Offshoring and international competitiveness: antecedents of offshoring advanced tasks

Abstract

During the past decade, offshoring has become an established business practice. Yet it is still more common to offshore less advanced tasks compared with offshoring more advanced tasks, i.e., tasks closer to the core activities of the firm. The latter is a new phenomenon which raises many new issues on the boundaries of the firm. More or less advanced tasks can be found within all activities, e.g., in sales and marketing where telesales is on the less advanced end of the scale while branding and identity building are on the advanced end of the scale. This article focuses on the antecedents of advanced offshoring, exploring what causes firms to offshore some of their more advanced tasks. Our findings indicate that while the lower cost of unskilled, labor-intensive processes is the main driver for firms that offshore less advanced tasks, the offshoring of advanced tasks is part of firms' strategy to achieve international competitiveness through access to crossborder knowledge flows and foreign knowledge resources. Furthermore, offshoring of advanced manufacturing tasks seems to be more widespread and experience-based than the offshoring of advanced service tasks.

Las empresas de servicios en América Latina: Un estudio exploratorio sobre factores de competitividad internacional, obstáculos y políticas públicas. (Service companies in Latin America: an exploratory study about determinants of international competitiveness, obstacles and public policies).

“…Pero, por otro lado, también aparecen aspectos de naturaleza más estructural o cualitativa, como la disponibilidad de capital humano, que sería un segundo factor determinante de las decisiones de offshoring y de la IED vinculada (Liu et al, 2011;Doh et al, 2008), así como de las exportaciones de servicios (Guerrieri y Meliciani, 2005;Nyahoho, 2010;Arora y Bagde, 2011). Previsiblemente, la relevancia del capital humano aumenta a mayor complejidad de las actividades deslocalizadas (Py y Hatem, 2009;Jensen y Pedersen, 2012). Goswami, Gupta, Mattoo, y Saez (2012) encuentran, además, que el "retorno" a la inversión educativa es superior en los países en desarrollo.…”

Latin America’s competitive position in knowledge-intensive services trade

“…Goswami and others (2012) find that an ample supply of qualified human capital has a positive impact on service exports and that the return on investment in education is higher in developing countries. It is to be expected that the importance of human capital increases in step with the complexity of offshored economic activities (see Py and Hatem, 2009;Jensen and Pedersen, 2012).…”

A focus on international competitiveness

“…In the spirit of JAMS' breadth of coverage as a journal, the articles broadly cover issues related to the scope of the field of international marketing (Cavusgil and Cavusgil 2012;Samiee and Chabowski 2012), multinational firms (Rugman et al 2012), small-medium enterprises (Kamakura et al 2012), culture (Steenkamp and Geyskens 2012), exporting , foreign market subsidiaries (Homburg et al 2012), and offshoring and outsourcing (Jensen and Pedersen 2012;Kotabe et al 2012;Kalaignanam and Varadarajan 2012). Naturally, some of the articles span multiple areas as well and, as such, make unique advances to the topic of international competitiveness and international marketing.…”

“…Subsidiary performance outcomes, subsidiary environmental conditions including important marketing aspects (e.g., customer characteristics), and headquarters' coordination and communication mechanisms enrich the study's cluster description and yield a holistic picture of the marketing subsidiary taxonomy. Jensen and Pedersen (2012) lead off a series of three articles in this issue on the topic of offshoring and outsourcing. They state that during the past decade, offshoring has become an established business practice.…”

“…More or less advanced tasks can be found within all activities, e.g., in sales and marketing where telesales is on the less advanced end of the scale while branding and identity building are on the advanced end of the scale. The Jensen and Pedersen (2012) article focuses on the antecedents of advanced offshoring, exploring what causes firms to offshore some of their more advanced tasks. The study's findings indicate that while the lower cost of unskilled, labor-intensive processes is the main driver for firms that offshore less advanced tasks, the offshoring of advanced tasks is part of firms' strategy to achieve international competitiveness through access to cross-border knowledge flows and foreign knowledge resources.…”