Supply Chain Adaptation of Finnish Companies in Chinese Institutional Environment

Within the last few decades of operations and supply chain management, the field has seen the rise of so called best practices, methods that will help supply chains obtain their business goals and gain a competitive edge. These methods were thought to be universal. This however is not always the case, as the surrounding business environment could have a significant impact on what will be effective in gaining competitive edge. Contingency theory states that the success of a supply chain is determined by both internal capabilities, as well as external context aligning. This creates a strategic fit, which is a major determinant of success. In order for supply chains to reach this strategic fit, they must adapt. As China has seen rapid growth and over the last few decades become one of the major economies of the world, Western companies have tried to establish themselves there, only to find that the Chinese market is extremely difficult to operate in. The aim of this thesis was to investigate from contingency theory perspective, what are the institutional factors that affect supply chain management of Finnish companies operating in China, and how do Finnish companies adapt their supply chains to better fit the Chinese institutional environment. A theoretical model was created for this thesis, in which supply chains possess resources, which can be combined in a meaningful manner to create capabilities. Both resources and capabilities are affected by the surrounding institutional environment, which forces supply chains to adapt in order to find a better strategic fit. A total of six Finnish managers from three large and three small companies operating in China were interviewed. The results indicated that the Chinese business environment is significantly different, than that of Finland or Western countries in general. Three institutional factors were identified: Confucian though, fast-paced business environment, and managing labor force. These three institutional factors made the relationship and delivery capabilities particularly important, as well as human resources, reputation, physical resources and technological resources. In conclusion, it was discovered that the Chinese institutional environment is heavily affected by Confucian thought, as well as the rapid market growth. These are the two most important institutional factors that shape the Chinese market. If supply chains wish to be successful in China, adaptation regarding these two institutional factors should yield good results.

Globalization of pharmaceutical R&D. Pharmaceutical R&D governance forms in People's Republic of China

Yrityksen selviytyminen ja menestyminen ovat riippuvaisia sen kyvystä innovoida, luoda tietoa ja hyödyntää tietämystä ja keksintöjä (Dunk ja Kilgore 2001). Yrityksen menestyminen erityisesti korkean teknologian alalla on siten suoraan riippuvainen sen T&T:stä, johon tehdyt investoinnit tuovat merkittäviä taloudellisia etuja yritykselle uusien tuotteiden, palveluiden ja prosessien muodossa (McEvily ja Chakravarthy 1999). Teknologinen etumatka ja sen tuotteistaminen innovatiivisiksi tarjoamiksi mahdollistaa monopolististen etujen saavuttamisen yrityksen kansainvälisessä kilpailussa (Lall 1977). Tämä kaltainen kilpailuetu voidaan saavuttaa yrityksen kyvyllä yhdistää maantieteellisesti hajautettu T&T:nsä tehokkaaksi verkostoksi (Porter 1986). Boehen (2008) mukaan T&T:n globalisoitumista voidaan johtaa eri hallintömuodoilla: T&T:n kansainvälistymisellä, T&T:n ulkomaille sijoittamisella ja T&T ulkomaille ulkoistamisella. T&T:n globalisoituminen on osa 2000-luvun taloudellista muutosta, ja sille on esitetty useita vaikuttavia tekijöitä, kuten kustannuserot, työvoimaresurssit, erityisosaamiskeskukset, paikallinen teknologia osaaminen ja kohdemarkkinoiden potentiaali (bardhan 2006; Norwood, ym. 2006; von Zedtwitz ja Gassmann 2002). Tutkimuksen on osoitettu eroavan tuotekehityksestä ja eri tekijöiden on osoitettu vaikuttavan niihin (von Zedtwitz ja Gassmann 2002; Leifer ja Triscari 1987). Samoin T&T on osoitettu olevan jatkumo perustavanlaatuisesta soveltavaan ja lääkekehityksen muodostavan vastaavan T&T jatkumon (Lall 1980; Iansiti 1993), jonka yksittäiset osat vaikuttavat sen hallintomuotoon. Tutkimus esittää eri tekijöitä voivan hyödyntää hallintomuodosta riippuen. Tätä tutkimusta varten tutkija haastatteli lääketeollisuuden johtajia Kiinassa vahvistaakseen tai hylätäkseen eri tekijöitä ja niiden suhdetta lääketeollisen T&T:n hallintomuotoihin. Markkinoiden todettiin olevan ensisijainen tekijä mutta myös kustannuserojen, insentiivien, työvoimaresurssien ja erityisosaamiskeskusten merkitys T&T:n globalisoitumiseen vaikuttavina tekijöinä vahvistettiin yhdessä perusvaatimusten ja riskitekijöiden kanssa. Tutkimuksessa vahvistetaan myös lääketeollisen T&T-jatkumon vaikutus ja esitetään viitekehys hallintomuodoille.

Globalization of pharmaceutical R&D Pharmaceutical R&D governance forms in People's Republic of China

Firm's survival and success, which are dependent on its ability to innovate, to create knowledge and to capitalize on inventions and know-how, is in essence directly linked to its R&D process (Dunk and Kilgore 2001). Especially in technology driven industries, such as the pharmaceuticals, there are significant positive returns to R&D investments through introduction of new or improved products and services (McEvily and Chakravarthy 1999). Technological lead and its transformation to innovative products as fruits of corporate R&D can be seen as monopolistic advantage that helps enterprises to compete in today’s market (Lall 1977). This competitive advantage can be derived from corporation's ability to integrate its activities across geographic locations (Porter 1986). According to Boehe (2008) globalization of R&D can executed with different governance forms: R&D internationalization, R&D offshoring or R&D offshore outsourcing. Globalization of R&D is intervened with the changes in global economy of the 21st century. Some studies argue for its influencing factors to be access to vast skilled labor pools and centers of excellence (Bardhan 2006). Other studies indicate the R&D cost differentials between countries to be the major expected benefit (Norwood et al. 2006). Von Zedtwitz and Gassmann (2002) presented benefits as divided to accessing markets and customers or to accessing local science and technology. This study proposes that based on governance form distinct factor derived benefits can be capitalized. To corroborate or refute factors and their relations on R&D globalization governance forms, an empirical study based on expert interviews of pharmaceutical directors was conducted in the People's Republic of China. The market was found to be the major influencing factor. Local requirements and adaptation were corroborated as factors connected with markets. Furthermore, influencing factors, such as labour, centers of excellence, cost, financial incentives were corroborated together with conditional and risk factors. Furthermore this research argues that the globalization of pharmaceutical R&D is dependent on the financial, scientific and operational requirements of the drug discovery stage. And thus establishes the influence of drug discovery's stages continuum on pharmaceutical R&D globalization. Finally, a R&D globalization governance form decision framework is proposed based on the frameworks presented in literature and author's corroborated empirical findings.