2015 Volume 4 Issue 1 Pages 114-119
Manufacturers in Japan were hurt by the strong yen after the 2008 financial crisis and then by the 2011 Great East Japan Earthquake. Manufacturers rushed to establish new sourcing strategies such as relocation of production facilities overseas, domestic production shifting, and restructuring of global procurement systems. As a result, gemba capabilities were devastated via the hollowing out of manufacturing functions. However, the 2012 adoption of new economic policies, popularly known as Abenomics, has had a positive influence on the Japanese economy, which has quickly recovered. The present paper focuses on the period from 2011 to 2014, and attempts to evaluate the sourcing strategies that were undertaken by small and medium-sized enterprises (SMEs) from the viewpoint of dynamic capabilities theory. First, to clarify the recent economic turbulence as it compares to past turbulence, we conduct text-mining analysis of 4,067 newspaper articles dated from 1980 to 2014, extracted using the key word “hollowing out”. Second, after a literature review of dynamic capacities studies, we propose an empirical model to examine the relationships between business environment dynamism, sourcing strategy, absorptive capacity (AC), gemba competitiveness (procurement, manufacturing, and marketing), and performance. Third, we conduct a questionnaire survey targeting 1,333 manufacturers. The result of the analysis shows how sourcing strategy affects business and organizational performance through maintaining current AC and building new AC. Lastly, our analysis indicates the co-existence of two types of SMEs: one employs a global strategy to reconfigure overall competitiveness and the other focuses on the domestic market to strengthen existing manufacturing capabilities.