Session 139

Offshoring & Outsourcing

Track G

Date: Monday, October 12, 2009


Time: 15:45 – 17:00


Room: Meeting Room 15

Session Chair:
C. Annique Un, Northeastern University

Title: Charting Value from Global Innovation Outsourcing: Insights from Six Longitudinal Case Studies


  • Christiane Prange, Tongji University
  • Manfred Janda, HAK-Innsbruck Business School

Abstract: Over the last years, it has become common practice for most firms to outsource basic business functions to low-cost countries. Recently, this has also included critical core competences like innovation. Beyond traditional cost concerns, it has been argued that accessing external capabilities and transforming internal knowledge are desirable benefits. However, the few extant studies on innovation outsourcing show mixed results and hint at a variety of potential pitfalls, such as capability erosion and revenue decline. In this article, we propose a research model based on the current and future importance as well as the maturity of existing capabilities. Six longitudinal case studies highlight multinational firms’ outsourcing trajectories, their propensity to outsource innovation as well as their respective management approaches to balance associated risks and returns.

Title: Quality Risk in Offshore Manufacturing


  • John Gray, Ohio State University
  • Aleda Roth, Clemson University
  • Michael Leiblein, Ohio State University

Abstract: Does offshoring pose a quality risk? We discuss the mechanisms by which the distance introduced when offshoring may lead to a quality risk. To evaluate a plant's quality risk, we use a heuristic procedure, developed with industry experts, that is applied to Food and Drug Administration inspection data. We then compare the quality risk posed by matched pairs of plants owned by the same company in the US mainland and Puerto Rico. We find that the offshore plants have significantly higher quality risk than plants in the mainland. We discuss the generalizability of these results to other industries and other offshore locations.

Title: Technology Offshore Outsourcing and Firm Performance


  • C. Annique Un, Northeastern University

Abstract: I study the impact of technology offshore outsourcing on firm performance. Theoretical arguments from the knowledge-based view suggest that technology offshore outsourcing has a negative influence on firm performance because this action erodes the firm’s learning capabilities and future competitive advantage. I propose that we need to theoretically separate the outsourcing dimension from the offshoring dimension and argue that technology offshore outsourcing has a positive impact on firm performance. Whereas the outsourcing dimension may limit learning and performance, the offshoring dimension improves learning and performance, because it enables the firm to acquire new technologies that may not be available in the home country and develop cross-border learning capabilities. Results indicate that technology offshore outsourcing has a positive impact on firm performance, while technology domestic outsourcing has no significant influence on performance.

Title: The Antecedents of Offshoring Advanced Tasks


  • Torben Pedersen, Bocconi University
  • Peter D. Ørberg Jensen, Copenhagen Business School

Abstract: This article focuses on the antecedents of advanced offshoring, exploring what causes firms to offshore some of their more advanced tasks. Our findings indicate that 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. We propose that offshoring should be analyzed on a more disaggregated level than is the norm in mainstream offshoring literature as this would allow finer distinctions between the offshoring of more or less advanced activities.

All Sessions in Track G...

Sun: 10:00 – 11:30
Session 270: Globalizing the Young Venture: A Conversation with Four High Tech CEOs
Sun: 13:00 – 14:30
Session 271: The Duke Offshoring Research Network Project: Implications for Research and Practice
Sun: 15:00 – 16:30
Session 272: Location, Knowledge, and Competitive Dynamics: New Research Directions
Sun: 16:30 – 17:30
Session 311: Global Strategy, IG Meeting
Mon: 12:45 – 14:00
Session 138: Doing Business in China
Mon: 15:45 – 17:00
Session 139: Offshoring & Outsourcing
Mon: 17:15 – 18:30
Session 142: Liability of Foreignness
Tue: 10:00 – 11:15
Session 140: Global Diversification and Firm Performance
Tue: 11:30 – 12:45
Session 145: Institutions and Governance in an Uncertain World
Tue: 14:30 – 15:45
Session 141: Entry Strategy & Location Choice
Session 143: Managing MNC Subsidiaries: Innovation, Control and Subsidiary Initiatives
Wed: 10:00 – 11:15
Session 146: Global Knowledge Search
Wed: 11:30 – 12:45
Session 147: Internationalizing the Firm: Institutions, Emerging Markets and Performance Considerations

Strategic Management Society

Washington DC