Reconceptualizing the Firm in a World of Outsourcing and Offshoring: The Organizational and Geographical Relocation of High-Value Company Functions

17 Pages Posted: 27 Oct 2010

See all articles by Farok J. Contractor

Farok J. Contractor

Rutgers, The State University of New Jersey

Vikas Kumar

The University of Sydney Business School

Sumit Kundu

Florida International University (FIU)

Torben Pedersen

Copenhagen Business School - Department of Strategic Management and Globalization

Abstract

In the largest sense, global strategy amounts to (1) the optimal disaggregation or slicing of the firm's value chain into as many constituent pieces as organizationally and economically feasible, followed by (2) decisions as how each slice should be allocated geographically (‘offshoring’) and organizationally (‘outsourcing’). Offshoring and outsourcing are treated as strategies that need to be simultaneously analysed, where just ‘core’ segments of the value chain are retained in-house, while others are optimally dispersed geographically, as well as dispersed over allies and contractors. This amounts to a reconsideration of the nature of the firm that captures the dynamic changes in global configuration and a reconsideration of what constitutes ‘core’ activities that need to be retained internally. The article proposes a new research agenda that searches for each firm's optimal degree of disaggregation and global dispersion given that further scattering of value chain activities entail benefits as well as increased complexity and costs.

Suggested Citation

Contractor, Farok J. and Kumar, Vikas and Kundu, Sumit and Pedersen, Torben, Reconceptualizing the Firm in a World of Outsourcing and Offshoring: The Organizational and Geographical Relocation of High-Value Company Functions. Journal of Management Studies, Vol. 47, Issue 8, pp. 1417-1433, December 2010, Available at SSRN: https://ssrn.com/abstract=1698371 or http://dx.doi.org/10.1111/j.1467-6486.2010.00945.x

Farok J. Contractor (Contact Author)

Rutgers, The State University of New Jersey ( email )

311 North 5th Street
New Brunswick, NJ 08854
United States

Vikas Kumar

The University of Sydney Business School ( email )

Storie Dixson Building H10
The University of Sydney
Sydney, NSW 2006
Australia
+ 61 2 9351 6438 (Phone)
+ 61 2 9036 5378 (Fax)

HOME PAGE: http://www.econ.usyd.edu.au/staff/vikask

Sumit Kundu

Florida International University (FIU) ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

Torben Pedersen

Copenhagen Business School - Department of Strategic Management and Globalization ( email )

Porcelænshaven 24
Frederiksberg, 2000
Denmark
+45 3815 3030 (Phone)
+45 3815 3035 (Fax)

HOME PAGE: http://www.cbs.dk/staff/tp

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
3
Abstract Views
809
PlumX Metrics