into vertical and lateral ones (Galbraith 1973,
1977, 2000). Vertical mechanisms include centralization,
formalization, standardization and vertical information
systems. Lateral mechanisms include, for example, job
rotation, cross-unit teams and integrators. The integration
mechanisms are suggested to vary both in their capacity to
facilitate information processing in an organization and
in their costs of use (both managerial time and financial
costs). Vertical mechanisms like centralization require less
investments but their capacity to facilitate information
processing is lower than that of lateral mechanisms.
Tushman and Nadler (1978) further suggest that organizations face different requirements for information
processing (left side of Figure 1), arising from uncertainty
imposed by the characteristics of its environment. These
Volume 45, Number 2
Integration in the Global Sourcing Organization
FIGURE 1
The General Information Processing Framework (adapted from Tushman and Nadler 1978)
Task Characteristics
Task Environment
Uncertainty
Facing the
Subunits
Information
Processing
Requirements
Information
Processing
Capacity
Inter-unit Task
Interdependence
Vertical
Integration
Mechanisms
Lateral
Integration
Mechanisms
FIT
Effectiveness
contingencies are classified as task characteristics, task

environment characteristics and interunit task interdependence. The first and last are internal to the organization, whereas the second one is a characteristic of its
external environment. The uncertainty they impose is
problematic because it interferes with the attainment of
organizational goals (Thompson 1967). When uncertainty is high, the organization does not have all the
relevant information to achieve its predetermined goals
and it needs to process information to complete its task.
The information processing arguments have been
widely applied by scholars in different fields (e.g., Egelhoff 1991; Jarvenpaa and Ives 1993; Nobel and Birkinshaw 1998; Kaipia 2007), but not extensively in the global
sourcing context. We suggest that the IPF has significant
implications for increasing the understanding of integration in the global sourcing context for the following reasons. First, although prior research (e.g., Rozemeijer 2000;
Trent and Monczka 2003; Trent 2004) has identified
a number of different mechanisms for integration in
the global sourcing organization, the benefits have been
emphasized and costs have been ignored. Second,
although it has been suggested that the design of global
sourcing organizations is affected by factors such as the
level of corporate internationalization, purchasing maturity and international purchasing strategy (Arnold 1999;
Rozemeijer et al. 2003; Trent and Monczka 2003), the
extant studies are highly descriptive and rather exploratory in nature. Therefore, prior research provides little
theoretical explanation for either when integration is particularly important or how and why various contingencies
affect integration in the global sourcing organization.
In this paper, the IPF serves as a theoretical basis for
analyzing the use of various integration mechanisms
under different circumstances in purchasing organizations. In this process, we theoretically elaborate on the
IPF for the global sourcing context. In the following
sections, we discuss prior research on (1) integration

mechanisms (right side of the IPF in Figure 1) and (2)
uncertainty in the sourcing context (left side of the IPF)
in the sourcing context.
Studies on Global Sourcing Organizations

The majority of research on global sourcing organizations has focused on the issue of centralization versus
decentralization (e.g., Corey 1978; Guinipero and Monczka 1990; Arnold 1999; Quintens, Matthyssens and Faes
2005). These studies tend to perceive integrated organizations as centralized hierarchies. Some authors have
extended the discussion and included additional ways of
integration. For example, it was shown that global
sourcing firms use a variety of mechanisms, such as
harmonized IT infrastructures, strategy review meetings
and cross-unit teams to manage integration (Trent and
Monczka 2003). Also, the use of different organizational
design mechanisms, networks of people, and information and communication infrastructure was assessed
(Rozemeijer 2000) and the importance of socialization
mechanisms for integrating activities across purchasing
locations was highlighted (Faes et al. 2000). Finally, reporting the results of an exploratory study on how various organization design features such as cross-unit teams
and colocation vary across different organizational size, it
was suggested that larger firms rely more on both vertical
and lateral mechanisms, simultaneously (Trent 2004).
Moreover, prior research on global sourcing organizations has taken an organization level of analysis, suggesting that the global sourcing organization is the same
across purchased categories. However, it has long been
recognized that category characteristics significantly affect
organization design (Davis, Epen and Mattson 1974;
Smith 1999; Daft 2004; Englyst, Jorgensen, Johansen and
Mikkelsen 2008) and that effective purchasing organizations are designed differently across categories within
April 2009
59
one firm. Although this approach has not yet been taken
very often, a noteworthy exception to this is a study on
integration analyzing 15 large MNCs, suggesting that
integration of purchasing units indeed varies across categories (Matthyssens and Faes 1997).
nization. The final contingency of interunit task interdependence of the IPF has not been addressed in the
sourcing context. This, however, is not surprising because
purchasing literature has mostly focused on uncertainty
from the perspective of a single purchasing unit.
Studies on Uncertainty in the Sourcing Context

Uncertainty in the sourcing context has been addressed
mainly in the literature on organizational buying behavior (OBB) (e.g., Robinson, Farris and Wind 1967;
Webster and Wind 1972; McQuiston 1989; Laios and
Moschuris 2001; Lewin and Donthy 2005). Summarizing
the main ideas of OBB, five contingencies can be identified as having an impact on uncertainty in the sourcing
context (shown in Table I): (1) purchase novelty; (2)
category complexity; (3) purchase importance; (4) demand volatility and (5) supply market characteristics.
The five characteristics presented in Table I can be
clustered into two groups that closely echo the contingencies presented in the IPF of Tushman and Nadler
(1978). The first four contingencies relate directly to task
characteristics and are internal to the organization. The
fifth characteristic, supply environment, relates to the
task environment of the IPF and is external to the orga-
RESEARCH METHODOLOGY
Research Design
Owing to the lack of theory on global sourcing organizations (Quintens et al. 2005) especially in terms of
providing theoretical explanations for relationships
among concepts (the questions of How and Why in
the definition of good theory [Bacharach 1989; Wacker
2008]), this research started without precise hypotheses
or propositions. Our research design can best be described as theory elaboration (Vaughan 1992; Lee 1999;
Gilbert 2005). In comparison with testing an existing
theory (Popper 1959) or developing a new theory (Glaser and Strauss 1967; Eisenhardt 1989), the key idea of
theory elaboration as applied in this paper is to extend
the IPF to the global sourcing context, thereby providing
theoretical explanations for the use of different integration mechanisms across different categories. The
TABLE I
Factors Affecting Uncertainty in the Purchasing Context
Contingency
Definition
How and Why It Affects Uncertainty
Example
References
(1) Purchase
novelty
Experience the firm has on

