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Governance decisions for the offshore outsourcing of new product development in technology intensive markets

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  • Griffith, David A.
  • Harmancioglu, Nukhet
  • Droge, Cornelia
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    Abstract

    This study addresses how buyers organize their offshore outsourcing new product development relationships. Building on transaction cost economics and resource dependence theories, we propose a model of the influence of key new product development offshore outsourcing factors on two important buyers' governance decisions (i.e., supply concentration and degree of supplier involvement). The antecedents, drawn from the marketing, management, and international business literatures, include: three sources of asset specificity (degree of modularity, strategic value of the project, and technology specificity) and two sources of uncertainty (cultural distance and technological discontinuity). The results, derived from an analysis of 200 offshore outsourcing new product development relationships, provide new insights for academics and practitioners.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of World Business.

    Volume (Year): 44 (2009)
    Issue (Month): 3 (July)
    Pages: 217-224

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    Handle: RePEc:eee:worbus:v:44:y:2009:i:3:p:217-224

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    Related research

    Keywords: Governance Offshoring Outsourcing New product development Technology intensive markets;

    References

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    1. Bruce Kogut & Nalin Kulatilaka, 1994. "Operating Flexibility, Global Manufacturing, and the Option Value of a Multinational Network," Management Science, INFORMS, vol. 40(1), pages 123-139, January.
    2. Shantanu Dutta & Allen M. Weiss, 1997. "The Relationship Between a Firm's Level of Technological Innovativeness and Its Pattern of Partnership Agreements," Management Science, INFORMS, vol. 43(3), pages 343-356, March.
    3. Masaaki Kotabe & Janet Y Murray, 1990. "Linking Product and Process Innovations and Modes of International Sourcing in Global Competition: A Case of Foreign Multinational Firms," Journal of International Business Studies, Palgrave Macmillan, vol. 21(3), pages 383-408, September.
    4. Mathews, John A. & Cho, Dong-Sung, 1999. "Combinative capabilities and organizational learning in latecomer firms: the case of the Korean semiconductor industry," Journal of World Business, Elsevier, vol. 34(2), pages 139-156, July.
    5. Oded Shenkar, 2001. "Cultural Distance Revisited: Towards a More Rigorous Conceptualization and Measurement of Cultural Differences," Journal of International Business Studies, Palgrave Macmillan, vol. 32(3), pages 519-535, September.
    6. Keith D Brouthers, 2002. "Institutional, Cultural and Transaction Cost Influences on Entry Mode Choice and Performance," Journal of International Business Studies, Palgrave Macmillan, vol. 33(2), pages 203-221, June.
    7. Erin Anderson, 1985. "The Salesperson as Outside Agent or Employee: A Transaction Cost Analysis," Marketing Science, INFORMS, vol. 4(3), pages 234-254.
    8. Chen, Homin & Chen, Tain-Jy, 2003. "Governance structures in strategic alliances: transaction cost versus resource-based perspective," Journal of World Business, Elsevier, vol. 38(1), pages 1-14, February.
    9. Laszlo Tihanyi & David A Griffith & Craig J Russell, 2005. "The effect of cultural distance on entry mode choice, international diversification, and MNE performance: a meta-analysis," Journal of International Business Studies, Palgrave Macmillan, vol. 36(3), pages 270-283, May.
    10. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan, vol. 19(3), pages 411-432, September.
    11. David J Sharp & Stephen B Salter, 1997. "Project Escalation and Sunk Costs: A test of the International Generalizability of Agency and Prospect Theories," Journal of International Business Studies, Palgrave Macmillan, vol. 28(1), pages 101-121, March.
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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. Martinez-Noya, Andrea & Garcia-Canal, Esteban & Guillen, Mauro F., 2012. "International R&D service outsourcing by technology-intensive firms: Whether and where?," Journal of International Management, Elsevier, vol. 18(1), pages 18-37.

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