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1 – 10 of over 2000Pieter Klaas Jagersma and Désirée M. van Gorp
The article discusses offshoring as an irreversible trend that is redefining the paradigm of global competition of service firms, and provides insight and practical advice…
Abstract
Purpose
The article discusses offshoring as an irreversible trend that is redefining the paradigm of global competition of service firms, and provides insight and practical advice regarding the offshore behavior of service firms for management professionals.
Design/methodology/approach
The offshoring process is applied to service firms including lessons learned. It is largely based on the results of a research study among 247 service firms determining their offshore behavior and illustrated with examples of their offshoring activities.
Findings
Offshoring is redefining global competition and service firms should use it as a tool to create a competitive advantage vis‐à‐vis their competitors. In doing so they should careful prepare offshoring in different phases of the process as suggested in the 4M approach. Moreover, they should decide in an early stage on monitoring, reporting and measuring the offshoring process and secure continuous commitment from management.
Research limitations/implications
The offshoring process referred to in this article as the 4M approach should be further tested among service firms.
Practical implications
Providing insight and practical advice regarding the offshore behavior of service firms for management professionals.
Originality/value
Research in the past has been largely focused on manufacturing firms. This article focuses on service firms and is based on findings of primary research executed by the authors.
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Peter D. Ørberg Jensen and Torben Pedersen
Purpose – The purpose of the chapter is to analyze the factors that lead firms to offshore advanced tasks.Methodology/approach – The study uses a 1,500-firm survey from Denmark to…
Abstract
Purpose – The purpose of the chapter is to analyze the factors that lead firms to offshore advanced tasks.
Methodology/approach – The study uses a 1,500-firm survey from Denmark to investigate the offshoring of 12 tradable manufacturing, technical, and service activities across different industries.
Findings – Findings indicate that offshoring of advanced tasks is driven by a different set of strategic motives than previous waves of offshoring, which predominantly included simple and standardized routine tasks. While the lower cost of unskilled, labor-intensive processes is the incentive for firms that offshore less advanced tasks, a desire to broaden and deepen global networks of new knowledge spurs highly knowledge-intensive companies to offshore more advanced tasks.
Originality/value of chapter – We propose that offshoring should be analyzed on a more disaggregated level of analysis than is the norm in mainstream offshoring literature. To reflect the trend whereby firms are “slicing” their value chain in finer and finer parts and locate these in various locations around the world, offshoring should be analyzed at the task level, since this paves the way for a richer understanding of offshoring strategies and processes.
Marcus M. Larsen and Torben Pedersen
The purpose of this paper is to investigate the effect of the organizational reconfiguration of offshoring on firms’ strategies. A consequence of offshoring is the need to…
Abstract
The purpose of this paper is to investigate the effect of the organizational reconfiguration of offshoring on firms’ strategies. A consequence of offshoring is the need to reintegrate the geographically relocated organizational activities into a coherent organizational architecture. In order to do this, firms need a high degree of architectural knowledge, which is typically gained through learning by doing. We therefore argue that firms with more offshoring experience are more likely to include organizational objectives in their offshoring strategies. We develop and find support for this hypothesis using a mixed-method approach based on a qualitative case study and comprehensive data from the Offshoring Research Network. These findings contribute to research on the organizational design and architecture of offshoring and the dynamics of organizational architectures.
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Nidthida Lin, Hao Tan and Stephen Chen
The purpose of this paper is to examine how three key dimensions of a firm’s offshoring portfolio – location diversity, functional diversity and governance mode – affect the…
Abstract
Purpose
The purpose of this paper is to examine how three key dimensions of a firm’s offshoring portfolio – location diversity, functional diversity and governance mode – affect the financial and innovation outcomes of offshoring.
Design/methodology/approach
The authors investigate the relationships between the diversity of a firm’s offshoring portfolio and its offshoring outcomes using a sample of US, European and Asia Pacific firms engaging in offshoring activities.
Findings
The authors found that: location diversity shows a significant “flipped S-shape” relationship with innovation outcomes, but has a negative impact on financial outcomes, functional diversity has a significant and positive effect on innovation outcome and the use of an outsourcing governance mode significantly moderates these relationships, such that the degree of offshore outsourcing weakens some of these effects.