purchasing the item: new task,
straight rebuy or modified rebuy
New tasks are more uncertain

because the firm does not have the
experience and knowledge of the
purchase
Cardozo (1980),
Hill (1972),
McQuiston
(1989)
(2) Product
complexity
Degree to which the product is a

commodity or highly customized
Customization increases the

understanding of product
characteristics and purchasing
process, making the situation more
uncertain
Hill (1972),
McQuiston
(1989), Xideas
and Moschuris
(1997)
(3) Purchase
importance
Degree and type of risk

perceived in the purchasing
situation and purchase volume
High volume and risk increase the

exposure to loss, making the
purchase more uncertain
Cardozo (1980),
Hill (1972),
Bunn (1993)
(4) Demand
volatility
Degree to which the demand of

the purchased item changes
across periods
Strong demand fluctuations make

the planning of purchase difficult,
increasing uncertainty of the
situation
Walker and
Weber (1984)
A turbulent environment
characterized by a rapid rate of
change and lacking transparency of
supply markets, making the situation
more uncertain
Cardozo (1980),
Bunn (1993),
Xideas and
Moschuris
(1997)
(5) Supply
Degree of global availability of
market
the item, uncertainty in
characteristics production and supply, stability
of supply
60
Volume 45, Number 2
TABLE II
Addressing Validity Criteria, Based on Miles and Huberman (1984) and Yin (2003)
Validity Criterion
Means by Which This Was Addressed in the Case Study
Objectivity/Confirmability:
relative neutrality and reasonable
freedom from unacknowledged
researcher biases
Clear research design

Detailed and explicit data collection process
Result: Methodology transparent and repeatable
Reliability/Dependability/Auditability:
whether the process of the study is
consistent, reasonably stable over time
and across researchers and methods
Data were collected across a full range of carefully selected

respondents and settings as suggested by the research questions
Shared questionnaire for all interviewers/field-workers
Development of case study database
Coding checks to ensure agreement of coders
Result: Stability and consistency of study process ensured
Internal and Construct Validity:

establishing causal relationships
whereby certain conditions are shown
to lead to other conditions,
as distinguished from spurious
relationships
Use of theoretical framework

Triangulation of interview data and documents studied
Context-rich data collection
Result: Transfer Participants agreed to the interpretations; of
information processing framework to global sourcing context
performed and substantiated
External Validity:
establishing a domain in which the
studys findings can be generalized
Clear description of case company context and situation

Detailed descriptions of specific category considerations for the
companies studied
Replication in further research is suggested and facilitated by clear
parameter specification (e.g., industry, size, hybrid sourcing
organization)
Result: Robust findings applicable to specific domain
Utilization/Application/Action
Orientation:
what the study does for its participants,
both researchers and researched, as
well as for the consumers
Research setting of hybrid sourcing organizations poses a

practically challenging field
Category-level analysis provides in-depth and practical information
to practitioners and researchers alike
Result: Practical value of research findings for organizations
engaging in global sourcing, as well as providing stimulus for the
research field of coordination mechanisms in MNCs and specifically
regarding hybrid sourcing organizations
outcome of the paper can therefore be classified as middle-range theory (Merton 1968; Bourgeois 1985; Layder
1993) which is defined as theory that generalizes beyond
a particular case but within a particular context or setting
(Woodside, Liukko and Vuori 1999; Ketokivi 2006).
In order to elaborate the IPF in the global sourcing
context, we collected empirical data following a multiple
case study design with a replication logic (Yin 2003). We
selected this case study research design for three reasons.
First, our research aim is to understand how and why
contingencies lead to differences in integration mechanisms at the category level (Meredith 1998; Yin 2003).
Second, research on global sourcing organizations is in
its exploratory stage and existing knowledge on the factors
affecting organization design at the category level is
scarce (Yin 2003; Voss, Tsikriktsis and Frohlich 2002;
Quintens et al. 2005). And finally, there has been a call for
more case studies on global sourcing (Trent 2004; Dubois
and Araujo 2007). The ways by which validity criteria
(Miles and Huberman 1994; Yin, 2003) in qualitative
research were addressed are shown in Table II.
In the case selection, we focused on MNCs because they
are more likely to be engaged in global sourcing (Bozarth
et al. 1998). Details about the case firms are presented in
Table III.
In our pursuit to achieve a theoretical sample, three
MNCs were studied from different industries (gas, pharmaceutical, automotive), thus varying the following attributes: Company sizes, degrees of multinationality and
global sourcing ratios. All three case firms have extensive
global sourcing experience with hybrid purchasing
structures in place. The primary structural dimension
April 2009
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TABLE III
Case Firm Characteristics
Firm
Firm
Sizea
Gas
Pharma
Auto
Size of
Purchasing
Departmenta
Purchasing
Structure
Extent of
Multinationalityb
Global Sourcing
Experience
(Years)
Global
Sourcing
Ratio (%)c
25,000
300
80
370
4050
300,000
720
70% foreign
spend
75% foreign
spend
20% foreign
spend
41,000
Matrix: region/
category
Category
70
Matrix: region/
category
Size measured as the number of employees.

