5. Results Discussion And Conclusion
5.6. Limitation and Future Research
The research had some limitations in its analyses. One of them was the small sample size of the survey (36 respondents), compared to the population of the online sourcing communities, of frequency survey and the case of two companies about the importance and
52 impact of the risks. Therefore, it was not possible to use powerful statistical tools for its analysis and testing; it also affected the genaralisability of our findings.
As this was an online survey posted in online forums and discussions, it was not possible to structure and filter who would reply to the research. The data was limited mostly by American and Brazilian managers/companies, as the research was conducted in English and in Portuguese, for conventionality reasons. Also, there was an unpredictable factor: most of the respondents were overwhelmingly from direct purchase sourcing companies (24 out of the 36 replies). Small companies were more predominant than medium and big sized
companies. Therefore, different contexts and environmental settings may have generated different findings. Future research may focus on replicating online surveys in similar communities and expand the number of survey participants and consequently expand the types of companies of the respondents for the survey, giving a more robust case for
quantitative analysis, in order to verify the generalibility of the study findings (Wright 2005).
Another limitation derived from the online survey format and its low response rate was that part of the original research about importance of risks was also survey based, but due to a lack of participants, it was changed to interview-based. However, the use of survey tool for the importance research would be better suited to gain empirical data, and future research may address this limitation.
Also, the inclusion of a third factor, the reason that these risks occur, could be incorporated, thus giving a more comprehensive and complete knowledge of the sourcing risks of China. For instance, Enderwick (2009) argues that suppliers often work on minute profit margins, which raises the incentive for opportunistic behaviour, particularly cost cutting, and it may result in lower expected quality levels (quality fade). Future research could address the co-relation between the cost cutting practices in Chinese sourcing companies and quality fade.
53 Other studies may also focus on the difference between sourcing in China and
sourcing in other countries, such as Vietnam, Mexico and India, if the risk perception is similar between countries. In fact, one of the online comments received in Linkedin during the survey argued that the risks and challenges in China should be same as other low-cost sourcing countries.
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62 APPENDIX
Online Survey Questionnaire: Risks of sourcing with Chinese suppliers
“How many times have you encountered the adversity described in the questions below, in your experience doing business in Mainland China. “ (The original questionnaire was hosted in Google Docs and was available in English and Portuguese)
Section 1 – Frequency of sourcing risks in China
Respondents were requested to rate the frequency of each different risk, according to their experience and opinion.
63
Risk Frequency
Risks of sourcing in China
1 - Never 2 3 4 5 - Very
frequently 1. Extras costs that arose during production
2.Supplier failed to meet quality requirements/standards, due to lack of
capabilities
3. Company's Staff start to be unmotived or fearful of layoffs, because of outsourcing
activities
4. Bad contract terms that led to future
problems and difficulties
5. Entering into a long-term contract with suppliers that diminish the company's
flexibility
6. Leakage of confidential information due
to openness and information exchange
7. Transferring control of resources to supplier, which become hard to reverse
back when relationship ceases
8. Changes in market conditions make
sourcing not beneficial
9. Risk associated with social stability, and social, cultural language, and customs differences between organization and vendor/supplier
10. Chinese government laws and
regulations that are hard to comply with
11. Quality fade: loss of product quality
over time
12. Fraud: the sourcing supplier does not
deliver or does not exist
13. Constant delays on the delivery time
64 Section 2 – Background
Industry / Sector
Company's country of origin
Suppliers’ location in China
Sourcing type in China (How do you source your products from China) – respondents were requested to select 1 of the following options:
1. Direct purchasing
2. Use of intermediaries (trading/ consulting company) 3. Direct investment and partnership in China (WFOE / JV)
Size of your company– respondents were requested to select 1 of the following options:
1. Micro (up to 19 employees) 2. Small (from 20 to 99 employees) 3. Medium (from 100 to 499 employees) 4. Big (over 500 employees)