Originality/value
The authors conclude that firms which strategically coordinate all three dimensions of their offshoring portfolio are more likely to achieve better innovation or financial outcomes from their use of offshoring in global supply chain and sourcing.
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Stephen Canham and Robert T. Hamilton
This paper aims to focus on production offshoring and “backshoring” in a representative sample of 151 New Zealand manufacturers. It identifies how and why firms offshore; why many…
Abstract
Purpose
This paper aims to focus on production offshoring and “backshoring” in a representative sample of 151 New Zealand manufacturers. It identifies how and why firms offshore; why many increase their offshoring while others “backshore”; and why most firms continue to compete internationally without offshoring.
Design/methodology/approach
Data collection used a two-wave postal questionnaire survey of 676 firms, with a usable response rate of 22.3 per cent and no indication of non-response bias.
Findings
Most exporters manufactured only from their New Zealand base, but 44 per cent had outsourced some production offshore in the period 2001 to 2011. Among the 67 offshored firms, 11 had then “backshored” to New Zealand. The main reasons for offshoring were lower labour costs and capacity constraints in New Zealand. “Backshoring” occurs when lower labour costs become offset by impaired capabilities in flexibility/delivery; quality; and the value of the Made in New Zealand brand especially among consumer goods producers. Stay at home firms reported fears of lowered quality; country loyalty; and their Made in New Zealand country of origin brand.
Practical implications
Offshoring begins tentatively but many firms then increase their offshoring to reap the benefit of lower labour costs. These reasons for “backshoring” mirror those given for keeping production in New Zealand and must be given careful consideration by firms considering offshoring.
Originality/value
There are few studies of offshoring by smaller manufacturers and none that have elucidated this as a process, one that is still avoided by many and can end in costly “backshoring” for others.
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Sameer Kumar, Anthony Kwong and Chandan Misra
Offshoring involves transferring or sharing management control and/or decision making of a business function to a supplier in a different country, which entails a degree of…
Abstract
Purpose
Offshoring involves transferring or sharing management control and/or decision making of a business function to a supplier in a different country, which entails a degree of two‐way information exchange, coordination and trust between the overseas supplier and its client. The purpose of this paper is to understand the current trend of offshoring and identify the risks involved in offshoring. This paper also proposes a risk mitigation strategy to combat offshoring risks.
Design/methodology/approach
The research is primarily based on professional literature reviews to identify risks associated with offshoring, which are mainly classified, in structural and operational risks categories. Additional risks are identified in the following areas: transaction, financial, value, socio‐economic, country risks and so forth. This research provides mitigation strategies to minimize or eliminate these risks. A survey of business individuals is used to determine the general perceptions of offshoring and the associated risks. Finally, the mitigation strategy is applied in a real‐life instance to validate its usefulness.
Findings
The research indicates that a majority of business professionals have little or no knowledge of methods to mitigate offshoring risk, though the marketplace trend is towards more offshoring in the future. Companies continue to increase the amount of offshoring activities without properly considering the associated risks.
Practical implications
The effects of improper implementation of offshoring activities have led to much publicized product recalls that have harmed firm profits. Managers need to use the developed mitigation strategy or develop their own model to address the risks of offshoring. Continued failure to do so will become evident as product recalls increase and customer satisfaction levels decrease.
Originality/value
This study serves as a framework for the thought process that should occur for successful offshoring activities. Companies that use this framework should tailor it to their individual situations to maximize its efficacy.
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Rosa Capolupo, Vito Amendolagine and Giovanni Ferri
The purpose of this paper is to assess whether offshoring strategies are able to substantially enhance firms’ international competitiveness in terms of productivity…
Abstract
Purpose
The purpose of this paper is to assess whether offshoring strategies are able to substantially enhance firms’ international competitiveness in terms of productivity, innovativeness and skill composition for a panel of Italian manufacturing firms.
Design/methodology/approach
A set of hypotheses derived from the extant literature is tested on data from balance sheets and qualitative surveys of about 4,000 Italian firms. The methodology used is a propensity score matching estimator and difference in differences method that allowed the authors to detect the causal effect of the offshoring status of the firms on some performance measures.
Findings
Results demonstrate that offshoring increases the propensity to innovate and the skill ratio of workers but does not show a significant association with productivity growth. The estimates are robust in all the specifications.
