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Article
Publication date: 6 March 2007

Marcos André Mendes Primo, Kevin Dooley and M. Johnny Rungtusanatham

Manufacturing firm reaction to a supply failure is important because buyer dissatisfaction may induce related development or switching costs. The purpose of this paper is…

Abstract

Purpose

Manufacturing firm reaction to a supply failure is important because buyer dissatisfaction may induce related development or switching costs. The purpose of this paper is to ask: what is the impact of a supply failure and recovery on manufacturing firm dissatisfaction with the supplier?

Design/methodology/approach

A case study approach is used based on interviews of key informants, examining four US manufacturers classified by industry type (aerospace and electronics) and firm size (large and small).

Findings

Manufacturing firm dissatisfaction increases relative to the accumulated impact of the supply failure, and is reduced when the manufacturer has slack to absorb the failure or shares blame for it. The supplier's failure recovery reduces dissatisfaction to the extent that it demonstrates the supplier's long‐term commitment to the relationship. The findings indicate that attributes of the failure, the failure recovery, and context must be taken into account when considering how a supplier's recovery may ameliorate the negative impact of a supply failure.

Research limitations/implications

The results are constrained by the number of cases we collected and by the limitations of retrospective interviews.

Practical implications

The findings suggest that manufacturers can over‐react to a failure because of the perceptual nature of risk, or under‐react to a failure because of excess slack or switching costs.

Originality/value

This paper adds significant detail to our understanding of how supplier failure and recovery impact a manufacturer's dissatisfaction with a supplier, the antecedent to costs involved with supplier development or switching.

Details

International Journal of Operations & Production Management, vol. 27 no. 3
Type: Research Article
ISSN: 0144-3577

Keywords

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Article
Publication date: 18 April 2016

Frank L. DuBois and Marcos Andre Mendes Primo

State capitalism is an economic model that relies on the role of a strong central government to support chosen firms and industries with subsidies, tax benefits and other…

Abstract

Purpose

State capitalism is an economic model that relies on the role of a strong central government to support chosen firms and industries with subsidies, tax benefits and other advantages to which non-favored firms or industries do not have access (Bremmer, 2010). From an economic development perspective state capitalism is often used to redirect economic activity to underdeveloped regions (Wickham, 2009; Chobanyan and Leigh, 2006; Porter, 2008). The purpose of this paper is to examine the case of the Brazilian shipbuilding to illustrate the use of state capitalism to direct economic activity.

Design/methodology/approach

Using Porter’s diamond factor model the authors analyze the development of an economic cluster focussed on the shipbuilding industry in northeastern Brazil. Using interviews with company executives and archival information, the authors profile the investments and incentives that the government has made in this region with particular attention to the mechanisms and policy directives designed to support local involvement in cluster activity.

Findings

The authors find that the Brazilian shipbuilding industry offers a unique perspective on the role that governments play in the inducement of economic activity. The authors document the challenges that confront the local enterprise in meeting the requirements of the state controlled buyer and the difficulties associated with developing a local supplier base and finding a qualified workforce. The authors conclude with comments with regard to the applicability of this model to economic development activity in other country contexts.

Research limitations/implications

This research adds to the body of literature on the role of governments in the creation of economic clusters.

Practical implications

Economic development in emerging markets is often associated with strong government intervention. The authors use the Brazilian shipbuilding industry to illustrate the role of a state owned enterprise in facilitation of economic development.

Social implications

Some countries may suffer from what has been known as the “resource curse,” that is, the misallocation of resource wealth into non-productive activities. In this paper, the authors illustrate and attempt by the Brazilian government to use this wealth to create employment opportunities in an underdeveloped region of the country.

Originality/value

Emerging markets are challenged in developing viable enterprises that are competitive in global markets. Most research on the development of industrial clusters is focussed on developed markets. These markets do not have to confront the same challenges found in emerging markets. The research illustrates these challenges and the efforts that may be made to surmount them.

Details

International Journal of Emerging Markets, vol. 11 no. 2
Type: Research Article
ISSN: 1746-8809

Keywords

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