Knowledge that Transforms

The paper combines perspectives from international business and manufacturing to examine multinational plant location decisions. The location choice in manufacturing is between integrated and independent plants, while the international choice is between a foreign and domestic plant relative to their headquarters' country. The study empirically investigates whether these choices have different plant location determinants using data from a survey of plant managers of large, multinational firms. We find more evidence that the manufacturing choices benefit from consideration of international business issues than vice versa. However, managers rank determinants associated with manufacturing strategy considerably higher than those associated with intemational business.

This study uses survey data on several hundred automotive suppliers in North America to evaluate the determinants of inventory levels in high‐volume discrete parts manufacturing. We assess the magnitude of raw materials, work‐in‐process, and finished goods inventories held at automotive supply plants. Inventories are shown to be jointly determined by technological and managerial factors in a manner roughly consistent with classical inventory theory. Several categories of managerial practices are found to be important. Low inventories are linked to employee problem solving and frequent communication with customers. More unexpectedly, we find the absence of inventory differences between U.S.‐owned and Japanese‐owned plants in North America. This contrasts with substantial differences in inventory holding between US plants and those in Japan.