Purchased volume of subsidiaries compared with headquarters.
c
Ratio of globally sourced volume to total volume.
b
along which the purchasing organization of the case

companies is organized is the category. Categories with
large purchasing volumes that show cross-locational
synergy potential are led by category managers situated at
headquarters. In addition, Gas and Auto have a regional
structure with regional managers, as a second dimension,
to ensure the implementation of global strategies in their
particular regions. Also, this is meant to improve coherence between globally developed strategies and regional
requirements. Category and regional managers have a
direct reporting line to the Chief Purchasing Officer.
Local purchasing sites have a dotted reporting line to
corporate purchasing, showing their formal participation
in the global purchasing community. As a result, the
corporate purchasing department has a direct reach on
the activities of the local supply managers and their appraisal system.
Most purchasing scholars agree that organizational
buying activities vary among specific products purchased
(Cardozo 1980; Xideas and Moschuris 1997; Monczka,
Trent and Petersen 2006). Thus, in our pursuit to maximize heterogeneity of results, four product types were
defined within each MNC: (1) raw materials; (2) capital
expenditures (CAPEX); (3) services; and (4) maintenance, repair & operations (MRO). Then, for each of the
three firms one globally sourced category for each of
these types was analyzed. This design yielded 12 cases
giving us a chance to study the research problem across a
high diversity of case contexts (Miles and Huberman
1984; Yin 2003). Table IV provides a detailed description
of each individual case.
Data Collection
As the aim of the paper is to develop middle-range
theory, the theoretical framework (IPF) dictates the form
of the required data (Layder 1993). The primary data
were collected between July 2006 and June 2007 using
semistructured interviews. A total of 15 interviews (five in
62
each company, a total of approximately 25 hours) were

conducted in two phases.
First, 12-hour interviews were conducted at headquarters with each of the senior supply managers being
responsible for a particular product type (e.g., raw
materials or services). Owing to their perspective on the
purchasing organization as a whole, these managers at
headquarters were the primary source of information.
Topics covered include, for example, the role of purchasing, global sourcing strategy, motivation for global
sourcing, purchasing organization, category characteristics
and integration of purchasing units within the company.
Second, one and a half hour group meetings were
organized; supply managers interviewed in the first
round were gathered together in each firm to discuss
differences in global sourcing across product types. The
goal was to improve the understanding of drivers that
determine the particular form of integration but also to
ensure reliability of the data from prior interviews
by repeatedly discussing some of the first round issues
(Eisenhardt and Graebner 2007). After each interview,
detailed interview transcripts were prepared and circulated among all the participants for potential clarification
(Eisenhardt 1989; Yin 2003). All interviews were conducted by two researchers, with one responsible for the
interview and the other one for taking notes.
In addition, archival documents, such as various internal reports, process documentations and presentations, were analyzed and used mainly for preparation of
interviews. For example, process charts enhanced the
understanding of how different purchasing units interact
on a global scale. Archival documents, however, were
used only as secondary source of information for crosschecking the interview findings.
DATA ANALYSIS
Data analysis was carried out in two major phases. First,
within-case analysis focused on each case separately and,
Volume 45, Number 2
TABLE IV
Case Firm Characteristics
Firm
Gas
Gas
Gas
Gas
Pharma
Pharma
Pharma
Pharma
Auto
Auto
Auto
Auto
Product Type
Category
Raw materials Gas

CAPEX
IT hardware
Services
Management
consulting
MRO
Office supplies
Description
Gases required for production and also for trading purposes

Mainly PCs and laptops
Consulting services for strategic management projects
All materials required for daily use in the offices (pens, paper,
coffee, etc.)
Raw materials Liquid crystals
Substances with characteristics of liquids and crystals and
essential component of product with highest growth rates in
firm
CAPEX
Innovative analytical Special instruments that are necessary for daily use in
instruments
laboratories
Services
Market research
Market data (market share of competitors, market volume,
services
growth rates, etc.)
MRO
Wear parts
Components that need to be replaced regularly during
production
Raw materials Steel
Critical component required for many parts of cars
CAPEX
Robots
Industrial robots required in many production steps such as
welding
Services
Agency services
Creative services for marketing and branding purposes
MRO
IT consumables
All supplementary material for IT (mice, batteries, discs, etc.)
second, cross-case analysis looked for common patterns

between the use of integration mechanisms and category
characteristics (Eisenhardt 1989; Yin 2003). In a first
step, individual profiles of the cases have been developed
to become more familiar with each single entity. As we
had prespecified many constructs a priori based on the
literature review, data from different sources could be
clearly converged to the respective constructs in each case.
In a second step, we followed techniques for cross-case
analysis and tabular displays to note similarities and
differences across the cases studied (Miles and Huberman 1984; Eisenhardt and Graebner 2007). Finally, relationships between constructs were analyzed and
findings were derived based on the relevant literature
explanations, resulting in the three aggregate research
propositions presented in the next section.
The 12 cases were divided into three groups based on
the primary underlying motive for implementing global
sourcing identified in prior research: Economies of scale,
economies of information and economies of process
(Arnold 1997; Faes et al. 2000; Trautmann, Bals and
Hartmann, 2009). An overview of the findings is presented in Tables V and VI below. Our findings indicate
that the specific economies of a product affect how integration is managed.
To elucidate this finding, the following sections focus
on explaining (1) how uncertainty is induced along the
three groups and (2) how integration is managed.
By this, we analyze the components uncertainty and
integration mechanisms of the IPF (as shown in

Figure 1, from left to right). First the uncertainty and its
contingency factors are treated, then the corresponding
integration mechanisms are treated. For each group, we
conclude with propositions concerning why and how
integration approaches differ across cases based on the
arguments of information processing theory.
Group 1: Economies of Scale

