The Hidden Costs of Offshoring: The Impact of Complexity, Design Orientation, and Experience

Abstract:     
This paper investigates hidden costs of offshoring, i.e. unexpected and often hard to measure costs resulting from the relocation of business tasks and activities outside the home country. Particularly, the paper shows that hidden costs can be explained by the degree of offshoring complexity. Firms’ organizational design orientation and offshoring experience negatively moderate the relationship between complexity and hidden costs.

Number of Pages in PDF File: 10

Keywords: Offshoring, hidden costs, complexity theory, organizational design, global sourcing, organizational learning

JEL Classification: J23, J24, J44, J31, M51, M53, M54, L14, L21, L22, L24, L84, O14, R11, P45, P48, F59, F21, F22, F23

Accepted Paper Series