Are supply chains global
Alan M. Rugman
Henley Business School, University of Reading, Reading, UK
Faculty of Business Administration, Simon Fraser University,
Burnaby, Canada, and
Chang Hoon Oh
Faculty of Business, Brock University, St Catharines, Canada
Purpose – The purpose of this study is to investigate the following questions: Are supply chains
global or regional? What are the performance implications for ﬁrms?
Design/methodology/approach – This paper classiﬁes 183 large North American ﬁrms into
home-region oriented, host-region oriented, bi-regional, and global ﬁrms by using geographic
distributions of their upstream and downstream activities. The performance implications of the
regional supply chains of a broader set of 273 ﬁrms by using Tobin’s Q and data on intra-regional
sales or assets are further evaluated.
Findings – It is found that the evidence to support the regional nature of supply chains – that is, over
85 percent of ﬁrms in our sample – have their supply chains within North America. The paper also
ﬁnds that a regional focus of ﬁrms in terms of sales contributes to improved performance as measured
by Tobin’s Q.
Originality/value – The regionalization perspective proposed by Rugman and Verbeke to develop
and test the regional nature of supply chains is applied.
Keywords Supply chain management, North America, Globalization
Paper type Research paper
In an era of globalization it has been assumed that supply chains are global. But are
they? What is the empirical evidence? We investigate the supply chain activities of the
world’s largest ﬁrms from the perspective of recent empirical work suggesting that
these ﬁrms operate regionally rather than globally. We deﬁne globalization as
worldwide economic integration and a supply chain as the upstream and downstream
activities of a ﬁrm.
The beneﬁts of economic integration are to offer economies of scale and cost
savings. If economic integration is global then a global supply chain should be able to
realize these beneﬁts. In turn, this thinking leads the ﬁrm to adopt a global strategy,
provided that, the managerial costs of global supply chain management and global risk
assessment are less than the perceived beneﬁts of operating a global supply chain.
In contrast to this thinking, recent studies by Rugman and Verbeke (2004) and
Rugman (2005) have suggested that for downstream activities, most multinational
enterprises (MNEs) operate within their home regions of the North America-European
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Received September 2008
Revised February 2009
Accepted February 2009
International Marketing Review
Vol. 26 Nos 4/5, 2009
q Emerald Group Publishing Limited