Does organizational strategic fit in supply chain relations affect the propensity for strategic change? Evidence from Taiwanese investments in China

Purpose: The purpose of this paper is to explore the relationship between the strategic fit of supply chains and the formulation of future strategies. Design/methodology/approach: This study focuses on Taiwanese investments in China and offers models based mainly on the transaction cost theory and the eclectic theory using data surveyed from 1,100 Taiwanese companies in China's Pearl River Delta (PRD) and the Yangtze River Delta (YRD). Findings: Strategic fit from the perspective of the degree of vertical integration and the degree to which a Taiwanese firm fits in the local supply chain can affect the propensity for strategic change. That is, strategic fits in internalization strategy for vertical integration and in localization strategy for fit in the local supply chain are related to how a firm formulates its future strategies. Industrial factors between technological sectors and non-technological sectors, and geographical factors between the YRD and the PRD further reveal different levels of significance in the strategic fit-change relationship. Originality/value: The paper fills some gaps. First, the study described in the paper examines strategic fit from the supply chain perspective to fill the knowledge gap regarding the significance of strategic fit in a supply chain and its impact on strategic change. To deal with the multi-dimensionality of strategic fit, this study attributes to evidence of multiple perspectives. Second, the study extends the industrial effect and the geographic effect on the strategic fit-change relationship. Third, the evidence-based findings provide academia, business practitioners and government agencies with evidence regarding foreign direct investment strategies from supply chain perspectives.