Santiago Chile October 18-19, 2012 Martine BoutaryMarie-Christine MONNOYER Professeur Professeur IAE Toulouse (France) ESC Toulouse (France) CRM When SMEs think about delocalization….

Is theory able to bring help to managers and hope to workers ? ECLAC 2012, M. Boutary -MC Monnoyer2

Research question ECLAC 2012, M. Boutary -MC Monnoyer3  Globalisation bring new threats and new opportunities, for all firms, but at the same time a question about relocation to find better production conditions  Up to now, relocation is more frequent for large firms than for SMEs, but new possibility appears for them  Such a strategy has to be analysed more deeply, and not only focused on the national employment consequences  We will open the relocation question on the international development of SMEs  In this paper, we have chosen to gather different theories to obtain a new framework and to improve our knowledge about the SME managers’ relocation decision.

1.Relocation, a blur concept ECLAC 2012, M. Boutary -MC Monnoyer4  Under this word :  Relocation may be partial or complete  With or without local partners  With or without a come back on the native land to finish, and to sell the product or the service  In such a situation, it is quite uneasy to obtain clear figures about investments and employment  Our choice  Relocation with local partners or subsidiaries with a come back on the native land to finish, and to sell the product or the service (Mayrhofer, 2011)

ECLAC 2012, M. Boutary -MC Monnoyer5

2. Relocation, an international way to reduce costs ECLAC 2012, M. Boutary -MC Monnoyer6  In a globalised world, technological gaps are no longer an obstacle, but distance (cultural, administrative, geographic, economic) is not a neutral variable.  Production costs are frequently deeply lower in new developed countries, but  Transaction costs may be high with new partners, in risky and emerging countries

2.Relocation, a new way to discover new markets ECLAC 2012, M. Boutary -MC Monnoyer7  In a very competitive world, the firm’s future is linked to its ability to choose the best spot at the best time.  OLI Paradigm : each firm is specific (Dunning, 1988)  Ownerships advantages : assets, technologies and experiences  Localisation : to find the best spots to produce  Internalisation : to control processes and property rights  The Uppsala internationalisation process model : step by step (Johanson et Valhne, 1977,… 2009)  Distance needs to give time to time  But globalisation reduces distance, information…  Each relocation decision seams to be a compromise between the manager’ projects and external pressures

3.What’s about SMF ? ECLAC 2012, M. Boutary -MC Monnoyer8  A SMF is characterised by proximity inside the firm (Torrès, 2003, Julien, 94; Raymond,94)  Internal relationships are easy so, they are frequent,  manager and workers know each other, and are able to achieve various tasks  This knowledge makes easier coordination, production processes may be more flexible  SMF’ strategy is often intuitive, so reactivity appears as an important key of success  A SMF is characterised by proximity outside the firm  With clients and providers Opportunities or threats ?

3.Strategies and constraints ECLAC 2012, M. Boutary -MC Monnoyer9  SMF choose niche strategy (Julien,94)  They need competitive advantages like new products more services, flexibility, specific knowledge  delocalization seams inappropriate, except…. when knowledge is no longer in the home country (Koromyslov, 2007)  SMF lack of resources (human et financial)  Product innovation, process, organisational innovation, are the way to obtain competitive advantage (Penrose, 59; Grant, 81; Tallman, 2002)

4. SMF are anchored in an environment and influenced by by institutional isomorphism ECLAC 2012, M. Boutary -MC Monnoyer10 DiMaggio and Powell, 83; Piotti, 2009  Coercive : regulation instigated by public institutions or private organisations through contracts or new standards  Normative : derives from professional expertise, experts can even aid in the creation in myths  Mimetic : important under conditions of uncertainty, the legitimacy providers attribute a particular status to the public discourse

4. SMF are anchored in an environment and influenced by institutional isomorphism ECLAC 2012, M. Boutary -MC Monnoyer11  Imitation may be a strategy  Rationality : why do not use the analysis done by others  Legitimacy : we have the same competitors, so look at what the others firms are doing (Peteraf et al, 97)  Justification :  A dependant firm may not choose its own way  An independent firm which is imitating its competitors finds a solution to its moral constraints (Caroll, 91)

To conclude ECLAC 2012, M. Boutary -MC Monnoyer12 Relocation : a non linear decisional process This theoretical corpus: :: A base to analyse managerial decision

ECLAC 2012, M. Boutary -MC Monnoyer13 Thank you,