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Learning Paths to Offshore Outsourcing: From Cost Reduction to Knowledge Seeking

  • Peter Maskell
  • Torben Pedersen
  • Bent Petersen
  • Jens Dick-Nielsen

A corporation's offshore outsourcing may be seen as the result of a discrete, strategic decision taken in response to an increasing pressure from worldwide competition. However, empirical evidence of a representative cross-sector sample of international Danish firms indicates that offshore sourcing in low-cost countries is best described as a learning-by-doing process in which the offshore outsourcing of a corporation goes through a sequence of stages towards sourcing for innovation. Initially, a corporation's outsourcing is driven by a desire for cost minimization. Over a period of time the outsourcing experience lessens the cognitive limitations of decision-makers as to the advantages that can be achieved through outsourcing in low-cost countries: the insourcer/vendor may not only offer cost advantages, but also quality improvement and innovation. The quality improvements that offshore outsourcing may bring about evoke a realization in the corporation that even innovative processes can be outsourced.

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Article provided by Taylor & Francis Journals in its journal Industry and Innovation.

Volume (Year): 14 (2007)
Issue (Month): 3 ()
Pages: 239-257

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Handle: RePEc:taf:indinn:v:14:y:2007:i:3:p:239-257
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  1. Warren J Bilkey & George Tesar, 1977. "The Export Behavior of Smaller-Sized Wisconsin Manufacturing Firms," Journal of International Business Studies, Palgrave Macmillan, vol. 8(1), pages 93-98, March.
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