How Foreign and Domestic Firms Differ in Leveraging IT-Enabled Supply Chain Information Integration in BOP Markets: The Role of Supplier and Client Business Collaboration

Abstract

Although attractive to foreign and domestic firms, bottom-of-pyramid (BOP) markets pose unique challenges. Research suggests that IT-enabled supply chain information integration (IT-SCII) helps firms collaborate with suppliers and clients in broad business activities, operate in a unique context, and overcome salient challenges in BOP markets. Anecdotal evidence and research suggest that foreign and domestic firms have differing advantages: While foreign firms have considerable global experience, domestic firms have substantial local market knowledge. We draw on the ownership-location-internalization (OLI) framework to theorize that domestic and foreign firms leverage IT-SCII differently because of their differing ownership-based advantages in BOP markets. We hypothesize that the influence of IT-SCII on client business collaboration and the influence of client business collaboration on firm performance are stronger for domestic firms than for foreign firms. Conversely, we hypothesize that the influence of IT-SCII on supplier business collaboration and the influence of supplier business collaboration on firm performance are stronger for foreign firms than for domestic firms. We test our hypotheses in the automotive parts manufacturing BOP market comprising foreign and domestic firms in India. Partial least squares and econometric analyses of 172 firms reveal broad support for our hypotheses. By incorporating the OLI framework into IT-enabled supply chain literature, our study contributes to theory and practice by highlighting that IT-SCII has differing implications for foreign and domestic firms in BOP markets.