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Understanding offshoring: A research framework based on disintegration, location and externalization advantages

Published on Jul 1, 2009in Journal of World Business 5.79
· DOI :10.1016/j.jwb.2008.08.005
Ben L. Kedia22
Estimated H-index: 22
(U of M: University of Memphis),
Debmalya Mukherjee12
Estimated H-index: 12
(College of Business Administration)
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Abstract
We present an analytical framework explaining offshoring in this paper. We address the question: why do firms offshore their business functions? Given the growing prevalence of offshoring as a dominant business practice in the world of global business, this question merits further research attention. We propose that firms embark on offshoring when they perceive three sets of interrelated advantages: disintegration advantages (D), location-specific resourcing advantages (L) and externalization advantages (E). Theories from multiple disciplines form the foundation of Disintegration-Location-Externalization (DLE) framework. Implications for managers, government policy makers and recommendations for future research are explored.
  • References (79)
  • Citations (198)
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References79
Newest
Published on Mar 1, 2008in Journal of World Business 5.79
Kraiwinee Bunyaratavej8
Estimated H-index: 8
(Wesley College),
Eugene D. Hahn15
Estimated H-index: 15
(SU: Salisbury University),
Jonathan P. Doh41
Estimated H-index: 41
(Villanova University)
Services offshoring has become an important source of investment and development in many emerging economies. While much attention has been paid to companies' use of services offshoring to lower costs, not all of these offshoring activities have yielded the anticipated results. Thus, the choice of where to locate offshore facilities is an important yet complex one that has substantial implications for both the investing firm and host country. In this paper, we adopt the perspectives of service fi...
Published on Dec 1, 2007in Journal of International Business Studies 7.72
Peter J. Buckley57
Estimated H-index: 57
(University of Leeds),
Timothy M. Devinney39
Estimated H-index: 39
(UNSW: University of New South Wales),
Jordan J. Louviere78
Estimated H-index: 78
(UTS: University of Technology, Sydney)
Many empirical examinations of foreign direct investment location choice have relied on the use of secondary data and surveys on the choices made by firms about the form and location of overseas investment. These studies have two inherent and related problems. First, they rely solely on the location choices made by different firms, and assume that the domains of possible options considered were the same. Second, there is an assumption about the rules used by firms to make these decisions, yet th...
Published on Jun 1, 2007in Journal of World Business 5.79
Yadong Luo64
Estimated H-index: 64
(UM: University of Miami)
This article elucidates an increasingly prevalent facet of global competition: simultaneous competition and cooperation between global rivals (i.e., coopetition). In order to develop an overall framework to analyze coopetition, this article explains why coopetition occurs, discusses situations in which cooperation or competition increases or decreases in a coopetition scheme, and presents a typology for understanding the intensity and diversity of coopetition with major global rivals. The typolo...
Published on Apr 9, 2007in Sloan Management Review
Paul S. Adler42
Estimated H-index: 42
(University of Manchester)
Outsourcing has become increasingly attractive for many organizations. Much attention has focused recently on the outsourcing of staffing. A much less noticed, though growing, business has been that for human-resources business-process outsourcing, or HR-BPO. Some observers see outsourcing as a key trend shaping the future of HR. outsourcing any business activity creates potential risks as well as benefits. This article synthesizes the strongest of the available research and identifies the six k...
Published on Mar 1, 2007in Journal of International Management 2.83
Ben L. Kedia22
Estimated H-index: 22
(U of M: University of Memphis),
Somnath Lahiri15
Estimated H-index: 15
(U of M: University of Memphis)
The business landscape is currently witnessing widespread migration of service functions from developed nations like the U.S to several foreign destinations as India, China, Ireland, Philippines etc. This happens as more and more firms engage in international outsourcing of services (IOS) to survive in today's highly competitive business environment. Despite increase in IOS, the nature of partnerships involved between clients and their overseas providers have not received adequate attention in t...
Published on Mar 1, 2007in Journal of International Management 2.83
Kraiwinee Bunyaratavej8
Estimated H-index: 8
(Wesley College),
Eugene D. Hahn15
Estimated H-index: 15
(SU: Salisbury University),
Jonathan P. Doh41
Estimated H-index: 41
(Villanova University)
Conventional wisdom suggests that firms engage in international offshoring of services primarily to reduce wage costs associated with a given service activity. Drawing on international business research on the costs of doing business abroad (CODBA), liability of foreignness (LOF), and institutional theory, we investigate the factors that contribute to the location choices for services offshoring activity, including wage differentials between the home and host countries. We find that consistent w...
Published on Mar 1, 2007in Journal of Operations Management 7.78
Tim R. Holcomb12
Estimated H-index: 12
(A&M: Texas A&M University),
Michael A. Hitt95
Estimated H-index: 95
(A&M: Texas A&M University)
Acknowledging efficiency motives, firms have increasingly turned to outsourcing in an effort to capture cost savings. Transaction cost theory (TCT) has been the dominant means of explaining outsourcing as an economizing approach whereby cost efficiencies are achieved by assigning transactions to different governance mechanisms. Recent research has used the resourcebased view (RBV) to examine the role of specialized capabilities as a potential source of value creation in relationships between fir...
