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Global outsourcing, explorative innovation and firm financial performance: A knowledge-exchange based perspective

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  • Verwaal, Ernst

Abstract

Global outsourcing can be an effective strategy to reduce costs and gain access to worldwide knowledge, however, research reports conflicting results regarding its performance effects. Building on knowledge and relational capital literatures, I submit that firms experience higher cognitive and normative barriers in knowledge exchange in global outsourcing, and this causes explorative innovation to negatively mediate the relationship between global outsourcing and firm financial performance. However, this negative mediation effect can be positively moderated by building relational capital with foreign suppliers. I test the theory using data from 223 manufacturing firms in the Netherlands, and find support for the hypotheses.

Suggested Citation

  • Verwaal, Ernst, 2017. "Global outsourcing, explorative innovation and firm financial performance: A knowledge-exchange based perspective," Journal of World Business, Elsevier, vol. 52(1), pages 17-27.
  • Handle: RePEc:eee:worbus:v:52:y:2017:i:1:p:17-27
    DOI: 10.1016/j.jwb.2016.10.004
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    Cited by:

    1. Zhao, Yue & Parente, Ronaldo & Song, Mohan & Wenger, Lucas, 2020. "Host country institutional diversity and MNE performance persistence," Journal of Business Research, Elsevier, vol. 113(C), pages 1-12.
    2. Li, Lei & Li, Dan & Goerzen, Anthony & Shi, Weilei (Stone), 2018. "What and how do SMEs gain by going international? A longitudinal investigation of financial and intellectual resource growth," Journal of World Business, Elsevier, vol. 53(6), pages 817-834.
    3. Mukherjee, Debmalya & Lahiri, Somnath & Ash, Steven R. & Gaur, Ajai S., 2019. "Search motives, local embeddedness, and knowledge outcomes in offshoring," Journal of Business Research, Elsevier, vol. 103(C), pages 365-375.
    4. HERCIU Mihaela & OGREAN Claudia, 2018. "Business Sustainable Competitiveness – A Synergistic, Long-Run Approach Of A Company’S Resources And Results," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 13(3), pages 26-44, December.
    5. Chen, Stephen & Lin, Nidthida, 2019. "The effect of inter- and intra-organizational distances on success of offshored outsourced innovation: A configurational approach," Journal of Business Research, Elsevier, vol. 103(C), pages 519-529.

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