Uncertainty Faced by the Organization. The findings
indicate that for five cases (liquid crystals, gas, steel,
market research and IT-hardware) the primary motive
for global sourcing is economies of scale, namely the
bundling of volumes across sites. The use of several
integration mechanisms, particularly more elaborate
lateral ones like global teams, indicates that uncertainty
and subsequent information processing requirements are
high. The category characteristics indicate low uncertainty
as nearly all cases are characterized as straight rebuy
(Robinson et al. 1967) with stable demand patterns
(Walker and Weber 1984) and high degree of
standardization (Hill 1972; Cardozo 1980; McQuiston
1989). Thus, the purchasing task is largely planable with
little need to gather additional information during task
execution. This can be exemplified by the case of IT
hardware, where once specifications have been set for a
laptop, they will not alter during its lifecycle. The
demand pattern is predictable, as these products are
renewed after 34 years for all employees within a firm.
April 2009
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64
Wear parts, IT
Full purchasing authority
consumables, office is decentralized to sites
supplies
Economies of
process
Strategic purchasing
centralized at category
manager (specification
setting, market analysis,
sourcing strategy,
contract placement)
Operational purchasing
at each site (ordering,
expediting)
Centralization
Innovative analytical Category manager must

instruments, robots, approve RFQ list and
consulting, agency sourcing decision
services
Liquid crystals,
gas, steel, market
research, IThardware
Case
Economies of
information/
learning
Economies of
scale
Motive
Volume 45, Number 2
Manuals, guidelines
and instructions with
best-practice
purchasing process
and related tools
Global database
with manuals and
instructions
IT system to leverage
information on best
price, suppliers and
contracts across sites
Knowledge database
with detailed
information,
templates, etc. about
project, best practices
IT system to leverage
information on local
needs, prices,
contract structures
and suppliers across
all sites
Standardized
purchasing process with
clear definition of roles
and responsibilities
Purchasing processes
differ across sites, but
comparable outputs
for each major activity
defined
Decision gates for
important activities
(supplier selection,
category strategy)
defined a priori by
category manager
Information Systems
Formalization
Overview on Integration Mechanisms
TABLE V
Category manager to transfer

category and market
knowledge by being involved
in the purchasing transaction
and working together with the
respective local sites
Category manager and local

managers work in teams to
develop global strategies for
a category.
Local knowledge and
requirements are considered
in global strategy
development and acceptance
across sites is ensured
Lateral Mechanisms
April 2009
Economies
of process
Economies of
information/
learning
Economies
of scale
Motive
Straight
rebuy
Modified
rebuy
Robots
Wear parts,
Working
clothes, office
suppliers
New buy
Consulting,
agency
services
Straight
rebuy
Market
research
services
New buy
Straight
rebuy
IT-Hardware
Innovative
analytical
instruments
Straight
rebuy
Purchase
Novelty
Liquid
crystals,
gas, steel
Case
Low volume,
low criticality
High volume,
high criticality
High volume,
high criticality
High volume,
low criticality
Medium
volume, high
criticality
Medium
volume, high
criticality
High volume,
high criticality
Purchase
Importance
Regular
and recurring
demand
Regular
and recurring
demand
Demand
Volatility
Irregular
demand
Irregular and
infrequent
demand
Standardized
item
Irregular
demand, high
quantity of
orders
Specifications Irregular and

set by supplier infrequent
demand
Highly
customized
Highly
customized
Specifications Regular
set by supplier and recurring
demand
Standardized
item
Standardized
item
Category
Complexity
Category Characteristics for Each Case
TABLE VI
Competitive supplier base,

stable market, high
transparency, low delivery risk
Few global suppliers, stable

market, limited transparency,
medium delivery risk
Few global suppliers, dynamic

market, low transparency, high
delivery risk
Few global suppliers, stable

market, low transparency, high
delivery risk

stable market, high

dynamic market, high

stable market, high
Supply Environment
Pooled
Reciprocal
Reciprocal
Reciprocal
Reciprocal
Reciprocal
Reciprocal
Type of
Interdependence
65
Finally, specifications are highly standardized for these

items with low pressures for regional adaptation, leading
the company Gas to label IT-hardware as commodity
purchasing.
Also, the supplier environment poses low uncertainty
since most cases have high global supply availability
with a competitive supplier base, low delivery risk and
transparent markets (Cardozo 1980; Noordewier, John
and Nevin 1990). Again using the case of IT-hardware,
there exist global suppliers (e.g., HP, Dell, etc.), competition is high, the market is transparent and products can
be delivered cost effectively across more than one site. As
most products are purchased on a regular basis and are
highly standardized, the purchasing department is familiar
with the relevant suppliers (enabling also a dual source
strategy) and therefore the risk that products are not
delivered on time, on cost and/or in the desired quality,
is rather low. Owing to the presented characteristics of the
items in this group, the pooling of demand across sites on
a regional basis is feasible, leading to lower prices for all
sites involved in the group contract.
Finally, the results indicate that high uncertainty
arises mainly from interdependence; the analyzed cases
are characterized by reciprocal interdependence, which
according to Thompson (1967) poses higher uncertainty
than pooled or sequential interdependence. Reciprocal
interdependence among organizational units is a result
of the concentration of strategic purchasing activities at
one location to take advantage of scale effects, while
retaining sourcing flexibility and responsiveness to local
interests. To exploit economies of scale, activities such as
the initiation of common bundling projects increase
dependency of the purchasing units. Therefore the information processing requirement and thus the required
variety of integration mechanisms to successfully
accomplish the purchasing task increase.
Integration Mechanisms. To achieve economies of
scale, a variety of different integration mechanisms have
been implemented. First, decision-making authority for
the complete strategic purchasing process is centralized
to a category manager, being responsible for the crossborder integration of purchasing activities for a particular
category. Hence, category managers drive sourcing consolidation of group-wide requirements and exploration
of global supply markets, while local sites remain
responsible for operational activities and maintain
proximity to internal clients. A standardized purchasing
process with clear definition of roles and responsibilities
for each purchasing step (e.g., need definition, market
analysis, strategy development) reduces misunderstandings between the category manager and the local
supply managers at each site. In addition, a global information system allows for efficient exchange and analysis of
global spend data, providing category managers with
information about local contracts, suppliers, specifications and maverick spend. Finally, global strategies
are developed through global category management teams,
66
embracing senior supply managers from key sites

