IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v150y2014icp163-173.html
   My bibliography  Save this article

An empirical analysis of manufacturing competitive factors and offshoring

Author

Listed:
  • da Silveira, Giovani J.C.

Abstract

Offshoring is one of the defining phenomena of 21st century manufacturing. It attracts significant attention in academic, business, and social circles in both developed and developing economies. Despite the relevance of this phenomenon, there is limited research exploring to what extent offshoring effort is explained by manufacturing strategy. In this study I investigate whether offshoring effort can be predicted by manufacturing competitive factors such as cost, flexibility, and delivery, particularly when controlling for structural covariates from internalization theory. Data from an international manufacturing survey enable the analysis. Results suggest that competing based on cost and flexibility, but not on delivery, explains the effort to relocate sourcing and design activities to a foreign country.

Suggested Citation

  • da Silveira, Giovani J.C., 2014. "An empirical analysis of manufacturing competitive factors and offshoring," International Journal of Production Economics, Elsevier, vol. 150(C), pages 163-173.
    • Handle: RePEc:eee:proeco:v:150:y:2014:i:c:p:163-173
    DOI: 10.1016/j.ijpe.2013.12.031
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527313005902
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ijpe.2013.12.031?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Arie Y Lewin & Silvia Massini & Carine Peeters, 2009. "Why are companies offshoring innovation? The emerging global race for talent," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(8), pages 1406-1406, October.
    2. Alan M. Rugman, 1981. "A test of internalization theory," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 2(4), pages 211-219, December.
    3. Mol, Michael J. & van Tulder, Rob J.M. & Beije, Paul R., 2005. "Antecedents and performance consequences of international outsourcing," International Business Review, Elsevier, vol. 14(5), pages 599-617, October.
    4. John K Mullen & James Panning, 2009. "Foreign Sourcing of Intermediate Inputs: Impacts on Unskilled Labor in US Manufacturing Industries," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 35(2), pages 160-173.
    5. Oberlaender, Michael, 2011. "Dual sourcing of a newsvendor with exponential utility of profit," International Journal of Production Economics, Elsevier, vol. 133(1), pages 370-376, September.
    6. Arie Lewin & Silvia Massini & Carine Peeters, 2008. "Why are companies offshoring innovation ?the emerging global race for talent," Working Papers CEB 08-009, ULB -- Universite Libre de Bruxelles.
    7. Alan M. Rugman & Alain Verbeke, 2005. "Extending the Theory of the Multinational Enterprise: Internalization and Strategic Management Perspectives," Chapters, in: Analysis of Multinational Strategic Management, chapter 7, pages 91-103, Edward Elgar Publishing.
    8. Lilach Nachum & Srilata Zaheer, 2005. "The persistence of distance? The impact of technology on MNE motivations for foreign investment," Strategic Management Journal, Wiley Blackwell, vol. 26(8), pages 747-767, August.
    9. World Bank, 2012. "World Development Indicators 2012," World Bank Publications - Books, The World Bank Group, number 6014.
    10. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Trading Tasks: A Simple Theory of Offshoring," American Economic Review, American Economic Association, vol. 98(5), pages 1978-1997, December.
    11. Colin Davis & Alireza Naghavi, 2011. "Offshoring Production: A Simple Model Of Wages, Productivity, And Growth," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 334-348, April.
    12. Peter Maskell & Torben Pedersen & Bent Petersen & Jens Dick-Nielsen, 2007. "Learning Paths to Offshore Outsourcing: From Cost Reduction to Knowledge Seeking," Industry and Innovation, Taylor & Francis Journals, vol. 14(3), pages 239-257.
    13. Peter J. Buckley & Mark Casson, 2010. "Models of the Multinational Enterprise," Palgrave Macmillan Books, in: The Multinational Enterprise Revisited, chapter 7, pages 147-176, Palgrave Macmillan.
    14. Bernhard Michel & François Rycx, 2012. "Does offshoring of materials and business services affect employment? Evidence from a small open economy," Applied Economics, Taylor & Francis Journals, vol. 44(2), pages 229-251, January.
