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The Strategic Nexus of Offshoring and Outsourcing Decisions

Published on Dec 1, 2010in Journal of Management Studies 5.84
· DOI :10.1111/j.1467-6486.2010.00947.x
Ram Mudambi42
Estimated H-index: 42
(TU: Temple University),
Markus Venzin9
Estimated H-index: 9
(Bocconi University)
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Abstract
One important effect of the increasing integration of the world economy is the rising importance of possibilities to offshore and outsource value-creating activities. In many industries, firms are able to disaggregate their value chains into smaller parts. This process allows for a less path-dependent approach to the firm's ideal location profile (through offshoring and relocation) and control strategies (through outsourcing). This article argues that optimal decisions regarding individual processes recognize the linkages of these processes with the firm's entire value chain. The article explores the magnitude, sequence, and dynamics of interdependent decisions regarding the location and control of various parts of the value chain. By using case illustrations from the mobile handset and financial services industries, this article provides a novel perspective on the disintegration, mobility, and reintegration of value chain activities in a global context.
  • References (77)
  • Citations (180)
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References77
Newest
Published on Mar 1, 2011in Journal of Management Studies 5.84
Klaus E. Meyer41
Estimated H-index: 41
(University of Bath),
Ram Mudambi42
Estimated H-index: 42
(TU: Temple University),
Rajneesh Narula37
Estimated H-index: 37
(University of Reading)
Some scholars have argued that globalization will reduce the importance of local contexts. We argue instead that despite the increased frequency and intensity of interactions across local contexts, they continue to retain their distinctive differences. MNEs face growing challenges in managing the complexity of these interactions, because they must manage multiple embeddedness across heterogeneous contexts at two levels. First, at the MNE level, they must organize their networks to exploit effect...
518 Citations Source Cite
Published on Dec 1, 2010in Journal of Management Studies 5.84
Susan M. Mudambi17
Estimated H-index: 17
(TU: Temple University),
Stephen Tallman25
Estimated H-index: 25
(UR: University of Richmond)
Outsourcing knowledge and innovation activities offer cost savings and superior performance, but can also put a firm's unique resources and capabilities at risk. Characterizations of outsourcing as a make-or-buy decision do not fit well with decisions on knowledge process outsourcing (KPO). KPO is a make-or-ally decision, as firms seek a governance structure that will both protect and leverage their strategic knowledge assets, with the final decision often coming down to a choice between differe...
150 Citations Source Cite
Published on Dec 1, 2010in Journal of Management Studies 5.84
Farok J. Contractor27
Estimated H-index: 27
(RU: Rutgers University),
Vikas Kumar29
Estimated H-index: 29
(USYD: University of Sydney)
+ 1 AuthorsTorben Pedersen45
Estimated H-index: 45
(CBS: Copenhagen Business School)
In the largest sense, global strategy amounts to (1) the optimal disaggregation or slicing of the firm's value chain into as many constituent pieces as organizationally and economically feasible, followed by (2) decisions as how each slice should be allocated geographically (‘offshoring’) and organizationally (‘outsourcing’). Offshoring and outsourcing are treated as strategies that need to be simultaneously analysed, where just ‘core’ segments of the value chain are retained in-house, while oth...
314 Citations Source Cite
Published on Dec 1, 2010in Journal of Management Studies 5.84
Yuan Li33
Estimated H-index: 33
(SJTU: Shanghai Jiao Tong University),
Zelong Wei10
Estimated H-index: 10
(Xi'an Jiaotong University),
Yi Liu27
Estimated H-index: 27
(SJTU: Shanghai Jiao Tong University)
From the perspective of the vendors in emerging countries (VECs), this article investigates how the vendor firms in China respond to cross-border outsourcing trends differently by examining the different effects of entrepreneurial orientation (EO) and market orientation (MO), as well as their interaction, on local vendors' acquisition of knowledge from foreign outsourcers in cross-border outsourcing. We find that the knowledge acquisition of the vendors positively affects firm performance. Thus,...
84 Citations Source Cite
Published on Dec 1, 2010in Journal of Management Studies 5.84
Christoph Grimpe17
Estimated H-index: 17
,
Ulrich Kaiser18
Estimated H-index: 18
(UZH: University of Zurich)
The outsourcing of research and development (R&D) activities has frequently been characterized as an important instrument to acquire external technological knowledge that is subsequently integrated into a firm's own knowledge base. However, in this paper we argue that these ‘gains’ from R&D outsourcing need to be balanced against the ‘pains’ that stem from a dilution of firm-specific resources, the deterioration of integrative capabilities and the high demands on management attention. Based on a...
273 Citations Source Cite
Published on Jan 1, 2010in Journal of Management Studies 5.84
Mehmet Demirbag25
Estimated H-index: 25
(University of Sheffield),
Keith W. Glaister31
Estimated H-index: 31
(University of Sheffield)
This paper examines empirically the determinants of offshore location choice between country clusters. Based on a dataset of 1722 R&D projects by MNEs located in developed and emerging countries, we examine the impact of home and host country, industry, and firm level variables on choice of location. We draw on the extended OLI paradigm to develop our hypotheses. Using the EU15 as a base group, a multinomial logit model is estimated between the regions of USA&Canada, Eastern Europe&Russia, emerg...
131 Citations Source Cite
Published on Aug 1, 2009in Journal of International Business Studies 7.72
Jonathan P. Doh41
Estimated H-index: 41
(Villanova University),
Kraiwinee Bunyaratavej8
Estimated H-index: 8
(Wesley College),
Eugene D. Hahn15
Estimated H-index: 15
(SU: Salisbury University)
In this paper we explore the question of why firms offshore particular services to specific geographic locations. We draw on research related to the unique characteristics of services in trade and commerce, and more recent analyses of the transnational unbundling and spatial dispersion of business processes. We move beyond a simple assessment of the cost sensitivity or relative sophistication of offshoring services and develop a typology emphasizing the degree to which offshoring services activi...
