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

Listed author(s):
  • Grote, Michael H.
  • Täube, Florian A.

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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Article provided by Elsevier in its journal Journal of International Management.

Volume (Year): 13 (2007)
Issue (Month): 1 (March)
Pages: 57-77

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Handle: RePEc:eee:intman:v:13:y:2007:i:1:p:57-77
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  17. Bruce Cronin & Lesley Catchpowle & David Hall, 2004. "Outsourcing, Offshoring - Outsourcing and Offshoring," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(2), pages 17-21, October.
  18. Mol, Michael J. & Pauwels, Pieter & Matthyssens, Paul & Quintens, Lieven, 2004. "A technological contingency perspective on the depth and scope of international outsourcing," Journal of International Management, Elsevier, vol. 10(2), pages 287-305.
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