    15. Bock, Stefan, 2008. "Supporting offshoring and nearshoring decisions for mass customization manufacturing processes," European Journal of Operational Research, Elsevier, vol. 184(2), pages 490-508, January.
    16. Gimenez, Cristina & Sierra, Vicenta & Rodon, Juan, 2012. "Sustainable operations: Their impact on the triple bottom line," International Journal of Production Economics, Elsevier, vol. 140(1), pages 149-159.
    17. Robert D. Warne, 1973. "The Heckscher‐Ohlin Model with Three Factors and Two Goods," The Economic Record, The Economic Society of Australia, vol. 49(2), pages 300-305, June.
    18. Olivier Bertrand, 2011. "What goes around, comes around: Effects of offshore outsourcing on the export performance of firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 42(2), pages 334-344, February.
    19. Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, April.
    20. Leo Dana & Robert Hamilton & Brooke Pauwels, 2007. "Evaluating offshore and domestic production in the apparel industry: The small firm’s perspective," Journal of International Entrepreneurship, Springer, vol. 5(3), pages 47-63, December.
    21. Demeter, Krisztina, 2003. "Manufacturing strategy and competitiveness," International Journal of Production Economics, Elsevier, vol. 81(1), pages 2015-2213, January.
    22. Mari Sako, 2006. "Outsourcing and Offshoring: Implications for Productivity of Business Services," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 22(4), pages 499-512, Winter.
    23. Peter J. Buckley & Mark Casson, 1991. "The Future of the Multinational Enterprise," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-21204-0, March.
    24. Martin Neil Baily & Robert Z. Lawrence, 2004. "What Happened to the Great U.S. Job Machine? The Role of Trade and Electronic Offshoring," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(2), pages 211-284.
    25. Houston, Mark B., 2004. "Assessing the validity of secondary data proxies for marketing constructs," Journal of Business Research, Elsevier, vol. 57(2), pages 154-161, February.
    26. repec:bla:ecorec:v:49:y:1973:i:126:p:300-05 is not listed on IDEAS
    27. Thomas W. Malone, 1987. "Modeling Coordination in Organizations and Markets," Management Science, INFORMS, vol. 33(10), pages 1317-1332, October.
    28. Liza Jabbour, 2010. "Offshoring and Firm Performance: Evidence from French Manufacturing Industry," The World Economy, Wiley Blackwell, vol. 33(3), pages 507-524, March.
    29. John A. Mathews, 2003. "Strategizing by firms in the presence of markets for resources," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 12(6), pages 1157-1193, December.
    30. Peter J Buckley & Mark C Casson, 2009. "The internalisation theory of the multinational enterprise: A review of the progress of a research agenda after 30 years," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 40(9), pages 1563-1580, December.
    31. Robert M. Grant & Charles Baden‐Fuller, 2004. "A Knowledge Accessing Theory of Strategic Alliances," Journal of Management Studies, Wiley Blackwell, vol. 41(1), pages 61-84, January.
    32. A. Delios & P.W. Beamish & X. Zhao, 2009. "The evolution of Japanese investment in China: from toys to textiles to business process outsourcing," Asia Pacific Business Review, Taylor & Francis Journals, vol. 15(3), pages 323-345, July.
    33. Arie Lewin & Silvia Massini & Carine Peeters, 2009. "Why are companies offshoring innovation the emerging global race for talent (Journal of International Business Studies (2009) 40 (901-925) DOI:10.1057/jibs.2008.92)," ULB Institutional Repository 2013/205625, ULB -- Universite Libre de Bruxelles.
    34. Paul M. Swamidass & William T. Newell, 1987. "Manufacturing Strategy, Environmental Uncertainty and Performance: A Path Analytic Model," Management Science, INFORMS, vol. 33(4), pages 509-524, April.
    35. Lucia Cusmano & Maria Luisa Mancusi & Andrea Morrison, 2010. "Globalization of Production and Innovation: How Outsourcing is Reshaping an Advanced Manufacturing Area," Regional Studies, Taylor & Francis Journals, vol. 44(3), pages 235-252.
    36. Paul M Swamidass & Masaaki Kotabe, 1993. "Component Sourcing Strategies of Multinationals: An Empirical Study of European and Japanese Multinationals," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(1), pages 81-99, March.