Research limitations/implications
The results are applicable to Italian firms. The magnitude and timing of the effects may vary across firms and countries.
Originality/value
This paper contributes to the empirical literature on offshoring by exploring its impact on a variety of firms’ performance measures by using matching techniques that allow us to investigate more in depth the causality link of the relationship and to control for the self-selection effect (more productive firms self-select to offshore).
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Godfrey Mugurusi and Luitzen de Boer
The purpose of the paper is concerned with one of the main contributions from the field of management cybernetics, the Viable System Model (VSM) developed by Beer (1972). This…
Abstract
Purpose
The purpose of the paper is concerned with one of the main contributions from the field of management cybernetics, the Viable System Model (VSM) developed by Beer (1972). This paper analyses what happens in terms of the VSM when a firm engages in production offshoring.
Design/methodology/approach
The paper is conceptual and develops four propositions about the nature of variety balance that production firms face, and what adjustments they make in the original viable system, both in terms of the properties of one or more of the basic subsystems and in the network of couplings between them.
Findings
The paper shows the production offshoring organisation as a dynamic adaptive system in search of ways to cope effectively with external forces that undermine its viability. The paper discusses how VSM can advance production offshoring research by both supplementing and linking established approaches such as transaction cost economics, the resource-based view and the eclectic theory of international production.
Originality/value
This research highlights the effects of geographical expansion of the firm’s operation on the stability of the firm itself. Using the VSM perspective, the paper provides opportunities to systematically track the changes that occur in the production offshoring firm and diagnose what they imply for the viability of the system as a whole.
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Shawn T. Thelen and Terri Shapiro
The purpose of this paper is to examine behavioral changes by consumers (i.e. changing time of day they contact a firm, requesting a domestic service provider, and ceasing doing…
Abstract
Purpose
The purpose of this paper is to examine behavioral changes by consumers (i.e. changing time of day they contact a firm, requesting a domestic service provider, and ceasing doing business with the firm) when faced with being provided a service from abroad.
Design/methodology/approach
Data were collected from a pre‐recruited internet panel of 394 American consumers. Hierarchical regression analysis, including demographic and psychographic variables, was employed to determine which variables were instrumental in predicting behavioral changes among consumers when being provided a service from abroad.
Findings
The results suggest that American consumers are wary of services offshoring and that psychographic variables (boycott issue importance and negative word of mouth) are more instrumental than demographic variables in predicting behavioral changes by consumers.
Research limitations/implications
Future research should examine consumer attitudes about services offshoring from populations in countries other than the US, and in relation to different types of services and the importance of those services to consumers.
Practical implications
Implications for firms include assessing their customer's perceptions of offshoring, proactively communicating with customers about offshoring practices, and providing customers with some control over their service interactions.
Originality/value
Previous researchers have highlighted the benefits of services offshoring to firms but also hypothesized that consumers may react negatively when provided services from abroad. In this research, it is found that consumers will change the way they interact with a firm when faced with being provided a service from abroad.
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Fazli Haleem, Sami Farooq, Brian Vejrum Wæhrens and Harry Boer
Many factors have been identified that may drive a firm’s decision to offshore production activities. The actual performance effects of offshoring, however, depend on the extent…
Abstract
Purpose
Many factors have been identified that may drive a firm’s decision to offshore production activities. The actual performance effects of offshoring, however, depend on the extent to which these drivers are realized. Furthermore, the question is how risk management helps mitigating the risk involved in offshoring ventures, thus leading to better performance outcomes. The purpose of this study is to investigate the extent to which realized offshoring drivers and risk management mediate the relationship between offshoring experience and firm performance.
Design/methodology/approach
Data from the Global Operations Networks project, a cross-sectional survey administered in Denmark and Sweden, are used to test two hypotheses on the mediating role of realized offshoring drivers and risk management in the relationship between offshoring experience and firm performance. AMOS version 23 is used to perform the analyses.
Findings
The results demonstrate that realized offshoring drivers fully mediate the relationship between offshoring experience and firm performance. However, risk management does not mediate the relationship between offshoring experience and firm performance.
Originality/value
This study develops new theory on, and managerial insight into, the mediating role of realized offshoring drivers and risk management in the relationship between offshoring experience and firm performance.
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