Published on Jan 2, 2007in Asia Pacific Journal of Management 2.74
Ben L. Kedia22
Estimated H-index: 22
(U of M: University of Memphis),
Debmalya Mukherjee12
Estimated H-index: 12
(U of M: University of Memphis),
Somnath Lahiri15
Estimated H-index: 15
(U of M: University of Memphis)
Business groups are an important constituent of many emerging economies. In this paper, we focus on the evolution and transformation of Indian business groups (IBGs) over two economic eras — pre-reform era (pre 1991) and reform era (post 1991). To this end, we analyze IBG behavior during these periods, and explain the implications of such behavior on IBG value creation. Our conceptualization of IBG dynamics utilizes the perspectives of product relatedness and institutional relatedness, and under...
Cited By198
Newest
Published on Mar 1, 2018in Journal of Business Research 4.03
Claudia Pongelli2
Estimated H-index: 2
(Libera Università Internazionale degli Studi Sociali Guido Carli),
Andrea Calabrò13
Estimated H-index: 13
,
Rodrigo Basco11
Estimated H-index: 11
(AUS: American University of Sharjah)
Abstract International sourcing decisions have received increased attention by scholars and policymakers recently as they are important predictors of firms' international competitiveness. Building on the theoretical perspective of socioemotional wealth, we introduce the distinction between family and non-family firms as an overlooked variable able to explain heterogeneous international make-or-buy choices. Using a sample of 1180 European firms, we find that family firms are more likely to engage...
Published in Sustainability 2.59
Foreign market entry mode research has been a popular area of study. However, a clear agreement between the usage of conventional constructs and their impact on a firm’s entry mode choice has not yet been found. This paper focuses on how, depending on the type of subsidiary that is established, multinational corporations (MNCs) in the manufacturing industry use different foreign market entry strategies. Previous research either treated types of subsidiaries synonymously or investigated them sepa...
Published on Apr 11, 2019in International Journal of Production Research 3.20
Shanthi Gopalakrishnan19
Estimated H-index: 19
(NJIT: New Jersey Institute of Technology),
Haisu Zhang4
Estimated H-index: 4
(NJIT: New Jersey Institute of Technology)
There has been a great deal of ambiguity and complexity in the relationship between vendor certification and vendor growth in the outsourcing context. In this study, the authors build a competitive mediation model, where they examine both the direct and the indirect effects of vendor certification on vendor growth. Using a combination of primary data (i.e. survey) and secondary data from a sample of 120 IT vendors in India, they find that vendor certification directly helps with vendor growth bu...
Published on Oct 7, 2018in International Journal of Production Research 3.20
Kulwant S. Pawar20
Estimated H-index: 20
(University of Nottingham),
Fahian Huq4
Estimated H-index: 4
(University of Manchester)
+ 1 AuthorsJanat Shah13
Estimated H-index: 13
(Indian Institute of Management Udaipur)
Outsourcing research has recognised that selecting the right offshore supplier (outsourcee) in low-cost distant developing countries is complex, but central to outsourcing success. More specifically, the combination of outsourcee contextual internal factors (e.g. capabilities) with outsourced-to country contextual external factors (e.g. political, legal, economic, socio-cultural) as two fundamental and interconnected decisions firms make when outsourcing remains an underexplored research gap. Th...
Published on Feb 21, 2019in The World Economy 1.09
Antonello Zanfei20
Estimated H-index: 20
(University of Urbino),
Giovanni Marin11
Estimated H-index: 11
(University of Urbino)
This paper evaluates the effect of host-country environmental policy stringency on the offshoring of environmental patents for 2000 top world R&D performers. It is shown that a more stringent environmental regulation triggers both the extensive and intensive margin of patent offshoring in the field of environmental technologies. Results are robust to various different specifications, alternative definitions of innovation offshoring and of regulation restrictions, and to the consideration of poss...
Published on May 14, 2019in Journal of International Business Studies 7.72
Ajai S. Gaur29
Estimated H-index: 29
,
Chinmay Pattnaik10
Estimated H-index: 10
+ 1 AuthorsJeoung Yul Lee8
Estimated H-index: 8
We extend internalization theory by examining the contingencies associated with market internalization and its impact on foreign subsidiary survival. Based on a sample of 6170 subsidiary–year observations in 63 countries belonging to 292 MNCs from Korea during 1995–2013, we find that greater product and labor market internalization have weaker impacts on the survival of subsidiaries operating in countries with more developed institutional environments but stronger for subsidiaries of MNCs affili...
Published on Mar 25, 2019in Journal of Business Strategy
Stuart Orr7
Estimated H-index: 7
Purpose In addition to their internal resources, companies in most industries rely upon external strategic resources to maintain and improve their performance. External strategic resources have a similar effect on competitiveness but are located in the company’s networks or even in unrelated industries. Some companies underuse these resources, while other companies focus too strongly on accessing external resources in their own industry, which results in hyper-competition. This paper aims to exp...