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This study examines how unilateral supplier transaction-specific investments (TSIs), directly and indirectly, influence international buyer opportunism and the extent to which detailed contracts enable suppliers to safeguard against international buyer opportunism. The study also examines whether relationship length affects the efficacy of detailed contracts in cross-border outsourcing relationships.

The hypotheses are tested by using data collected from multiple informants working for 229 manufacturing suppliers in China. Multiple regression with a three-way interaction is used to test the hypotheses.

Unilateral supplier TSIs encourage international buyer opportunism through increased supplier dependence. Contract specificity negatively moderates the effect of supplier dependence on international buyer opportunism. This moderating effect is stronger in long-term cross-border buyer–supplier relationships than in short-term ones.

The current study extends the cross-border outsourcing literature by examining how emerging-market suppliers in a weak power position can proactively safeguard against international buyer opportunism by using detailed contracts. Our findings show that supplier dependence mediates the relationship between unilateral supplier TSIs and international buyer opportunism; detailed contracts, however, can help dependent suppliers safeguard against international buyer opportunism. In particular, the findings highlight the importance of long-term buyer–supplier relationships that enhance the efficacy of detailed contracts.

To provide a theoretical explanation of why outsourcing relationships are inherently dynamic, in that the dependence of each party upon the other inevitably changes over time and thus so too will the power asymmetries between the parties.

Our approach is theoretical and draws upon insights from resource dependence theory, transaction cost economics, and the resource-based view of the firm, to focus on the power asymmetries between the focal firm undertaking the outsourcing and its suppliers. We illustrate our arguments using a longitudinal case study of the evolving relationship between Apple and the Foxconn Technology Group.

For supplier firms, the message is to upgrade, develop distinctive resources and capabilities, and diversify the customer base. Otherwise, suppliers will forever be condemned to low operating margins and the threat of being replaced by cheaper, more agile rivals. For focal firms, the message is not to rest on your laurels. The potency of isolating mechanisms may well dissipate, suppliers will no doubt strive to lessen their positions of dependence and competitors will inevitably emerge, with the result that once-profitable outsourcing arrangements may quickly erode.

We highlight the crucial role played by isolating mechanisms to underpin power asymmetries in outsourcing relationships, and thus enable focal firms to appropriate the rents from externalized value chain activities. We argue that the efficacy of many isolating mechanisms will tend to dissipate over time as competitors emerge to imitate successful strategies and products, and as resource and capability asymmetries erode.

Many manufacturing firms (e.g. Apple and Nike) now outsource some or all of their manufacturing activities to independent suppliers rather than continuing to undertake them in-house. Clearly these firms perceive this externalisation of production to be a performance-enhancing strategy, but what are the performance consequences in practice? In this chapter, we review and critique the extant academic literature on the performance consequences of manufacturing outsourcing, and note that the empirical findings have yielded mixed results. We argue that outsourcing has potential impacts upon a number of ‘performance’ outcomes, including inter alia financial performance, productivity/efficiency, sales/market share, costs of production, business performance and innovation. We further argue that many of the empirical studies have flawed designs, and make a series of methodological recommendations to guide future empirical work.

A multitude of factors influence the information technology outsourcing (ITO) decision. Organizations must systematically evaluate these factors prior to making the ITO decision. The purpose of this paper is to provide an in-depth analysis toward understanding the critical factors in affecting ITO decision in the context of e-banking services.

The effect of technological, organizational, and environmental attributes on e-banking services outsourcing decision were investigated in this paper. The study was carried out using the quantitative research methodology based on a survey of 23 banks. The partial least squares technique was utilized as the method of data analysis.

The results of the data analysis illustrated that nine out of 11 assumed factors (i.e. perceived complexity, perceived cost, service observability to the client, cultural fit between client and supplier, perceived loss of organizational knowledge, prior outsourcing experience, external pressure, market volatility, and suppliers’ power) influence the outsourcing decision of e-banking services. The findings also confirmed that the nature of the service and client IT capabilities did not exert any influence on the outsourcing decision.