(regional managers in the case of Auto and Gas) and
the respective category manager. By working together
with the affected local supply managers, the acceptance
and compliance of global strategies is ensured. In
addition, it facilitates that knowledge of local supply
managers is feeding into global purchasing strategies.
For example, in the case of IT-hardware, the category
manager and his team of Gas established a European
contract with one supplier for the delivery of laptops to
bundle volumes across sites. To achieve harmonization
of specifications, local supply managers first had to be
convinced of the benefits of a joint approach. The specific
requirements of local users (e.g., service conditions,
repair, replacement) were communicated within the
strategy development process, thereby ensuring that
internal customers satisfaction would not suffer due to
the new approach. As a result, the application of the
presented integration mechanisms enables the firms to
exploit economies of scale for these categories.
Theoretical Interpretation of Uncertainty Situation and
Integration Mechanisms. Based on information processing
theory, the following propositions are formulated:
Proposition 1: For global sourcing categories with high
economies of scale potential, the main contingency factor
affecting uncertainty is reciprocal interdependence among
purchasing units.
Proposition 2a: For global sourcing categories with high
economies of scale potential, companies use vertical
integration mechanisms for uncertainty reduction in
interdependent units as reflected in formal purchasing
processes and global systems.
Proposition 2b: For global sourcing categories with high
economies of scale potential, companies use lateral
integration mechanisms for uncertainty reduction as
reflected in the use of cross-locational teams, category
managers and integrators.
Reciprocal interdependence induces high uncertainty in
the organization and in the case of high uncertainty,
decentralization of decisions is required. Under uncertainty, the information processing requirements are so
significant that centralization would lead to overloading
the top management (Galbraith 1973; Tushman and
Nadler 1978). In such cases, a specialized liaison role
can be assigned to manage information processing
between the reciprocally interdependent units (Galbraith
1973, 1977) and in cases of highly differentiated units
(such as sites in different locations) the liaison role needs
to have formal power. This gives an explanation for
the assignment of the category manager, who has the
liaison role. The findings concerning the formalization
of the purchasing process can be explained as follows.
A formalized purchasing process across locations reduces
Volume 45, Number 2
the role ambiguity and increases the predictability of

outcomes of reciprocally interdependent units (Galbraith
1973; Roth, Schweiger and Morrison 1991). As such, much
of the uncertainty related to unpredictable tasks is reduced
(e.g., when to send spend requirements from each site to
the category manager and according to which template).
The need to constantly exchange routine information
among interdependent purchasing units, such as spend
requirements, specifications or prices, explains the implementation of global information systems (Jarvenpaa and
Ives 1993), as a vertical mechanism. And finally, the use of
lateral mechanisms, such as cross-locational teams or
integrators with formal authority, can be explained by
the fact that not only routine information about local
volumes and suppliers is required for planning bundling
initiatives, but also a common understanding for the joint
project has to be established. For example, local knowhow needs to be integrated into a global sourcing strategy
and opinions about the most feasible strategy for all units
need to be exchanged in order to reduce equivocality (Daft
and Lengel 1986). This requires lateral integration mechanisms which facilitate the processing of large amounts of
nonroutine and rich information, thereby explaining the
use of cross-locational teams and category managers.
Group 2: Economies of Information and Learning

Uncertainty Faced by the Organization. The findings
indicate that for four cases (analytical instruments, robots,
consulting and agency services) the primary motive for
global sourcing is economies of information and learning.
For example, in the case of analytical instruments the
different research facilities of Pharma purchased these
items rather infrequently, so that category specific knowledge could not be developed at each site.
Implementation of complex integration mechanisms
indicates a high level of uncertainty in completing the
purchasing task. In contrast to the first group with the
focus on economies of scale, here uncertainty induced by
category characteristics is significant; cases are characterized
by either a new buy or modified rebuy (Robinson et al.
1967; Cardozo 1980), high category importance (Bunn
1993; Lewin and Donthy 2005), high level of technical
complexity (Hill 1972) and volatile demand pattern
(Walker and Weber 1984; Woodside et al. 1999). For
example, consulting and agency services are tailored to
customer needs and therefore represent mostly new buy,
are of high relevance for the business, and the
specification of service needs is challenging and requires
expertise. In addition, demand from an individual site
perspective is volatile, as it always represents project
business and therefore local sites can hardly develop
knowledge concerning the purchase of these services.
Uncertainty induced by the supply environment is also
significant; due to the limited number of capable
suppliers and the heterogeneity in offers being high,
the need to obtain more detailed supply market
information is high in order to identify feasible
suppliers and to enable an objective comparison of their

offers. Because of purchase novelty, supply managers have
to deal with unfamiliar suppliers, increasing the
uncertainty in the purchasing process, as suppliers might
not perform as expected in terms of quality and delivery
(Cardozo 1980). This can be exemplified by analyzing the
case of agency and consulting services, where it becomes
very difficult to evaluate and choose the best supplier for
the required service.
Owing to the presented characteristics of the items in
this group, the exchange of category and market knowledge across sites is the dominant motive for global
integration of purchasing activities. The systematic and
worldwide exploitation of strategic knowledge and
information between units carrying out similar
activities is emphasized as a unique advantage of global
MNCs (Bartlett and Ghoshal 1989; Hedlund and
Rolander 1990). This creates reciprocal interdependence
in global sourcing organizations; each units ability to
achieve its own goals is to some extent dependent on its
willingness to mutually support other units in achieving
their goals (Bartlett and Ghoshal 1989). The pool of
knowledge dispersed worldwide thereby increases the
interdependence (Bhagat, Harveston and Triandis
2002) and also increases the uncertainty faced by
purchasing units.
Integration Mechanisms. Considering the high technical complexity involved when purchasing these items,
the lack of know-how precluded local supply managers
from early involvement into the purchasing process. The
integration challenge was described by the senior supply
manager of Pharma as follows:
We have developed purchasing specialists for these
categories here at headquarters. Our key idea was to
use their expertise for the benefit of all sites, making
their category and market knowledge accessible to
the whole group.
To attain economies of information and learning,
decision making is centralized to a global category
manager. The extent of centralization varies across cases
with the category manager determining for each individual transaction, approval and decision gates with
comparable outputs for major activities along the purchasing process (e.g., market analysis, strategic action
plan, supplier short list), thereby ensuring involvement
in key decisions at local sites. On the one extreme, the
category manager at least confirms request for quotation
lists and makes final sourcing decisions, but on the other
extreme can also assume responsibility for the whole
purchasing process. For example in the case of agency
services, the responsible category manger at the headquarters of Pharma accompanies the whole purchasing
transaction when a major site launches a new marketing
campaign for a new product. This is because marketing
managers rather often dislike the fact that purchasing is
April 2009
67
involved in the creative part of the purchasing transaction

