An interaction approach to global sourcing: A case study of IKEA Jens Hultman a,1 , Thomas Johnsen b,n , Rhona Johnsen b,2 , Susanne Hertz c,3 a Lund University School of Economics and Management, Tycho Brahes v¨ ag 1, P.O Box 7080, SE-220 07 Lund, Sweden b Audencia Nantes School of Management, 8 Route de la Joneliere, BP 31222 – 44312 Nantes Cedex 3, France c J¨ onk¨ oping International Business School, Gjuterigatan 5, P.O Box 1026, SE-551 11 J¨ onk¨ oping, Sweden article info Article history: Received 30 June 2010 Received in revised form 24 November 2011 Accepted 25 November 2011 Keywords: Global sourcing Interaction Supply network Internationalization IKEA China abstract This study explores the process of global sourcing through a case of the Swedish furnishing retailer IKEA from an interaction perspective. With a point of departure in the streams of existing research on global sourcing and the internationalization process of firms through networks, a research question is proposed concerning supply network interactions as an influence in the global sourcing process. The study uses an in-depth qualitative case study methodology, focusing on IKEA and its development of a supply network for the PAX wardrobe system during the years 2003–2009. The findings draw on 29 interviews in Sweden and China, ranging from interviews with the supply management function of IKEA to interviews with Swedish and Chinese suppliers and sub-suppliers. The findings show that the global sourcing process is influenced by interactions and network effects between supply network actors. In particular, we find that relationships between suppliers were identified and set up by IKEA, but cascaded into deeper interactions amongst suppliers at different supply network tiers. Our study contributes to global sourcing research in indicating the importance of interaction amongst supply network actors, showing how the global sourcing strategy of one actor may significantly influence the sourcing strategies of other actors. Global sourcing decisions therefore need to be understood and coordinated across global supply networks. & 2011 Elsevier Ltd. All rights reserved. 1. Introduction Global sourcing is one of the greatest strategic challenges for purchasing and supply managers. Under increasing pressure to reduce costs, companies have shifted sourcing from local suppliers to low-cost country-based suppliers. The current economic reces- sion shows little evidence of reversing this trend; in fact, it is likely to increase the pressure to source globally. Yet, the global sourcing process is riddled with difficulties and firms frequently under- estimate its complexity. Despite the popularity of global sourcing across both service and manufacturing industries, research on global sourcing is arguably still playing catch-up. The global sourcing process – the change from domestic to worldwide sourcing – remains relatively poorly conceptualized, for example in comparison with research on buyer–supplier relationships or industrial networks (Quintens et al., 2006b). This calls for more theoretical development in the field of global sourcing. In this paper we argue that the process of global sourcing is governed not only by rational single firm decisions but also by interactions amongst supply network actors. The interaction (or network) approach to internationalization (e.g., Coviello and Munro, 1997) has shown that interactions amongst network actors, for example by suppliers following their customers to foreign markets, can be an important driving force of internationalization. However, to date such impacts on the global sourcing process have not yet found their way to the global sourcing literature in any significant way. In this paper we therefore seek to apply an interaction perspective to elucidate the global sourcing process, borrowing from theories of internationalization that traditionally have tended to focus on downstream market development to see how the driving forces of global sourcing have been influenced by interaction between firms. The purpose of this paper is to contribute to the understanding of the global sourcing process by applying the interaction approach as a theoretical lens. Consistent with much past research, which has applied the interaction approach, we have sought to tackle the problem empirically through an in-depth case study of IKEA, the Swedish furniture retailer, collecting data from across the IKEA supply network. Interviews across several supply network tiers have enabled us to explore the relevance of interaction effects on the global sourcing process. Hence, using the interaction approach as a theoretical lens on the global Contents lists available at SciVerse ScienceDirect journal homepage: www.elsevier.com/locate/pursup Journal of Purchasing & Supply Management 1478-4092/$ - see front matter & 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.pursup.2011.11.001 n Corresponding author. Tel.: þ33 240 37 46 53. E-mail addresses: jens.hultman@fek.lu.se (J. Hultman), tjohnsen@audencia.com (T. Johnsen), rjohnsen@audencia.com (R. Johnsen), susanne.hertz@ihh.hj.se (S. Hertz). 1 Tel.: þ46 46 222 4775. 2 Tel.: þ33 240 37 46 25. 3 Tel.: þ46 36 10 18 39. Please cite this article as: Hultman, J., et al., An interaction approach to global sourcing: A case study of IKEA. Journal of Purchasing and Supply Management (2011), doi:10.1016/j.pursup.2011.11.001 Journal of Purchasing & Supply Management ] (]]]]) ]]]–]]]