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The Attention Stimulus of Cultural Differences in Global Services Sourcing

Published on Feb 1, 2015in Journal of International Business Studies 7.72
· DOI :10.1057/jibs.2014.30
Carine Peeters12
Estimated H-index: 12
(Katholieke Universiteit Leuven),
Catherine Dehon13
Estimated H-index: 13
(ULB: Université libre de Bruxelles),
Patricia Garcia-Prieto4
Estimated H-index: 4
(ULB: Université libre de Bruxelles)
Cite
Abstract
Contrasting with extant research centred on the organizational challenges of sourcing services in culturally distant countries, we show that cultural differences between home and host countries do not prevent firms from achieving their cost savings targets. Instead, the effect is positive, both for the captive and outsourcing governance models. Using insight from social psychology research and the theory of organizations, we build the argument that the positive effect is due to cultural differences providing an attention stimulus for decision-makers to thoroughly gather and process information on the costs and benefits of global sourcing, thereby reducing the risk of cost estimation errors. The empirical validation uses a data set of 624 global services sourcing initiatives obtained from the Offshoring Research Network, complemented with multiple external sources of cross-country data on cultural differences, languages, geographic distance and education levels. The main contribution of the article is to add much needed nuance to the otherwise monotonic negative view of cultural differences in extant global sourcing literature. Moreover, the original theoretical framework and resulting attention stimulus argument we develop open new avenues for research on the consequences of cultural differences in international business operations more broadly.
  • References (65)
  • Citations (16)
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References65
Newest
Published on Mar 1, 2014in Journal of International Management 2.83
Julien Gooris2
Estimated H-index: 2
(ULB: Université libre de Bruxelles),
Carine Peeters12
Estimated H-index: 12
(ULB: Université libre de Bruxelles)
This paper studies the effect of home–host country distance on the choice of governance mode in service offshoring. Using a Transaction Cost Economics approach, we explore the comparative costs of the hierarchical and contractual models to show that different dimensions of distance (geographic, cultural and institutional), because they generate different types of uncertainties, impact offshore governance choices in different ways. Empirical results confirm that, on the one hand, firms are more l...
Published on Jan 1, 2014in Management international
Carine Peeters12
Estimated H-index: 12
(ULB: Université libre de Bruxelles),
Sébastien Point8
Estimated H-index: 8
('ENS Paris': École Normale Supérieure)
+ 1 AuthorsAndrés Davila3
Estimated H-index: 3
('ENS Paris': École Normale Supérieure)
La delocalisation d’activites a l’etranger est une pratique de plus en plus repandue dans les entreprises, avec pour consequence d’accroitre les differences culturelles auxquelles les entreprises sont confrontees. L’analyse qualitative de 76 articles sur la periode 1996-2009 provenant de 26 revues internationales de gestion montre que la culture est uniquement presentee comme une menace pour les entreprises qui delocalisent, et ce, en depit d’une litterature sur la diversite nettement plus posit...
Published on Dec 1, 2013in Journal of International Management 2.83
Federica Ceci7
Estimated H-index: 7
,
Andrea Prencipe25
Estimated H-index: 25
(Libera Università Internazionale degli Studi Sociali Guido Carli)
We submit that offshoring research focused mostly about an empirical phenomenon and extending our understanding about it, rather than expanding our understanding of the underlying theory as illuminated by empirical evidence. To theoretically frame the implications of offshoring strategy and practice for organizational design, this paper centers on the interplay between coordination and geographical distance. Distance strains the traditional approaches to coordination – i.e. decomposability and c...
Published on May 1, 2013in Strategic Management Journal 5.57
Marcus Møller Larsen9
Estimated H-index: 9
(CBS: Copenhagen Business School),
Stephan Manning19
Estimated H-index: 19
(University of Massachusetts Boston),
Torben Pedersen45
Estimated H-index: 45
(CBS: Copenhagen Business School)
This study investigates estimation errors due to hidden costs — the costs of implementation that are neglected in strategic decision-making processes — in the context of services offshoring. Based on data from the Offshoring Research Network, we find that decision makers are more likely to make cost-estimation errors given increasing configuration and task complexity in captive offshoring and offshore outsourcing, respectively. Moreover, we show that experience and a strong orientation towards o...
Published on Jan 1, 2013in Journal of International Business Studies 7.72
Yuping Zeng3
Estimated H-index: 3
(SIUE: Southern Illinois University Edwardsville),
O. Schenkar44
Estimated H-index: 44
(Max M. Fisher College of Business)
+ 1 AuthorsSangcheol Song10
Estimated H-index: 10
(""St. Joe's"": Saint Joseph's University)
In a departure from prior studies presuming a beneficial experience effect in foreign direct investment (FDI), the present paper examines the conditions under which FDI experience may actually harm subsequent subsidiaries. We argue that multinational enterprises (MNEs) may draw erroneous inferences and learn incorrectly from their early expansions when new to a dissimilar culture, because their learning abilities are eroded by cultural differences. We posit that the characteristics of an MNE's i...