The study is among the first kind of ITO decision research which empirically investigates the effect of service observability, cultural fit, perceived loss of organizational knowledge, external pressure, market volatility, and suppliers’ power amongst other factors on the ITO decision. The findings from this study provide insights for the banks and service providers to better understand the factors affecting the outsourcing decisions of e-banking services in contexts of less developed countries. Implications based on a specific situation of the Iranian banking sector is also proposed.

This paper aims to contribute to international business research by providing an integrative framework of the factors determining the learning process of outsourcing companies in developing countries.

A systematic review of the literature was performed with an analysis of 84 articles published in peer-reviewed academic journals, published between 2000 and 2020.

The results show that the different factors should be seen as complementary and not mutually exclusive. It is the interaction between macro and micro factors that jointly shape the learning of developing country subcontractors. Moreover, the results of the analysis show that many existing studies have not been based on specific theoretical frameworks.

This study develops a roadmap of the current state of research on the determinants of learning among developing country subcontractors and offers suggestions to guide future research. The authors conclude with a call for methodological advancement and theory development on the topic.

To the best of the authors’ knowledge, this study proposes the first comprehensive review of the literature on the factors determining the learning of subcontractors in developing countries. The authors have tried to provide an integrative analytical framework to discuss what has been known and what needs to be known in this regard.

Purpose – The purpose of this chapter is to analyse the influence of offshoring on entrepreneurial activity (i.e. the introduction of new products and services).

Methodology/approach – Conceptual

Practical implication – The framework proposed in this study provides some indication to managers about designing an offshoring strategy. Particularly, we aim to inform managers that offshoring various functions may differentially influence firm innovation and that the effect also depends on the governance mode used for the offshore operations and managerial oversight of the offshoring process.

Originality/value of chapter – We provide a theoretical framework that proposes that the offshoring of knowledge intensive services (KIS) and that of labour-intensive services (LIS) will differentially influence the ability of firms to introduce new products and services. While the offshoring of KIS has an inverted U-shaped influence on entrepreneurial activity, the offshoring of LIS has a positive impact. In addition, we propose that these relationships are conditioned by organisational (i.e. governance mode) and managerial (i.e. TMT reflexivity) factors. Specifically, we argue that the degree of integration with the offshore affiliate and TMT reflexivity each moderate the non-linear relationship between offshoring KIS and innovation in such a way that the positive effects of low levels of offshoring KIS will be stronger and the negative effects of high levels of offshoring KIS will be lower. In addition, we argue that the degree of integration constrains and TMT reflexivity enhances the relationship between offshoring LIS and innovation.

This study aims to understand the performance implications of when a business internationalizes. Many managers take the performance implications of internationalization for granted. Whether seeking a broader customer base or cost reduction through cross-border outsourcing, the overwhelming belief is that internationalization leads to higher profits.

This paper offers a systematic review, content analysis and cross-tabulation analysis of 115 empirical studies from over 40 major journals in management, strategy and international business between 1977 and 2021. Focusing on research settings, sample characteristics, underlying theoretical approaches, measurements of key variables and moderators influencing the multinationality and performance relationship, this study offers a detailed account of definitions and effects.

The findings of this study suggest a tenuous connection between internationalization and performance. No strain of research literature conclusively identifies a consistent direct path from internationalization to performance. The context specificity of the relationship makes general declarations impossible.

Future researchers should recognize that internationalization is a process taking different forms, with no specific dominant form. General declarations are misleading. The focus should be on the process of internationalization rather than on the outcome.

This study contributes to the international business literature by exploring reasons for the inconsistent results and lack of consensus. Through a detailed account of definitions and effects, this paper explores the lack of consensus as well as the identified shapes of the relationship.

The aim of this paper is to go beyond the “What to outsource” and “To Outsource or Not” debate. Recognizing outsourcing as a fast growing reality that firms have to depend upon, the paper concerns itself with optimal management of outsourcing arrangements through the practice of “outsourcing capability”. It argues that outsourcing failure can be mitigated if organizations see outsourcing as an “ongoing activity” to be managed as opposed to treating it as a one-time opportunistic “act”.

