Learning Paths to Offshore Outsourcing - From Cost Reduction to Knowledge Seeking

30 Pages Posted: 26 Apr 2007

See all articles by Peter Maskell

Peter Maskell

Copenhagen Business School (CBS)

Torben Pedersen

Copenhagen Business School - Department of Strategic Management and Globalization

Björn Preuss

Copenhagen Business School

Jens Dick-Nielsen

Copenhagen Business School - Department of Finance

Date Written: August 2006

Abstract

A corporation's offshore outsourcing may be seen as the result of a discrete, strategic decision taken in response to an increasing pressure from worldwide competition. However, empirical evidence of a representative cross-sector sample of international Danish firms indicates that offshore sourcing in low-cost countries is best described as a learning-by-doing process in which the offshore outsourcing of a corporation goes through a sequence of stages towards sourcing for innovation. Initially, a corporation's outsourcing is driven by a desire for cost minimization. Over a period of time the outsourcing experience lessens the cognitive limitations of decision-makers as to the advantages that can be achieved through outsourcing in low-cost countries: the insourcer/vendor may not only offer cost advantages, but also quality improvement and innovation. The quality improvements that offshore outsourcing may bring about evoke a realization in the corporation that even innovative processes can be outsourced.

Keywords: Offshore outsourcing, cost reduction, innovation, experiential learning, low-cost countries

JEL Classification: L22, L23, D83, M55

Suggested Citation

Maskell, Peter and Pedersen, Torben and Preuss, Björn and Dick-Nielsen, Jens, Learning Paths to Offshore Outsourcing - From Cost Reduction to Knowledge Seeking (August 2006). Available at SSRN: https://ssrn.com/abstract=982122 or http://dx.doi.org/10.2139/ssrn.982122

Peter Maskell (Contact Author)

Copenhagen Business School (CBS) ( email )

Howitzvej 60, 6
Danish research Unit for Industrial Dynamics (DRUID)
DK-2000 Frederiksberg
Denmark
+45 3815 2881 (Phone)
+45 3929 2226 (Fax)

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

Björn Preuss

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Jens Dick-Nielsen

Copenhagen Business School - Department of Finance ( email )

Solbjerg Plads 3
Frederiksberg, DK-2000
Denmark

Register to save articles to
your library

Register

Paper statistics

Downloads
477
Abstract Views
2,934
rank
59,296
PlumX Metrics