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A Matter of Coherence: The Effects of Offshoring of Intangibles on Firm Performance

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  • Federica Ceci
  • Francesca Masciarelli

Abstract

Offshoring of intangibles is a global production strategy based on the decision to externalize intangible activities to foreign countries. In the present work we test the existence of a positive relationship between offshoring intangibles and firm performance. To reap the full benefit of offshoring, firms are required to integrate and coordinate activities and knowledge; integration and coordination become difficult when activities are knowledge intensive as in the case of intangibles. We argue that the positive relation between offshoring intangibles and performance is strengthened if firms retain part of the knowledge related to the offshore outsourced activity, which reduces the risk of knowledge fragmentation and eases coordination and control. Our analysis suggests that some coherence between what a firm outsources abroad and what it offers positively moderates the relationship between offshoring intangible activities and firm performance.

Suggested Citation

  • Federica Ceci & Francesca Masciarelli, 2010. "A Matter of Coherence: The Effects of Offshoring of Intangibles on Firm Performance," Industry and Innovation, Taylor & Francis Journals, vol. 17(4), pages 373-392.
    • Handle: RePEc:taf:indinn:v:17:y:2010:i:4:p:373-392
    DOI: 10.1080/13662716.2010.496244
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    References listed on IDEAS

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    1. Wei, Shang-Jin & Amiti, Mary, 2006. "Service Offshoring, Productivity and Employment: Evidence from the US," CEPR Discussion Papers 5475, C.E.P.R. Discussion Papers.
    2. Jacob Funk Kirkegaard, 2005. "Outsourcing and Offshoring: Pushing the European Model Over the Hill, Rather Than Off the Cliff!," Working Paper Series WP05-1, Peterson Institute for International Economics.
    3. Nicolai J. Foss & Jens Frøslev Christensen, 1996. "A Process Approach to Corporate Coherence," DRUID Working Papers 96-7, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    4. Mary Amiti & Shang-Jin Wei, 2006. "Service Offshoring and Productivity: Evidence from the United States," NBER Working Papers 11926, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Saleh S. Tabrizy, 2015. "An empirical assessment of the effects of trade in innovative tasks on innovation output," Southern Economic Journal, John Wiley & Sons, vol. 82(1), pages 307-334, July.
    2. Gavin Murphy & Iulia Siedschlag, 2015. "Determinants of R&D offshoring," JRC Working Papers on Corporate R&D and Innovation 2015-02, Joint Research Centre.
    3. Ceci, Federica & Prencipe, Andrea, 2013. "Does Distance Hinder Coordination? Identifying and Bridging Boundaries of Offshored Work," Journal of International Management, Elsevier, vol. 19(4), pages 324-332.
    4. Valle, Sandra & García, Francisco & Avella, Lucía, 2015. "Offshoring Intermediate Manufacturing: Boost or Hindrance to Firm Innovation?," Journal of International Management, Elsevier, vol. 21(2), pages 117-134.
    5. Stefano Elia & Rajneesh Narula & Silvia Massini, 2015. "Disentangling the Role of Modularity and Bandwidth in Entry Mode Choice: The Case of Business Services Offshoring," John H Dunning Centre for International Business Discussion Papers jhd-dp2015-06, Henley Business School, University of Reading.
    6. Gavin Murphy & Iulia Siedschlag, 2018. "Determinants of R&D offshoring: firm-level evidence from a small open economy," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(2), pages 529-553, August.

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