Yesterday's Friends, Tomorrow's Foes? Offshoring, Rents and Institutional Settings

42 Pages Posted: 26 Feb 2007

See all articles by Elizabeth Maitland

Elizabeth Maitland

University of New South Wales (UNSW)

Pierre J. Richard

University of New South Wales (UNSW) - Management; UNSW Australia Business School, School of Economics

Date Written: January 12, 2007

Abstract

Despite sustained public debate about the current wave of offshoring, there has been limited international business research on its strategic implications. We examine the generation, appropriation and sustainability of economic rents that flow from competitive advantage in the face of offshoring. Digitization and I.T. have allowed the scope of offshoring to expand to cover finance and accounting, business analysis, R&D, HR and customer service. At the same time, across borders, institutional differences associated with intellectual property rights regimes, market regulation, lobbying and corruption create additional distortions that can threaten rents. Our analysis of rent generation suggests that innovation (Schumpeterian) rents and asset utilization (Ricardian) rents are threatened by offshoring, while rents based on market power (monopoly rents) are only weakly impacted. This places Schumpeterian rents at risk in a manner they never have been before.

Keywords: Offshoring, rents, international business, institutional economics

JEL Classification: F23, L14, L24, M10

Suggested Citation

Maitland, Elizabeth and Richard, Pierre J., Yesterday's Friends, Tomorrow's Foes? Offshoring, Rents and Institutional Settings (January 12, 2007). Available at SSRN: https://ssrn.com/abstract=965342 or http://dx.doi.org/10.2139/ssrn.965342

Elizabeth Maitland

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

Pierre J. Richard (Contact Author)

University of New South Wales (UNSW) - Management ( email )

Sydney, NSW 2052
Australia

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

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