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When outsourcing is not an option: International relocation of investment bank research - Or isn't it?

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  • Michael H. Grote
  • Florian Taübe

Abstract

Outsourcing is high on the agenda of firms seeking to cut costs. Based on an enhanced value-chain concept we develop a model that determines the conditions under which outsourcing and offshoring are not expedient. The model allows for an integrated analysis of horizontal and vertical links to actors within and outside the firm. Equity and country research in investment banks and their outsourcing potential are used as case studies. We draw mainly on qualitative evidence from interviews with investment bank analysts, as well as data on locations of research units of foreign investment banks in India. The option of outsourcing certain stages of business processes and offshoring parts of the value chain within firms to low-wage locations depends crucially on how processes are ‘embedded’ in relation to other departments within and to corresponding actors outside the firm. Our analysis shows that there is little, if any, scope for outsourcing but some potential for low-level research activities to be offshored to low-cost regions.

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  • Michael H. Grote & Florian Taübe, 2007. "When outsourcing is not an option: International relocation of investment bank research - Or isn't it?," ULB Institutional Repository 2013/206769, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:ulb:ulbeco:2013/206769
    Note: International Outsourcing of Services: Expanding the Research Agenda
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    Cited by:

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    2. McWilliam, Sarah E. & Kim, Jung Kwan & Mudambi, Ram & Nielsen, Bo Bernhard, 2020. "Global value chain governance: Intersections with international business," Journal of World Business, Elsevier, vol. 55(4).
    3. Conti, Claudio Ramos & Parente, Ronaldo & de Vasconcelos, Flávio C., 2016. "When distance does not matter: Implications for Latin American multinationals," Journal of Business Research, Elsevier, vol. 69(6), pages 1980-1992.
    4. Zoltan Gal, 2013. "New Bangalores - The role of Central and Eastern Europe in business and IT services offshoring," Journal of Economic Development, Environment and People, Alliance of Central-Eastern European Universities, vol. 2(3), pages 77-100, September.
    5. Lorentz, Harri & Kumar, Mukesh & Srai, Jagjit Singh, 2018. "Managing distance in international purchasing and supply: a systematic review of literature from the resource-based view perspective," International Business Review, Elsevier, vol. 27(2), pages 339-354.
    6. Ram Mudambi & Markus Venzin, 2010. "The Strategic Nexus of Offshoring and Outsourcing Decisions," Journal of Management Studies, Wiley Blackwell, vol. 47(8), pages 1510-1533, December.
    7. Naveen Kumar Jain & Sumit K. Kundu & Fred A. Niederman, 2008. "Offshoring propensity in information technology services: A firm and country level analysis," Management International Review, Springer, vol. 48(4), pages 447-461, April.
    8. Gooris, Julien & Peeters, Carine, 2014. "Home–Host Country Distance in Offshore Governance Choices," Journal of International Management, Elsevier, vol. 20(1), pages 73-86.
    9. Julien Gooris, 2013. "The impact of host-country environment and home-host country distance on the configuration of international service activities," ULB Institutional Repository 2013/209404, ULB -- Universite Libre de Bruxelles.
    10. 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.
    11. Somnath Lahiri, 2011. "India-focused publications in leading international business journals," Asia Pacific Journal of Management, Springer, vol. 28(2), pages 427-447, June.
    12. Niccolò Pisani & Joan Enric Ricart, 2018. "Offshoring Innovation to Emerging Countries: The Effects of IP Protection and Cultural Differences on Firms’ Decision to Augment Versus Exploit Home-Base-Knowledge," Management International Review, Springer, vol. 58(6), pages 871-909, December.
    13. Baier, Elisabeth & Rammer, Christian & Schubert, Torben, 2015. "The Impact of Captive Innovation Offshoring on the Effectiveness of Organizational Adaptation," Journal of International Management, Elsevier, vol. 21(2), pages 150-165.
    14. Julien Gooris & Carine Peeters, 2012. "Home-Host Country Distance and Governance Choices in Service Offshoring," Working Papers ECARES ECARES 2012-007, ULB -- Universite Libre de Bruxelles.
    15. Baier , Elisabeth & Rammer , Christian & Schubert , Torben, 2013. "The Impact of Innovation Off-shoring on Organizational Adaptability," Papers in Innovation Studies 2013/44, Lund University, CIRCLE - Centre for Innovation Research.
    16. Driffield, Nigel & Pereira, Vijay & Temouri, Yama, 2019. "Does offshore outsourcing impact home employment? Evidence from service multinationals," Journal of Business Research, Elsevier, vol. 103(C), pages 448-459.

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