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Offshoring strategy: Motives, functions, locations, and governance modes of small, medium-sized and large firms

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Author Info

  • Roza, Marja
  • Van den Bosch, Frans A.J.
  • Volberda, Henk W.

Abstract

How does firm size impact on a firm's offshoring strategy? Are the underlying motives for offshoring, the particular functions considered, the locations to relocate, and the particular governance mode different for small, medium-sized and large firms? In this paper, cost, resource and entrepreneurial drivers are investigated for their relationship with firm size. Moreover, we hypothesize on the relationship between function, location and governance mode choices of offshoring and firm size. Using multi-country data of the Offshoring Research Network (ORN), we present empirical evidence on the three offshoring driver categories and function, location and governance mode choices of small, medium-sized and large firms. The results show offshoring might be used as cost, resource or entrepreneurial strategy. Cost drivers are most important for large and small firms, whereas resource drivers are especially important for medium-sized and large firms. Entrepreneurial drivers are most important for medium-sized firms, just like these firms have a relatively stronger preference for nearshoring. Small firms mostly offshore competence exploring activities, whereas large firms relocate competence exploiting activities.

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Bibliographic Info

Article provided by Elsevier in its journal International Business Review.

Volume (Year): 20 (2011)
Issue (Month): 3 (June)
Pages: 314-323

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Handle: RePEc:eee:iburev:v:20:y:2011:i:3:p:314-323

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Related research

Keywords: Competence exploiting activities Competence exploring activities Farshoring Firm size Functions Governance mode Location choice Nearshoring Offshoring strategy Offshoring drivers;

References

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Cited by:
  1. Schmeisser, Bjoern, 2013. "A Systematic Review of Literature on Offshoring of Value Chain Activities," Journal of International Management, Elsevier, vol. 19(4), pages 390-406.
  2. Baier, Elisabeth & Rammer, Christian & Schuber, Torben, 2013. "The impact on innovation off-shoring on organizational adaptability," ZEW Discussion Papers 13-109, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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