The navigation of SMEs’ International Vendor Selection

Abstract

In today’s fierce competitive environment, offshore outsourcing is a main stream practice in global business operations. In this context, vendor selection is a critical factor affecting outsourcing performance. It has furthermore been determined as a multiple criteria decision making problem. Despite a large set of literature, previous studies of vendor selection have predominantly focused on factors regardless the firm size. However, an increasing number of small and medium-sized enterprises (SMEs) have participated in selecting foreign vendors during last decades. Nevertheless, rather less is known about this phenomenon and especially on what basis SMEs select offshore vendors. The current paper aims to investigate SMEs’ vendor selection by looking into the three dimensions: driving forces, vendor selection criteria and vendor selection methods. A multiple-case study and an explorative research approach are applied in this paper. Empirical findings are compared and analyzed against the results found in literature review. Evidently, the qualitative research indicates that SMEs prefer to focus on core selection criteria and simple methods rather than complex statistical models. Consequently, a framework for SMEs’ effective vendor selection is proposed and analyzed.