as they consider the selection of an agency as a fundamental part of their own work. Thus, the idea is to establish a category manager situated at headquarters with the
respective knowledge in order to convince managers that
purchasing can make a contribution by providing
expertise, thereby facilitating early process involvement.
Information systems are implemented to maintain transparency over contracts, suppliers and prices including
best-price comparisons across sites. Category managers
ensure that dispersed knowledge that is shared across
sites is aggregated, acting as a liaison between the different
purchasing locations. For example, in the case of analytical instruments the high level of technical complexity,
high variety in specifications and low supply market
transparency forces the category manager to be involved in the whole purchasing process for every transaction. As there are very few suppliers that can provide
this technically complex item, the category manager
works closely with local buyers from other sites to gain
access to their market knowledge. In contrast, the market
for robots is more transparent and specifications are
given by suppliers, so that the value added provided by
a category manager is considered to be lower, resulting in
involvement only during the most important stages of
the purchasing process.
Integration Mechanisms. Based on information processing theory, the following propositions are formulated:
economies of information and learning potential,
the main contingency factors affecting uncertainty
are category characteristics, supply environment and
reciprocal interdependence among purchasing units.
economies of information and learning potential,
companies use mainly lateral integration mechanisms,
reflected in the paramount role of the category manager.
Our empirical findings suggest that decision-making
authority remains with the units faced by uncertainty and
is not transferred upward in the hierarchy, but rather
aggregated at the level of one category manager. The
sheer volume and the complexity of information flows
limit the ability to integrate through centralization
(Galbraith 1973; Bartlett and Ghoshal 1989).
Following the line of argument presented for group 1,
comprising cases characterized by economies of scale,
decision-making authority is allocated to one local unit,
being responsible for managing knowledge and information transfer across sites. Owing to the high volume
and complexity, information processing needs are so
significant that centralization to headquarters would
immediately overload the top management. This gives
an explanation for the assignment of the category
68
manager; he has the liaison role as in cases characterized by economies of scale.

Second, the high diversity related to the purchase of
each of these unique and novel categories makes
integration through a completely standardized purchasing process less feasible (Woodside et al. 1999). Formalization does not facilitate information processing as
required in this situation. Routine information, such as
prices, information on suppliers, or project descriptions,
on the other hand, can most effectively be transferred
through global information systems. However, a lot of
the required information for these categories is very
knowledge intensive (e.g., setting up complex contract
structures, defining service level agreements or conducting detailed supplier evaluations). Therefore, the
most effective way to transfer the nonroutine and
highly knowledge-related information is through lateral
mechanisms that enable local supply managers to learn
and make use of the information (Nonaka 1990).
Building on the arguments of Daft and Lengel (1986)
and Galbraith (1973), the need to process varying
information explains the use of a category manager; he
has the capability to process more and richer information
among organizational units, hence, acting as an integrator.
Group 3: Economies of Process

Uncertainty Faced by the Organization. For the final
three cases (wear parts, IT consumables and office
supplies), the primary motive for global sourcing
is economies of process. Although bundling of these
categories at one regional supplier is possible, the
benefits related to it are limited as the value of these
items is rather low. As these categories are highly
standardized and the supply availability is high, category
and market knowledge exchange is not as critical as for the
prior groups 1 and 2 of categories. However, demand
planning for these items is very difficult, leading to a high
order frequency and as a consequence to the problem that
local supply managers often spend 80 percent of their
time on purchases that represent < 20 percent of their
spend volume. For example, in the case of office supplies it
is difficult to determine the demand of internal clients, as
usage patterns might alter constantly. In addition, most of
the items (pens, rubbers, etc.) are of low value, so that
minimizing transaction costs is the main goal to be
addressed. Thus, it has been argued that establishing
best-practices across the organization on how to source
these categories more efficiently, such as through systems
contracting, is the main benefit to be addressed through
global sourcing.
The results point out that these cases are integrated
with multiple vertical mechanisms, but in contrast to the
prior groups, lateral mechanisms are not used, which
indicates low uncertainty. Category characteristics indicate
low uncertainty; cases are characterized by straight rebuys,
low importance and high standardization (Robinson
et al. 1967; Cardozo 1980). Demand patterns might
Volume 45, Number 2
sometimes be volatile; however, uncertainty during