    37. Yushan Zhao & Roger J. Calantone, 2003. "The Trend Toward Outsourcing In New Product Development: Case Studies In Six Firms," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 51-66.
    38. Masaaki Kotabe & K Scott Swan, 1994. "Offshore Sourcing: Reaction, Maturation, and Consolidation of U.S. Multinationals," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 25(1), pages 115-140, March.
    39. Peter J Buckley & Niron Hashai, 2004. "A global system view of firm boundaries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 35(1), pages 33-45, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kathleen M. Kahle & René M. Stulz, 2017. "Is the US Public Corporation in Trouble?," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 67-88, Summer.
    2. Grodzicki, Maciej J. & Skrzypek, Jurand, 2020. "Cost-competitiveness and structural change in value chains – vertically-integrated analysis of the European automotive sector," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 276-287.
    3. Alison Ashby, 2016. "From global to local: reshoring for sustainability," Operations Management Research, Springer, vol. 9(3), pages 75-88, December.
    4. Di Mauro, Carmela & Ancarani, Alessandro, 2022. "A taxonomy of back-shoring initiatives in the US," International Business Review, Elsevier, vol. 31(5).
    5. Mazzola, Erica & Bruccoleri, Manfredi & Perrone, Giovanni, 2019. "The curvilinear effect of manufacturing outsourcing and captive-offshoring on firms' innovation: The role of temporal endurance," International Journal of Production Economics, Elsevier, vol. 211(C), pages 197-210.
    6. Pourya Pourhejazy & Alison Ashby, 2021. "Reshoring Decisions for Adjusting Supply Chains in a Changing World: A Case Study from the Apparel Industry," IJERPH, MDPI, vol. 18(9), pages 1-13, May.
    7. Gillani, Fatima & Chatha, Kamran Ali & Sadiq Jajja, Muhammad Shakeel & Farooq, Sami, 2020. "Implementation of digital manufacturing technologies: Antecedents and consequences," International Journal of Production Economics, Elsevier, vol. 229(C).
    8. Kinkel, Steffen & Baumgartner, Marco & Cherubini, Enrica, 2022. "Prerequisites for the adoption of AI technologies in manufacturing – Evidence from a worldwide sample of manufacturing companies," Technovation, Elsevier, vol. 110(C).
    9. Gylling, Michael & Heikkilä, Jussi & Jussila, Kari & Saarinen, Markku, 2015. "Making decisions on offshore outsourcing and backshoring: A case study in the bicycle industry," International Journal of Production Economics, Elsevier, vol. 162(C), pages 92-100.
    10. Woldt, Jason & Godfrey, Michael, 2022. "Is there a home field advantage? The impact of shareholder wealth from U.S. manufacturing location decisions: A comparative analysis," International Journal of Production Economics, Elsevier, vol. 248(C).
    11. Ancarani, Alessandro & Di Mauro, Carmela & Fratocchi, Luciano & Orzes, Guido & Sartor, Marco, 2015. "Prior to reshoring: A duration analysis of foreign manufacturing ventures," International Journal of Production Economics, Elsevier, vol. 169(C), pages 141-155.
    12. Ortega Jimenez, Cesar H. & Machuca, Jose A.D. & Garrido-Vega, Pedro & Filippini, Roberto, 2015. "The pursuit of responsiveness in production environments: From flexibility to reconfigurability," International Journal of Production Economics, Elsevier, vol. 163(C), pages 157-172.
    13. Koji Kimita & Sergio A. Brambila‐Macias & Anne‐Marie Tillman & Tomohiko Sakao, 2021. "Failure analysis method for enhancing circularity through systems perspective," Journal of Industrial Ecology, Yale University, vol. 25(3), pages 544-562, June.
    14. Takahiro Fujimoto & Mitsuhiro Fukuzawa & Young Won Park & Paul Hong, 2022. "Developing Effective Measures of Organizational Capability of Manufacturing Firms: An Exploratory Case Study of Japanese Manufacturing Firms," Sustainability, MDPI, vol. 14(22), pages 1-20, November.
    15. Johansson, Malin & Olhager, Jan, 2018. "Comparing offshoring and backshoring: The role of manufacturing site location factors and their impact on post-relocation performance," International Journal of Production Economics, Elsevier, vol. 205(C), pages 37-46.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Schmeisser, Bjoern, 2013. "A Systematic Review of Literature on Offshoring of Value Chain Activities," Journal of International Management, Elsevier, vol. 19(4), pages 390-406.
