Internationalization of Apparel Firm from Bangladesh to Ethiopia: A perspective of Lead buyer’s business model, institutional condition, and Supplier’s entrepreneurial capability

Rana, M. B. (Lecturer)

Activity: Talks and presentationsConference presentations

Description

International business literature tends to view internationalization process from the perspective of down-stream value chain that how firms enter foreign countries and sell products and services there. In doing so, firms need to manufacture in and source products from different countries depending on the available factor conditions, geographical and cultural proximities in relation to firm and its markets. Firms therefore need to gather market knowledge, coordinate units in different locations, and make decisions on how to manufacture and sell products that would give them competitive advantage. Since this is the dominant perspective of internationalization model (i.e. as illustrated in Uppsala stage model and OLI paradigm), extant literature overlooks supplier-firm’s internationalization from emerging economies that tends to work for multinationals in which internationalization takes place in upstream value chain of the lead buyer while that part of the value chain is considered to be downstream (i.e. sells) for supplier. We investigate a large garment supplier from Bangladesh, i.e. BDL Limited, who is a long-term supply partner of H&M and has internationalized its production plant to Ethiopia in 2014 with an aim to supply fast fashion products at a relatively cheaper price and lower lead-time to H&M. Even though BDL has been exporting garments to H&M and other multinationals since 1991, it has, for the first time, crossed national boundary for manufacturing garments in a foreign location and selling from there not only to same lead buyer- H&M but also to other global brands. Our study on internationalization of supplier firm from emerging economies brings an alternative perspective in a way that, instead of going to the nearest geographic location, DBL has gone to Ethiopia, the geographically, culturally, and institutionally distant context. While the internationalization did not follow an incremental step-wise process to gather knowledge on Ethiopian context and thereby progress, instead the decision for internationalization was driven by lead buyer H&M’s business model change, long-term buying commitment and complementary resource support, institutional incentives in host context, and DBL’s entrepreneurial capability and vision to grow globally. Our study makes two important contributions to supplier-firm’s internationalization from emerging economies. First, it demonstrates an alternative perspective of internationalization that does not completely match with the assumptions of traditional internationalization models. Thus, it inspires future researchers to investigate supplier’s internationalization process from the perspective of buyer’s business model, commitment, and nature of relationships. Second, our study unfolds an ignored area of internationalization, i.e. internationalization in upstream value chain, in which suppliers internationalization motive is stimulated by lead buyer’s degree of commitment and institutional incentives of the host country; while the actual internationalization and its sustainability lies on supplier’s entrepreneurial and managerial capability and vision for globalization.
Period5 Mar 20197 Mar 2019
Event titleSustaining Global Garment Industry 2019
Event typeConference
LocationDhaka, Bangladesh
Degree of RecognitionInternational