purchasing remains low. Also, uncertainty induced by
the supply environment is low. There is a stable and
transparent supply market with a large, competitive
supplier base and high supply availability (Xideas and
Moschuris 1997).
In terms of interdependence, uncertainty is also low; the
purchasing units are characterized by pooled rather than
reciprocal interdependence as in other cases (Thompson
1967). The interdependence characterizing these relationships is pooled because once new purchasing processes or
methods have been implemented and established across
locations, each purchasing site is capable of executing the
purchasing task independently.
Integration Mechanisms. Within these cases the decision-making authority is decentralized and remains at
each site, but standardized purchasing processes are
defined. One senior supply manager for MRO pointed
out the importance of formalization:
It is simply impossible and not value adding that we
are involved in every purchasing transaction from
our local sites. We rather need to ensure that they
adhere to our prescribed purchasing standards.
Formalized processes are critical since they
accelerate learning as best practices can be
incorporated into process descriptions. Since
electronic procurement solutions often play a major
role in re-engineering purchasing processes, we
often first need to train local site supply managers
and acquaint them with the new methods. Then, it
is all about ensuring that everybody adheres to the
prescribed standards to achieve a significant
bottom-line effect for the whole company.
Finally, global databases serve as a platform for making
documents, templates, manuals and best-practice descriptions available for all sites. For example, in the case
of wear parts, the establishment of catalog agreements
with the respective suppliers is considered an efficient
solution to cut down process costs. Global integration
involves the recommendation of corporate headquarters
to install these catalog agreements across sites, the provision of the software and training, as well as manuals that
include the most important aspects concerning the
installation and implementation. Once the catalogs are
installed, each purchasing site conducts the purchasing
task independently.
Integration Mechanisms. Based on information processing theory, the following propositions are formulated:
economies of process potential, the main contingency
factors affecting uncertainty are category characteristics,
supply environment and pooled interdependence among
purchasing units.

economies of process potential, companies use mainly
vertical integration mechanisms, reflected in purchasing
process formalization.
The high reliance on formalization of activities in this
case can be explained as follows: due to pooled
interdependence, the uncertainty is low and the task
can be preplanned. Hence, a standardized cost-effective
purchasing process can be developed to ensure
integration (Galbraith 1977; Tushman and Nadler
1978); that is, all units follow the same best-practice
purchasing process. Finally, as there is a need for
documents, templates and best-practice process
descriptions across sites, impersonal mechanisms, such
as global databases are able to convey this routine
information cost-effectively across sites (Egelhoff 1991).
SUMMARY AND CONCLUSION

In this paper, we have addressed the organizational design aspects of global sourcing, in particular integration in
global sourcing organizations. The contribution of the
paper is threefold and tackles the identified research gaps
pointed out in the Introduction. First, we have complemented the mainly strategy-focused research on global
sourcing by assessing global sourcing from an organization
design perspective. We have sought to enrich the dominant
centralizationdecentralization debate by providing insights on how companies apply a number of different
integration mechanisms to manage their geographically
dispersed purchasing units. Second, by emphasizing the
need for more research in purchasing organization design
with a category-level of observation, we have sought to
improve the understanding of hybrid purchasing organizations, finding that effective hybrid organizational structures differ across categories. And finally, we have sought to
complement the highly exploratory and data-driven empirical work on global sourcing organizations by providing
theoretical explanations for global sourcing units through
elaborating the information processing perspective in the
global sourcing context.
Based on the model developed by Tushman and Nadler
(1978) and the case studies above, we can summarize by
stating that three key contingencies affect integration in
the global sourcing organization: (1) category characteristics, (2) supply environment and (3) interdependence
of the purchasing units. These three contingencies echo
those identified by Tushman and Nadler (1978) but are
adapted to the global sourcing context.
Category characteristics relate to what Tushman and
Nadler (1978) call task characteristics: in the global
sourcing context the task is the purchase of the category.
Category characteristics are internal to the organization
and include purchase novelty, purchase importance,
category complexity and demand volatility. Along the
three groups of cases studied, task characteristics explain
April 2009
69
uncertainty faced by the organization while in cases

characterized by economies of scale and economies of
process, uncertainty related to the task is rather low. The
high complexity involved in purchasing capital expenditures and services in the group characterized by economies
of information, explains the need to process more information during task execution. Therefore, we conclude:
Conclusion 1: The higher the uncertainty induced by
category characteristics, the higher the need for integration mechanisms with high information processing
capacity.
In further research, these integration mechanisms could
be studied in more detail, analyzing how the varying
category characteristics affect the detailed design and implementation of vertical and lateral integration mechanisms. As was discussed in the previous section, those
categories with the highest uncertainty posed by category
characteristics (i.e., such as with high potential for
economies of information and learning), were managed
by predominantly lateral integration mechanisms. An
overview study of the kinds of lateral mechanisms as well
as their distribution among different industries could be
particularly valuable for practice.
The second contingency of Tushman and Nadlers
(1978) work is task environment, which in the global
sourcing context is the supply subenvironment (Duncan
1972) including the aspects of availability of global
suppliers, transparency of supply market and familiarity
with the suppliers (Cardozo 1980; Noordewier et al.
1990; Xideas and Moschuris 1997). The environment
affects the organization because according to the open
system perspective to organizations (Scott 1998), organizations continuously adapt to their environments
(Joyce, McGee and Slocum 1997; Baum and Rowley
2002). This adaptation creates uncertainty because the
environment is mainly outside the control of the organization (Thompson 1967). Our observations point out
that for cases characterized by economies of scale and
process, supply market uncertainty is rather low, whereas
for cases of economies of information the constant
search for alternative suppliers, the lack of supply market
transparency and the low familiarity with suppliers
makes preplanning difficult and requires extensive information-processing among purchasing units.
Conclusion 2. The higher the uncertainty induced by
supply environment characteristics, the higher the need
for integration mechanisms with high information processing capacity.
Further research could examine how companies design
and implement dedicated systems and structures within
their global sourcing organizations to scan and monitor
their supply environments, addressing the varying levels
70
of uncertainty discussed in this paper. Herein, interesting

