Cross‐border supply chain relationships: interpretive research of maquiladora realized strategies

Abstract

Maquiladora plants are foreign‐owned plants operating in Mexico and represent a pre‐North American Trade Agreement (NAFTA) mechanism to reduce tariffs on the assembly of component parts and finished products for re‐export. Maquilas first opened along the Mexican‐US border in the mid‐1960s to provide employment for Mexican workers as well as cheap labor for low‐skilled US manufacturers. Beginning in 1999 the industry started experiencing a sharp decline, which cost jobs and closed factories on both sides of the border. This study applies grounded theory to develop an initial understanding of the factors contributing to the success (and failure) of maquiladora realized strategies, that is, performed operating behaviors and the role of culture in the results these operations achieve. Broadly, these factors include internal relationships (with both management and line employees) and external relationships (both organizational and governmental). The study culminates in a series of suggestions for increasing the likelihood of success of maquiladoras and proposes the applicability of these factors in other multinational operations in labor‐intensive industries.