Selecting the governance mode when offshoring knowledge-intensive activities Articles uri icon

publication date

  • October 2018

start page

  • 275

end page

  • 287

issue

  • 4

volume

  • 24

international standard serial number (ISSN)

  • 1478-4092

abstract

  • The offshoring phenomenon has evolved in recent years, and can be understood from a threefold perspective: first, the evolution in the type of activity being offshored; second, the learning curve involving both the companies implementing offshoring and service providers; and third, the reasons for offshoring. This study proposes an empirical framework that will allow us to explore the interaction between the type of activity (specifically knowledge-intensive) and the drivers of the decision to select the most appropriate governance mode. Specifically, our results show that market-seeking drivers become the primary determinants prompting firms to offshore knowledge-intensive activities through a captive center. In contrast, the motivation to reduce costs moderates the decision to offshore knowledge-intensive activities by nurturing a preference for offshore out-sourcing. The empirical evidence is supported by multi-country data from the Offshoring Research Network.

keywords

  • captive offshoring; international sourcing; offshoring drivers; offshoringgovernance modes; offshoring knowledge-intensive activities; offshore outsourcing; entry-mode; organizational design; market entry; value chain; transaction; cost; services; firm; performance; innovation