aspects lie also in the questions of whether these systems
depend on the size of the company, as well as the variety
of supply markets the company has to consider.
Finally, interdependence among organizational units is
highly significant in creating integration needs. For
Tushman and Nadler (1978), interdependence refers to
interdependence of the functions, but in the global
sourcing context it refers to the interdependence of the
purchasing units distributed across locations. While cases
characterized by economies of scale and information
have reciprocal interdependence among purchasing
units, the cases characterized by economies of process
are characterized by pooled interdependence. As elaborated, reciprocal interdependence is a more complex type
of interdependence, creating higher task uncertainty
(Thompson 1967).
Conclusion 3. The higher the reciprocal interdependence
of purchasing units, the higher the need for integration mechanisms with higher information processing
capacity.
In further research, it could be studied in more detail how
reciprocal interdependence affects global sourcing decision
making. Questions arise as to whether there is some kind
of optimal degree of reciprocal interdependence, and how
such a state could be determined. Also, how the transition
process from a central or decentral organization to a hybrid
one can be managed, taking into account reciprocal interdependence, is an interesting question.
Based on the discussion above, it can be summarized
that three contingencies (1) category characteristics,
(2) supply environment characteristics and (3) reciprocal
interdependence of purchasing units influence the
level of uncertainty faced by global sourcing organizations, and in turn affect the level of information processing requirements. Effective management of the global
sourcing organization requires the implementation of
different types of integration mechanisms to respond to
these information-processing needs. When informationprocessing needs are high, complex lateral mechanisms
are required. In the case of low information processing
requirements, the organization can do well with simple
vertical mechanisms.
A particular contribution of this paper to information
processing theory lies in elaborating on its understanding
of interdependence. By transferring this contingency to
the context of global sourcing, the understanding has
been extended beyond the interdependence of functions,
to the current reality of geographically dispersed functional units in a globalized business environment. We
expect that this interpretation could be taken on in a
variety of future research approaches, studying diverse
realms of application (e.g., globally dispersed production
sites or sales).
Volume 45, Number 2
More theoretical and empirical research on integration

in the global sourcing context is needed. The theoretical
propositions developed in this paper require empirical
testing. Future research on these propositions could address the viability of various configurations of integration
mechanisms, complementing the mostly descriptive research in the area. Also, the headquarters-perspective
taken in this paper when collecting empirical data could
be complemented with data collection at the subsidiary
level, in order to point out potential differences in crosssubsidiary integration patterns. Finally, it would be interesting to analyze organizational design phenomena in
the global sourcing context from different theoretical
perspectives. In particular, the resource dependence perspective offered by Salancik and Pfeffer (1978) is a competing viewpoint in the organization design field and
could provide alternative explanations for our findings.
The presented findings have important practical implications for companies and supply managers dealing with
global sourcing. First, the results suggest that as companies design their global sourcing organization they need
to follow a category-based approach: Different categories
require different ways of integration even within the same
firm. Second, depending on the peculiarities of a category
and the particular synergy potential to be exploited, a
template for structuring the global sourcing organization
has been brought forward. Third, the results emphasize
that global sourcing is not only about pooling volumes by
centralization to attain high cost savings. An effective
implementation of global sourcing also generates high
value by exploiting economies of information and
learning, and economies of process. Fourth, our findings
illustrate that for effective global sourcing, companies
need to gain access and commitment of local sites. By
providing these insights as well as a concrete template we
hope to enable managers to take these considerations
into account deliberately when designing and managing
global sourcing organizations.
In an increasingly globalized environment, achieving
global integration of dispersed functional units becomes a
rewarding, albeit challenging task. As was highlighted
throughout this paper, understanding the influences behind varying requirements for information processing
capacity is essential. By matching these requirements with
suitable vertical and lateral mechanisms, the MNC can
become more than the sum of its organizational units.
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April 2009
73
Gerhard Trautmann (Dr., European Business School,

Germany) is a consultant at Siemens AG in Munchen,
Germany. Dr. Trautmanns research interests include
global sourcing, organizational design, offshoring and
performance measurement.
Virpi Turkulainen (D.Sc.,Tech., Helsinki University of
Technology) is a senior researcher in the department of
industrial management at Helsinki University of Technology. Her interests include organization design and
theories as well as global operations. More specific research topics have covered organizational integration in
the cross-functional, global sourcing and global operations contexts, as well as plant location decisions and
global operations strategies. Dr. Turkulainens current
projects include various topics related to organization
design, management of global operations and emerging
business models as well as High Performance Manufacturing research. She will be a visiting researcher at Stanford University in 2009.
Evi Hartmann (Dr. Ing., Technical University Berlin) is
an assistant professor for purchasing and supply man-
74
agement at European Business School in Wiesbaden,

Germany. Her research on purchasing strategy and organizational design, offshoring, global sourcing and
service procurement has been published in Journal of
Purchasing and Supply Management, Journal of International
Management, International Journal of Production Economics,
Journal of Customer Behavior, Journal of Business Economics
and other managerial and academic outlets.
Lydia Bals (Dr., European Business School, Germany)
is senior consultant at Bayer Business Consulting, Germany. Simultaneously, Dr. Bals is a visiting scholar at
Copenhagen Business School, Center for Strategic Management and Globalization (SMG) in Denmark. She has
made research visits to the Wharton School at the University of Pennsylvania and Columbia Business School at
Columbia University. Her research interests include global sourcing, offshoring, sourcing of services and early
internationalization. She has published in Journal of
Purchasing and Supply Management, Swiss Journal of Business Research and Practice, Journal of Business Economics,
Journal of International Management and International
Journal of Production Economics.
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Integration in The Global Sourcing Organization - An Information Processing Perspective

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INTEGRATION IN THE GLOBAL SOURCING

ORGANIZATION AN INFORMATION PROCESSING

Global sourcing refers to the integration of decision making across worldwide

overall goal (March and Simon 1958; Lawrence and

Journal of Supply Chain Management

paper, is the integration of managerial decision making

A category encompasses a group of similar items that are required

From a methodological viewpoint, this paper follows

LITERATURE REVIEW AND THEORETICAL

Volume 45, Number 2

contingencies are classified as task characteristics, task

sections, we discuss prior research on (1) integration

Studies on Global Sourcing Organizations

Journal of Supply Chain Management

Studies on Uncertainty in the Sourcing Context

How and Why It Affects Uncertainty

Experience the firm has on

New tasks are more uncertain

Degree to which the product is a

Customization increases the

Degree and type of risk

High volume and risk increase the

Degree to which the demand of

Strong demand fluctuations make

Volume 45, Number 2