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

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  • 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.

Suggested Citation

  • Roza, Marja & Van den Bosch, Frans A.J. & Volberda, Henk W., 2011. "Offshoring strategy: Motives, functions, locations, and governance modes of small, medium-sized and large firms," International Business Review, Elsevier, vol. 20(3), pages 314-323, June.
  • Handle: RePEc:eee:iburev:v:20:y:2011:i:3:p:314-323
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    Cited by:

    1. Niccolò Pisani & Joan Enric Ricart, 2016. "Offshoring of Services: A Review of the Literature and Organizing Framework," Management International Review, Springer, vol. 56(3), pages 385-424, June.
    2. 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 - Center for Innovation, Research and Competences in the Learning Economy.
    3. Symeonidou, Noni & Bruneel, Johan & Autio, Erkko, 2017. "Commercialization strategy and internationalization outcomes in technology-based new ventures," Journal of Business Venturing, Elsevier, vol. 32(3), pages 302-317.
    4. Jeremiah, Rupin, 2017. "DO FIRMS INNOVATE ABROAD? - The Case of Swedish R&D in India," SSE Working Paper Series in Business Administration 2017:4, Stockholm School of Economics, revised 07 Dec 2017.
    5. Weifeng Zhai & Shiling Sun & Guangxing Zhang, 2016. "Reshoring of American manufacturing companies from China," Operations Management Research, Springer, vol. 9(3), pages 62-74, December.
    6. Katarzyna Budzynska, 2016. "Offshoring Sector In Poland," Oeconomia Copernicana, Institute of Economic Research, vol. 7(4), pages 635-651, December.
    7. repec:spr:opmare:v:10:y:2017:i:1:d:10.1007_s12063-016-0119-7 is not listed on IDEAS
    8. Schubert, Torben & Baier, Elisabeth & Rammer, Christian, 2016. "Technological capabilities, technological dynamism and innovation offshoring," ZEW Discussion Papers 16-044, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Yi-Ju Lo & Tung Hung, 2015. "Structure offshoring and returns on offshoring," Asia Pacific Journal of Management, Springer, pages 443-479.
    10. repec:eee:iburev:v:26:y:2017:i:3:p:435-447 is not listed on IDEAS
    11. Manning, Stephan, 2014. "Mitigate, tolerate or relocate? Offshoring challenges, strategic imperatives and resource constraints," Journal of World Business, Elsevier, vol. 49(4), pages 522-535.
    12. Silvia Grappi, 2015. "Consumer boycott of companies implementing offshoring strategies," MERCATI E COMPETITIVITÀ, FrancoAngeli Editore, vol. 2015(3), pages 123-138.
    13. Jia, Fu & Lamming, Richard & Sartor, Marco & Orzes, Guido & Nassimbeni, Guido, 2014. "Global purchasing strategy and International Purchasing Offices: Evidence from case studies," International Journal of Production Economics, Elsevier, vol. 154(C), pages 284-298.
    14. Marco Cioppi, 2013. "The role of web communication to enhance the value of retail trade in small cities," The International Journal of Economic Behavior - IJEB, Faculty of Business and Administration, University of Bucharest, vol. 3(1), pages 127-145, December.
    15. 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.
    16. repec:spr:opmare:v:10:y:2017:i:3:d:10.1007_s12063-017-0124-5 is not listed on IDEAS
    17. Caniato, Federico & Elia, Stefano & Luzzini, Davide & Piscitello, Lucia & Ronchi, Stefano, 2015. "Location drivers, governance model and performance in service offshoring," International Journal of Production Economics, Elsevier, vol. 163(C), pages 189-199.
    18. Amendolagine, Vito & Capolupo, Rosa & Ferri, Giovanni, 2014. "Innovativeness, offshoring and black economy decisions. Evidence from Italian manufacturing firms," International Business Review, Elsevier, pages 1153-1166.
    19. Godfrey Mugurusi & Lydia Bals, 0. "A processual analysis of the purchasing and supply organization in transition: the impact of offshoring," Operations Management Research, Springer, vol. 0, pages 1-20.
    20. Verdu, Antonio J. & Gómez-Gras, José María & Martínez-Mateo, Jesús, 2012. "Value creation through production offshore–inshore strategies in a footwear industry cluster: A coevolutionary perspective," International Business Review, Elsevier, pages 342-356.
    21. 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.
    22. Lewin, Arie Y. & Volberda, Henk W., 2011. "Co-evolution of global sourcing: The need to understand the underlying mechanisms of firm-decisions to offshore," International Business Review, Elsevier, vol. 20(3), pages 241-251, June.
    23. repec:spr:manint:v:57:y:2017:i:4:d:10.1007_s11575-017-0315-1 is not listed on IDEAS
    24. Sebastian Benz & Wilhelm Kohler & Erdal Yalcin, 2016. "Offshoring and Volatility of Demand," CESifo Working Paper Series 5970, CESifo Group Munich.
    25. Jeremiah, Rupin, 2017. "DECISION EVALUATION OF INNOVATION OFFSHORING: Swedish R&D in India," SSE Working Paper Series in Business Administration 2017:3, Stockholm School of Economics, revised 07 Dec 2017.

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