Investigating the strategic roles of plants in footloose and rooted networks – a statistical analysis

Matyusz, Zsolt and Nagy, Dorottya and Szigetvári, Csenge (2014) Investigating the strategic roles of plants in footloose and rooted networks – a statistical analysis. In: Eighteenth International Working Seminar on Production Economics, 2014. február 24-28., Innsbruck, Austria.

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Abstract

Ferdows (2009c) proposed a framework for global production networks. This framework is based on two product attributes, namely the uniqueness of the product and the characteristic of its production process (standard or proprietary). Two main types of production networks were introduced: footloose networks for commodity products with standard processes and rooted networks for unique products with proprietary processes. Most companies have products that are somewhat unique and have partly proprietary processes, which means that they operate close to the diagonal of this framework. Ferdows (2009a) extended this framework by adding the concept of strategic role of the plant devised by Ferdows (1997, 2009b) and proposed that high competence production units are in line with more rooted networks and vice versa. We intended to test this joint model empirically with statistical tools, which according to our knowledge has not been done previously. For the empirical validation we used IMSS-V survey data, which contains 750 companies in 21 different countries from the ISIC sectors 28-35. Data were collected through 2009 by an international network of researchers. After screening the data, 440 companies remained in our sample. By using cluster analysis (both hierarchical and k-means clustering) we were able to separate seven clusters that fit well the framework of Ferdows (2009c). Initial analysis showed that there is no significant relationship between the strategic roles of the plants and their position on the footloose-rooted scale. Further analysis is to uncover the differences of the clusters and evaluate their performance.

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