Published on Sep 1, 2011in Organization Science 3.26
William Ocasio24
Estimated H-index: 24
(NU: Northwestern University)
Organizational theory and research has increased attention to the determinants and consequences of attention in organizations. Attention is not, however, a unitary concept but is used differently in various metatheories: the behavioral theory of the firm, managerial cognition, issue selling, attention-based view, and ecology. At the level of the brain, neuroscientists have identified three varieties of attention: selective attention, executive attention, and vigilance. Attention is shaped by bot...
Published on Aug 1, 2011in Strategic Management Journal 5.57
Kannan Srikanth9
Estimated H-index: 9
(Indian School of Business),
Phanish Puranam25
Estimated H-index: 25
(LBS: London Business School)
We investigate coordination strategies in the remote delivery of business services (i.e. Business Process Offshoring). We analyze 126 surveys of offshored processes to understand both the sources of difficulty in the remote delivery of services as well as how organizations overcome these difficulties. We find that interdependence between offshored and onshore processes can lower offshore process performance. Investment in coordination mechanisms such as modularity, ongoing communication and gene...
Published on May 1, 2011in Journal of International Business Studies 7.72
Runjuan Liu7
Estimated H-index: 7
(U of A: University of Alberta),
Dorothee J. Feils5
Estimated H-index: 5
(U of A: University of Alberta),
Barry Scholnick12
Estimated H-index: 12
(U of A: University of Alberta)
The “tradability revolution” in services has led to a dramatic expansion of offshore outsourcing of services, allowing firms to take advantage of lower production costs in foreign countries. However, production costs alone cannot explain the location determinants of offshore outsourcing of services. In this paper, we argue that minimizing transaction costs is also an important determinant of the location of offshore outsourcing of services. We empirically analyze characteristics of services and ...
Published on Apr 1, 2011in Journal of International Business Studies 7.72
María Jesús Nieto16
Estimated H-index: 16
(ISCIII: Instituto de Salud Carlos III),
Alicia Rodríguez5
Estimated H-index: 5
(ISCIII: Instituto de Salud Carlos III)
The offshoring of knowledge services has become a phenomenon of increasing importance for firms, but many of its implications are yet to be discussed thoroughly. This paper analyzes whether R&D offshoring contributes to enhancing firms’ innovation capabilities. Specifically, the study distinguishes between two governance models of offshoring – captive offshoring and offshore outsourcing – and two types of innovation outcomes – product and process innovations. We suggest that R&D offshoring has d...
Published on Feb 1, 2011in Management International Review 2.69
Thomas Hutzschenreuter16
Estimated H-index: 16
(WHU - Otto Beisheim School of Management),
Arie Y. Lewin38
Estimated H-index: 38
(Duke University),
Stephan Dresel2
Estimated H-index: 2
(WHU - Otto Beisheim School of Management)
This paper contributes to the emerging debate about offshoring of support functions in international business research. We analyze the success of offshoring activities and focus on the time a firm takes to achieve its expected cost savings and its targeted service level. We hypothesize that firm-specific offshoring experience, publicly available knowledge on offshoring, path dependencies, cultural distances, and the chosen governance mode influence the success of offshoring activities. An analys...
Cited By16
Newest
Harri Lorentz11
Estimated H-index: 11
(UTU: University of Turku),
Sini Laari3
Estimated H-index: 3
(UTU: University of Turku)
+ -3 AuthorsKari Tanskanen13
Estimated H-index: 13
(Aalto University)
Abstract The focus of purchasing and supply management (PSM) is no longer just on short-term cost savings, but is also on long-term goals such as innovation and renewal. Because of this new dual role PSM needs to balance the short-term goals referred to as exploitation, and the long-term strategic goals referred to as exploration. However, developing in-depth knowledge of the supply markets in order to achieve PSM ambidexterity is challenging, as it requires much managerial attention that is lim...
Published on Jun 1, 2019in Industrial Marketing Management 4.78
Jay Weerawardena21
Estimated H-index: 21
(UQ: University of Queensland),
Sandeep Salunke4
Estimated H-index: 4
(QUT: Queensland University of Technology)
+ 2 AuthorsPeter W. Liesch23
Estimated H-index: 23
(UQ: University of Queensland)
Abstract We examine the role of learning firm-specific advantages of small and medium size (SME) service firms in their internationalization. We focus on technical services that have received limited scholarly attention. We theorize that innovative born global firms build a set of capabilities in market, internal and relational learning that will provide new knowledge configurations to undertake technical and administrative innovations. Adopting an organizational sub-system view, we posit that m...
