Nidthida Lin

Global offshoring portfolio diversity and performance implications

Purpose The purpose of this paper is to examine how three key dimensions of a firm’s offshoring portfolio – location diversity, functional diversity and governance mode – affect the financial and innovation outcomes of offshoring. Design/methodology/approach The authors investigate the relationships between the diversity of a firm’s offshoring portfolio and its offshoring outcomes using a sample of US, European and Asia Pacific firms engaging in offshoring activities. Findings The authors found that: location diversity shows a significant “flipped S-shape” relationship with innovation outcomes, but has a negative impact on financial outcomes, functional diversity has a significant and positive effect on innovation outcome and the use of an outsourcing governance mode significantly moderates these relationships, such that the degree of offshore outsourcing weakens some of these effects. Originality/value The authors conclude that firms which strategically coordinate all three dimensions of their offshoring portfolio are more likely to achieve better innovation or financial outcomes from their use of offshoring in global supply chain and sourcing.

Global dispersion of offshore service providers: an information processing perspective

Purpose This paper aims to propose a new theoretical perspective on the organizational design of offshoring service organizations by adopting an information processing perspective which incorporates the factors of collaborative information technologies, task commoditization and global customer service delivery that are characteristic of modern-day knowledge-intensive service (KIS) organizations. Design/methodology/approach The authors analyze data from a large multiyear survey of offshoring service providers conducted in 12 countries. Findings The authors show how use of collaborative technology is significantly and positively related to spatial and configurational dispersion, task commoditization is significantly and positively related to spatial and temporal dispersion and need for global customer presence is not related to spatial, temporal or configurational dispersion. Research limitations/implications The paper integrates concepts from management information system (MIS), operations management and international business to show how collaborative technology, task characteristics and customer service requirements affect the global dispersion of KISs. Practical implications The results show how use of collaborative technology, task characteristics and global customer service requirements need to be jointly considered in the global dispersion of activities by KIS providers. Originality/value The study sheds light on the effect of the key factors on different dimensions of global dispersion (i.e. spatial/temporal/configurational dispersion) in offshoring service provider organizations. Second, it shows how the traditional information processing perspective on organizations can be updated and applied to KIS organizations by incorporating the factors of global collaborative information technologies, task commoditization and global customer service.

Why Should Managers Look beyond Cost When Making Outsourcing Decisions? Outsourcing Driven Innovation as a Form of Open Innovation

Outsourcing scholars have used transaction cost economics to explain outsourcing decisions predominantly as a means of reducing costs and increasing profits. However, mounting empirical observation reveals that outsourcing to suppliers with the ability to assemble diverse expertise can provide critical strategic benefits to outsourcing firms in terms of the timing and cost efficiency of innovation. This study extends the traditional outsourcing paradigm to incorporate potential innovation benefits from outsourcing and proposes strategic outsourcing as an additional aspect of open innovation. Our perspective differs from traditional outsourcing and open innovation studies in two important ways. First, we outline how firms can gain the benefits from the potential innovation from outsourcing and argue that managers should take these benefits into account in their strategic outsourcing decisionmaking. Second, we show that by allowing some degree of spillover to other firms such benefits are a type of open innovation. Our theoretical framework provides new insights into organizational outsourcing decision-making and presents an extension of outsourcing as a strategic mechanism driving innovation beyond firms boundary.

Inertia and Discounting in the Selection of Socially Responsible Investments: An Experimental Investigation

Socially responsible investment funds (SRIs) have grown dramatically as an investment alternative in most of the developed world. This is an important development from a managerial perspective since the criteria used to qualify for inclusion in these funds could influence the decisions and behaviors of managers with regards to their CSR practices. However, little is known about how investors select SRI funds and how they allocate their investments in these funds. This study uses a structured experimental approach to determine if the decision-making process of investors to invest in SRIs is consistent with the decision-making used for conventional investments. Our theoretical framework draws on two widely studied concepts in the decision-making and investment literature, namely, inertia and discounting. For our 704 respondents we find that inertia plays a significant role in the selection of SRI funds and that they systemically discount the value of SRIs. Furthermore, the level of discounting of SRIs was positively related to the risk level of the investments. Our results suggest that SRIs need to be designed to cater to the risk/return profiles of investors and that these investors need to be better informed about the performance of SRIs versus conventional investments in order to reduce their systematic discounting.

Differentiators of Managerial Preferences for Outsourcing: Experimental Evidence of the Moderating Role of Value Appropriation

This study adds to our understanding of outsourcing decision-making by examining the differential effect of potential cost and non-cost innovation benefits on outsourcing choices made by top managers. In addition, we show that value appropriation - which we define in this context as a firm’s ability to capture(appropriate) value created by effectively combining and leveraging the capabilities it sources through outsourcing partners - plays a moderating role on the decision to outsource, particularly when the expected benefits involve value realized from complementary internal and external capabilities. Our results reveal that although cost efficiency incentives remain an important motivation behind outsourcing, managers recognize and strongly value non-cost innovation benefits and the role of contractual efficiency when making outsourcing decisions.

Being in Good Standing: The Value of a Corporate, Workplace & Social Reputation to Potential Executive Employees

It has been readily accepted that prospective employees, including MBA students seeking jobs after graduation, put great stock in a potential employer’s reputation – particularly that relating to its social responsibility and workplace practices. However, other than potentially biased results from self-report surveys we have little information as to whether or not job seekers would actually trade-off salary and other utilitarian aspects of a job contract to work at firms with supposed greater reputational standing. In the present study we use a structured experimental approach to determine the extent to which the facets of reputation – corporate, social and workplace – drive job contract choice. We discover that while some aspects of corporate and workplace reputation matter marginally, MBA job seekers appear to put little value on social reputation. Even in the specific cases where we can discern individuals who do value social reputation, this is unrelated to their stated preferences revealed using standard survey methods. The implication is that firms seeking to entice potential executives should focus on utilitarian aspects of the employment contract that may impact their reputation rather than attempting to manipulate that reputation directly.