    2. Wieland, Andreas & Bals, Lydia & Mol, Michael J. & Handfield, Robert B., 2020. "Overcoming blind spots in global sourcing research: Exploiting the cross-sections between supply chain management and international business," Journal of International Management, Elsevier, vol. 26(1).
    3. Buckley, Peter J. & Hashai, Niron, 2014. "The role of technological catch up and domestic market growth in the genesis of emerging country based multinationals," Research Policy, Elsevier, vol. 43(2), pages 423-437.
    4. Nidthida Lin, 2020. "Designing Global Sourcing Strategy for Cost Savings and Innovation: A Configurational Approach," Management International Review, Springer, vol. 60(5), pages 723-753, October.
    5. Larsen, Marcus M., 2016. "Failing to estimate the costs of offshoring: A study on process performance," International Business Review, Elsevier, vol. 25(1), pages 307-318.
    6. Roger Bandick, 2020. "Global sourcing, productivity and export intensity," The World Economy, Wiley Blackwell, vol. 43(3), pages 615-643, March.
    7. Julien Gooris, 2013. "The impact of host-country environment and home-host country distance on the configuration of international service activities," ULB Institutional Repository 2013/209404, ULB -- Universite Libre de Bruxelles.
    8. repec:bla:jomstd:v:47:y:2010:i:s2:p:1510-1533 is not listed on IDEAS
    9. Yi-Ju Lo & Tung Hung, 2015. "Structure offshoring and returns on offshoring," Asia Pacific Journal of Management, Springer, vol. 32(2), pages 443-479, June.
    10. Jensen, Peter D. Ørberg, 2012. "A passage to India: A dual case study of activities, processes and resources in offshore outsourcing of advanced services," Journal of World Business, Elsevier, vol. 47(2), pages 311-326.
    11. Martinez-Noya, Andrea & Narula, Rajneesh, 2018. "What more can we learn from R&D alliances? : A review and research agenda," MERIT Working Papers 2018-022, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    12. Lema, Rasmus & Quadros, Ruy & Schmitz, Hubert, 2015. "Reorganising global value chains and building innovation capabilities in Brazil and India," Research Policy, Elsevier, vol. 44(7), pages 1376-1386.
    13. Luisa Gagliardi & Simona Iammarino & Andrés Rodríguez-Pose, 2021. "Exposure to OFDI and regional labour markets: evidence for routine and non-routine jobs in Great Britain [Who’s got the aces up his sleeve? Functional specialization of cities and entrepreneurship]," Journal of Economic Geography, Oxford University Press, vol. 21(5), pages 783-806.
    14. Angels Pelegrín & Catalina Bolancé, 2011. "Offshoring and company characteristics: some evidence from the analysis of Spanish firm data," Working Papers 2011/16, Institut d'Economia de Barcelona (IEB).
    15. Angels Pelegrín & Catalina Bolancé, 2011. "Offshoring and company characteristics: some evidence from the analysis of Spanish firm data," Working Papers 2011/16, Institut d'Economia de Barcelona (IEB).
    16. Marina Papanastassiou & Robert Pearce & Antonello Zanfei, 2020. "Changing perspectives on the internationalization of R&D and innovation by multinational enterprises: A review of the literature," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(4), pages 623-664, June.
    17. Lorena D’Agostino, 2015. "The neglected effects of R&D captive offshoring in emerging countries on the creation of knowledge at home," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 42(1), pages 61-91, March.
    18. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
    19. Prud'homme, Dan & von Zedtwitz, Max, 2019. "Managing “forced” technology transfer in emerging markets: The case of China," Journal of International Management, Elsevier, vol. 25(3), pages 1-1.
    20. Niccolò Pisani & Joan Enric Ricart, 2016. "Offshoring of Services: A Review of the Literature and Organizing Framework," Management International Review, Springer, vol. 56(3), pages 385-424, June.
    21. Steinberg, Philip J. & Procher, Vivien D. & Urbig, Diemo, 2017. "Too much or too little of R&D offshoring: The impact of captive offshoring and contract offshoring on innovation performance," Research Policy, Elsevier, vol. 46(10), pages 1810-1823.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:150:y:2014:i:c:p:163-173. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.