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...
Published on Aug 1, 2018in Strategic Management Journal 5.57
Stephan Manning19
Estimated H-index: 19
(University of Massachusetts Boston),
Silvia Massini15
Estimated H-index: 15
(Manchester Institute of Innovation Research)
+ 1 AuthorsArie Y. Lewin38
Estimated H-index: 38
(Duke University)
Research Summary: This article studies how the logic of firm governance choices varies as a function of the time of adoption of particular sourcing practices. Using data on the diffusion of global business services sourcing as a management practice from early experiments in the 1980s through 2011, we show that the extent to which governance choices are affected by process commoditization, availability of external service capabilities, and past governance choices depends on whether firms are earl...
Published on May 15, 2018in Cogent Business & Management
Valtteri Kaartemo3
Estimated H-index: 3
(UTU: University of Turku)
AbstractThis article analyses and develops the concept of international service based on a review of 407 articles published in high-ranking international business and service research journals. The review confirms that usage of the key concept of international service is ambiguous, and a new definition is proposed, characterising international service as a value co-creation process between two or more resource-integrating actors that do not share influential institutional arrangements because of...
Published on May 14, 2018in International Marketing Review 3.45
Melanie P. Lorenz4
Estimated H-index: 4
(UT: University of Toledo),
Jack Clampit4
Estimated H-index: 4
(UA: University of Alabama),
Jase R. Ramsey8
Estimated H-index: 8
(SLU: Saint Louis University)
Purpose A dilemma exists in that many view offshoring as a tradeoff between cost efficiency and innovation. The purpose of this paper is to reconcile this dilemma by showing how and why offshoring to institutionally distant host countries may result in innovation. The authors introduce an institutional lens in order to understand how offshoring to institutionally distant locales affects innovation outcomes of multinational enterprises. This lens is aimed to provide an analytical tool that is les...
Published on Feb 1, 2018in Journal of International Management 2.83
Niccolò Pisani5
Estimated H-index: 5
(UvA: University of Amsterdam),
Alan Muller7
Estimated H-index: 7
(UG: University of Groningen),
Paula Bogăţan (UvA: University of Amsterdam)
The factors that determine firms' levels of internationalization remain a focal area of international business research. Within this research stream, studies building on the upper echelons theory have investigated the influence of the demographic characteristics of the top management team (TMT) on firms' international expansion. However, the literature to date has overlooked the TMT's overall degree of internationalization as a key driver of firm-level internationalization. In our paper, we argu...
Published on Feb 1, 2018in International Business Review 3.64
Ferran Vendrell-Herrero14
Estimated H-index: 14
(University of Birmingham),
Emanuel Gomes11
Estimated H-index: 11
(NOVA: Universidade Nova de Lisboa)
+ 1 AuthorsKamel Mellahi30
Estimated H-index: 30
(Warw.: University of Warwick)
Research is needed on effective servitization by multinational enterprises. This study examines whether Manufacturing Multinational Enterprises (MMNEs) can obtain better servitization outcomes by partnering with Knowledge Intensive Business Service (KIBS) firms and or by internationalizing their service function. In addition, the paper analyses the centralization of management decisions of human resources as an organizational mechanism to overcome coordination failure between product and service...
Published on Nov 1, 2017in International Business Review 3.64
Michael J. Mol20
Estimated H-index: 20
(University of Birmingham),
Kristin Brandl3
Estimated H-index: 3
(UVic: University of Victoria)
The rise of offshoring of knowledge-intensive business services (KIBS), causing a physical separation between clients and service providers in co-created services, is a major trend in practice but challenges existing theories. International business literature has addressed many types of distance that may affect (service) offshoring, such as cultural or geographic distance. However, limited emphasis has been placed on the implications of differing cognitions of individuals that produce a cogniti...
Published on Sep 1, 2017in International Business Review 3.64
Harri Lorentz11
Estimated H-index: 11
(UTU: University of Turku),
Mukesh Kumar7
Estimated H-index: 7
(University of Cambridge),
Jagjit Singh Srai12
Estimated H-index: 12
(University of Cambridge)
Abstract The aim of this research is to find out how the extant literature on international purchasing and supply management (PSM) covers the elements of capability from the perspective of distance. A priori , we form a framework of capability driving elements and conclude that distance—in its multiple dimensions—is the fundamental management aspect in international PSM. Equipped with analytical frameworks and a bottom–up process for identifying emergent themes, a systematic literature review wa...