SMEs and global supply chains in the French agricultural machinery sector

Over the last 40 years globalisation has had a major impact on small and medium sized enterprises (SMEs) in traditional manufacturing sectors, located in developed countries. In response to increasingly competitive domestic markets, many of these firms are now engaged in supplier and customer relationships internationally, in order to expand sales and take advantage of lower sourcing costs. This transition from predominantly local to global connections and the different ways in which SMEs manage their global relationships is the focus of this research. It was decided to confine the study to a single manufacturing sector, so that any differences between firms’ experiences are not driven by the industry, but by other possible factors. Therefore the research question is: how do SMEs in the French agricultural machinery sector manage their global supply chains? Research was carried out into twelve SMEs in the agricultural machinery sector in north-west France. The qualitative research was broken down into three stages: exploratory, which included a range of professionals with knowledge of the sector including SMEs, larger firms and historians; explanatory, which followed a grounded theory methodology to develop new thinking about SMEs and global supply chains based on the findings, which were subsequently fed back to a number of professionals in a final stage and led to further discussion.

Uniformity in approaches to managing global supply chains was not found, and differences even between companies in the same product speciality were noted. The challenge of developing business relationships with suppliers and distributors against a background of power asymmetries and cultural distance in the global supply chain was met by the SMEs through the use of a variety of approaches. Out of the research has emerged a conceptualization of the challenges that SMEs face in relation to managing global supply chains: a governance, control and power (GCP) model that highlights the main responses and priorities for SMEs in terms of managing supply chain relationships and controlling flows of materials and information.