Based on the review of existing literature and drawing upon recent instances of outsourcing successes and failures, the paper develops a conceptual framework which divides various organizational processes into four different classes. It delineates the varied aspects of “outsourcing capability” that a firm would need to use to manage these varied class of processes as and when they are outsourced.

There is no “one-size-fits-all” approach to managing outsourced processes. Different processes require emphasis on different aspect of outsourcing capability if outsourcing is to deliver the envisaged benefits.

The traditional focus in outsourcing literature has been on the core/non-core process with the recommendation to keep core processes in-house and outsource the non-core processes. This distinction can be transitory and hence detrimental in the era of hyper-competition. I argue that firms should instead focus on developing and refining aspects of “outsourcing capability” relevant to the varied class of processes that they wish/need to outsource.

While the phenomenon of R&D offshoring has become increasingly popular, scholars have mostly focused on R&D offshore outsourcing from the point of view of the client firms, who are often from an advanced country. By examining vendor firms, in this paper the authors shift the focus to the second party in the dyadic relationship of R&D offshore outsourcing. Specifically, the authors compare vendor firms with nonvendor firms from the same emerging economy and industry to look at whether vendor firms from emerging economies can improve their innovation performance by learning from their clients. The authors also look at the role of depth and breadth of existing technological capabilities of the vendor firm in its ability to improve its innovation performance.

This study is based on firm-level data from the Indian biopharmaceutical industry between 2005 and 2016. The authors use the Heckman two-stage model to control for self-selection by firms. The authors compare the innovation performance of vendor firms with nonvendor biopharmaceutical firms (group vs nongroup analysis) as well as innovation performance across vendor firms (within group comparison).

The authors find that, compared to nonvendor firms, R&D offshore outsourcing vendor firms from emerging economies have higher innovation performance. The authors argue that this higher innovation performance among vendor firms is due to learning from their clients. Among vendor firms, the authors find that the innovation gains are contingent upon the two factors of depth and breadth of the vendor firms' technological capabilities.

This paper makes three contributions: First, the authors augment the nascent stream of research on innovation from emerging economy firms. The authors introduce a new mechanism for emerging economy firms to learn and upgrade their capabilities. Second, the authors contribute to the literature on global value chains, by showing that vendor firms are able to learn from their clients and upgrade their capabilities. Third, by examining the innovation by vendor firms, the authors contribute to the R&D offshore outsourcing, which has largely focused on the client.

The study findings have important implications for both clients and vendors. For client firms, the authors provide evidence that knowledge spillovers do happen, and R&D offshore outsourcing can turn vendors into potential competitors. This research helps firms from emerging economies by showing that becoming vendors for R&D offshore outsourcing is a viable option to learn from foreign firms and improve innovation performance. Going outside geographic boundaries may be a large hurdle for these resource-strapped, emerging economy firms. Providing offshore outsourcing services for narrow slices of R&D activities may be a starting point for these firms to upgrade their capabilities.

This paper is among the first to quantitatively study the innovation performance of vendor firms from emerging economies. The authors also contribute to the nascent literature on innovation in emerging economy firms by showing that providing R&D offshore outsourcing services to client firms from advanced countries can improve firms' innovation performance.

This is a preliminary study that explores the nature of decision making in the implementation process through an examination of environmental scanning and interpretation activities of project managers tasked with implementing offshore outsourcing activities.

The model utilized for this study suggests that individual scanning is filtered through distinct organizational types and control that will influence implementation efforts to find solutions to major issues associated with offshore outsourcing. The methodology uses a semi‐structured detailed set of interviews to gather data.

The preliminary findings suggest that project managers entrusted with implementing complex offshoring arrangements to achieve strategic short term cost reduction goals receive relatively little scanning information from senior management to guide them, must learn by doing, and are confronted with multiple external challenges centering on culture and communication with individuals performing work offshore that they were not initially prepared for.

Suggestions for future research include expanding the study to complete comparative interviews with senior management scanning, comparisons between industries, comparisons between client and provider organizations and comparisons between organizational countries of origin.

Practical implications include a more accurate definition of decision‐making and implementation of offshore outsourcing by individuals and how this impacts organizations.

The study fulfills a void in organizational literature by examining scanning and interpretation as performed by mid‐level managers.