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Corporate Downsizing and the Rise of ‘Problem-solving Suppliers: the Case of Hadco Corporation

In re-examining the supply chain relationships of American firms, investigators usually confine their studies to the outsourcing strategies of original equipment manufacturers (OEMs). A few authors meanwhile have examined how small and medium size manufacturers (SMMs) fit within the vertical supply chain. This study explores how these suppliers develop new opportunities for increasing the volume and breadth of product which they source to OEMs and how these SMMs develop ways to collaborate with their OEM customers and manage appropriate technologies. The study develops a strategic supplier typology with transaction cost economics providing the conceptual basis and a survey sample of 200 SMMs offering the relevant data. The focus is on Hadco Corporation, an electronic parts manufacturer, that has taken special advantage of OEM strategic outsourcing decisions within the computer industry. Conclusions support the general proposition that structure follows strategy. Survival in a strategic outsourcing environment requires suppliers to hone competency skills and organizational S forms that allow for adaptation and quick customer demand response through inter-organizational linkage, networks, partnerships or strategic alliances.