166 Citations Source Cite
Published on Jul 1, 2009in Asia Pacific Business Review 0.90
Andrew Delios37
Estimated H-index: 37
(NUS: National University of Singapore),
Paul W. Beamish59
Estimated H-index: 59
(UWO: University of Western Ontario),
X. Zhao1
Estimated H-index: 1
(NUS: National University of Singapore)
The nature of Japanese firms' international activity in China underwent substantive change between 1995--2006. Japanese companies now compete in many more regions in China and have shifted their investment strategies in various provinces and municipalities to reflect new competitive realities. This creates substantial opportunities and challenges to scholars and practitioners alike. The challenge is to develop a nuanced understanding of sub-national variations in Japanese firms' strategies in Ch...
8 Citations Source Cite
Published on Jun 1, 2009in Journal of International Management 2.83
Masaaki Kotabe48
Estimated H-index: 48
(TU: Temple University),
Ram Mudambi42
Estimated H-index: 42
(TU: Temple University)
67 Citations Source Cite
Cited By180
Newest
Michael J. Maloni16
Estimated H-index: 16
(KSU: Kennesaw State University),
James Anthony Swaim3
Estimated H-index: 3
(KSU: Kennesaw State University)
+ 1 AuthorsJames Wermert (KSU: Kennesaw State University)
Abstract The current escalating global tariff war reflects public concern with offshoring associated with perceived loss of jobs and reduced national competitiveness. Accordingly, offshoring represents a crucial yet complex topic in business education as existing literature emphasizes how managers struggle to make objective offshoring decisions. With limited available pedagogical research however, educators are not fully aware of how students perceive offshoring and process offshoring decisions....
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Published on May 1, 2019in Journal of World Business 5.79
Alessandro Ancarani13
Estimated H-index: 13
,
Carmela DiMauro11
Estimated H-index: 11
,
Francesco Mascali
Abstract An analysis of the competitive priorities that may lead backshoring companies to adopt new technologies is developed and tested using secondary data from 495 relocation initiatives to Europe. Findings suggest that backshoring is associated with the adoption of Industry 4.0 when the firm’s priorities are high quality and the reduction of costs tied to non-conformance. Backshoring initiatives prioritizing the reduction of direct costs or responsiveness are not significantly tied to Indust...
1 Citations Source Cite
Published on Nov 1, 2018in Journal of Purchasing and Supply Management 3.09
Li Wan (University of Udine), Guido Orzes10
Estimated H-index: 10
(Free University of Bozen-Bolzano)
+ 2 AuthorsGuido Nassimbeni22
Estimated H-index: 22
(University of Udine)
Abstract The Entry Mode (EM) choice is a fundamental issue in reshoring initiatives. Despite several authors have studied the determinants of offshoring EM, no study has investigated so far the factors affecting the reshoring EM and its relation with the offshoring EM. The purpose of this paper is to examine which factors influence entry mode choice in reshoring initiatives. We develop a conceptual framework that explains the reshoring EM in terms of country-, industry-, firm- and project-specif...
3 Citations Source Cite
Published on Mar 1, 2019
Rongyao Zhang (ODU: Old Dominion University), Kan Wang (HUST: Huazhong University of Science and Technology)
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Published on Feb 1, 2019in Journal of Management 9.06
Vili Lehdonvirta20
Estimated H-index: 20
,
Otto Kässi2
Estimated H-index: 2
+ 2 AuthorsMark Graham23
Estimated H-index: 23
(University of Oxford)
Grants from the International Development Research Centre (107384-001) and the European Research Council (639652).
3 Citations Source Cite
Published on Jan 1, 2019in Journal of Management Studies 5.84
Nina Rosenbusch8
Estimated H-index: 8
(WLU: Wilfrid Laurier University),
Michael Gusenbauer1
Estimated H-index: 1
(Johannes Kepler University of Linz)
+ 2 AuthorsKlaus E. Meyer7
Estimated H-index: 7
(UWO: University of Western Ontario)
Innovation offshoring (IO) has become a widespread management practice. Yet, evidence on the performance implications is inconsistent, and scattered across disciplines and contexts. We argue that the benefits firms can derive from IO depend on the institutional environment at home. Drawing on recent work on institutional theory in international business, we explore institutions that facilitate reverse knowledge transfer and/or institutional arbitrage with respect to innovation-related activities...
1 Citations Source Cite
Published on Dec 1, 2018
Simona Iammarino26
Estimated H-index: 26
(LSE: London School of Economics and Political Science)
The transformations in the worldwide division of labour brought about by globalisation and technological change have shown an unintended negative effect, particularly evident in advanced economic systems: uneven spatial distribution of wealth and rising within-country inequality. Although the latter has featured prominently in recent academic and policy debates, in this paper we argue that the relevance of connectivity (here proxied by foreign capital investments, FDI) for regional economic deve...
1 Citations Source Cite
Published on Dec 1, 2018in Management International Review 2.69
Niccolò Pisani5
Estimated H-index: 5
(UvA: University of Amsterdam),
Joan E. Ricart17
Estimated H-index: 17
(University of Navarra)
Developed-country multinationals (DMNEs) have increasingly engaged in the practice of offshoring innovation to emerging countries. In this article, we leverage and extend the institution-based view to further our understanding of this phenomenon. Specifically, we examine the differential effects of formal and informal institutions on DMNEs’ strategic decision to offshore innovation activities aimed at augmenting (versus exploiting) home-base-knowledge to emerging countries. Concerning formal ins...
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Published on Nov 29, 2018in Management Decision 1.96
Jun-You Lin (National Open University of Nigeria)
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