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

By P. Maskell, Torben Pedersen, Bent Petersen, Jens Dick‐Nielsen. 2007

345 citations recorded by the source corpus.

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.

Subfields: Management Information Systems, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/20394262929cf733ff0b4eccf83de3fbfa60143d

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In Strategy and Management

Citations in the corpus

The Economic Geography of Offshoring: The Fit Between Activities and Local Context (2011, neutral): “This indicates that offshore location choices are not influenced by different levels of experiential learning, even though it is important to note that the strategies and behaviour of offshoring firms, in general, may change over time as these firms gain more experience in the field (e.g. Jensen, 20”
The Emergence of China and India as New Competitors in MNCs' Innovation Networks (2009, background): “Several studies provide evidence for an evolutionary ‘upgrading’ from ‘offshoring of commodity services’ towards higher value ‘innovation offshoring’ of selected parts of the R&D value chain (Couto et al. 2006; Lewin & Couto 2007; Lewin et al. 2008; Manning et al. 2008; Maskell et al. 2006).”
Offshoring of R&D: Looking abroad to improve innovation performance (2011, background): “…to their relationships with different service providers, firms that offshore R&D gain access to crucial inputs such as new knowledge and technology (Maskell et al., 2007), greater depth of knowledge, more diverse sources of information (Paju, 2007), and highly qualified personnel (e.g., Couto et…”
Donor approaches to supporting pro-poor value chains (2007, background): “Moreover, it helps to “unbundled” the value chain distinguishing different types of sourcing relationships for dif- 2 See Petersen (2005) for an overview.”
Trends in production relocation and backshoring activities (2012, background): “Some authors describe the relocation process as an adoption process, starting with rather simple or standardised activities and progressively leading – by learning and doing – to relocation of increasingly advanced activities (Lewin and Peeters, 2006; Maskell et al., 2007).”
Creating Value through Offshore Outsourcing: An Integrative Framework (2013, neutral): “…strategic device is typical among firms from advanced economies, primarily because it helps client firms reduce productions costs in the short run (Maskell et al., 2007), and has potential to become a strategic device for value co-creation in the long run (Contractor et al., 2010; Liesch et al.,…”