Sumit K. Kundu

Reconceptualizing the Firm in a World of Outsourcing and Offshoring: The Organizational and Geographical Relocation of High-Value Company Functions

In the largest sense, global strategy amounts to (1) the optimal disaggregation or slicing of the firms value chain into as many constituent pieces as organizationally and economically feasible, followed by (2) decisions as how each slice should be allocated geographically (‘offshoring’) and organizationally (‘outsourcing’). Offshoring and outsourcing are treated as strategies that need to be simultaneously analysed, where just ‘core’ segments of the value chain are retained in-house, while others are optimally dispersed geographically, as well as dispersed over allies and contractors. This amounts to a reconsideration of the nature of the firm that captures the dynamic changes in global configuration and a reconsideration of what constitutes ‘core’ activities that need to be retained internally. The article proposes a new research agenda that searches for each firms optimal degree of disaggregation and global dispersion given that further scattering of value chain activities entail benefits as well as increased complexity and costs.

Country-of-origin image: measurement and cross-national testing

Abstract The importance of country-of-origin as a cue in consumer choice behavior is well established in the international business literature. However, little research has been done in conceptualizing and measuring the specific construct of country-of-origin. This research attempts to show that country-of-origin is rooted in the construct of “country-image” and makes a case for the measurement of the broad construct of country-of-origin image (COI). We test and revise an existing scale of COI and attempt to validate it with data from China, Taiwan, and India.

Explaining Export Performance: A Comparative Study of International New Ventures in Finnish and Indian Software Industry

In explaining international expansion and performance, the traditional explanation in international business literature has mainly offered country, and firm-level structural explanations for performance. Moreover, this literature has been biased toward larger, established multinational manufacturing companies (Dunning, 1958; Hymer, 1960; Aharoni, 1966; Vernon, 1966). This was understandable as, for much of the 20th century, manufacturing occupied the dominant share of the economy. However, by the early 1960s, the service sector already accounted for more than half of the domestic economic activity in developed nations. Today, even in international operations, the share of services is rapidly increasing. For example, the share of services in U.S. exports in 1997 had grown to 27%, and to 16% in U.S. imports (Contractor, 1999). Moreover, in sectors such as information technology, telecommunications or biotechnology, recent years have seen a proliferation of entrepreneurial start-up companies, where the characteristics of their founders and leaders appear to have as much, or greater, impact on performance, as traditional firm-level explanations. Since the late 1980s, the growth of venture capital markets and rise in entrepreneurship have been observed in technology-driven industries (The Economist, 1993; Gupta, 1989; Mamis, 1989). Could entrepreneurial and leadership factors assume greater importance in explaining performance, especially international performance, of younger companies in such sectors? This is the broad hypothesis pursued in this study.

IT Software Development Offshoring: A Multi-Level Theoretical Framework and Research Agenda

The offshoring of IT development is a significant global economic phenomenon. It influences the lives and fortunes of individuals, organizations, and nations/regions. However, because offshoring so broadly affects different stakeholders, a multi-level theory is required so that influences that may positively affect one set of stakeholders while negatively affecting another are not misinterpreted by an overly narrow analysis. This article discusses how IT development is differentiated from other global labor sourcing and argues that it is worthy of investigation as an offshoring domain. The article proposes that the study of IT development offshoring needs to recognize precursors and results as they affect individuals, organizations, and nation/regions, and presents examples and discussion in each of these areas. The article further argues that the domain of IT development offshoring is incomplete without consideration of interactions between the individual and nation/region as well as between the organization and nation/region. The article concludes by considering the complexity of presenting a complete picture in this domain and suggesting some areas for future research.

Country location choices of service multinationals: An empirical study of the international hotel sector

This article examines international country location choices for equity investment undertaken by global hotel chains. Why do certain host countries attract more hotel investment than others? A second underlying issue that we tackle in this article is whether the traditional foreign direct investment determinants used in past studies on manufacturing also apply to services--or whether service sector-specific determinants are better explanatory variables for understanding the distribution of service foreign direct investment across countries.

A Cross-Cultural Analysis of Ethnocentrism in China, India, and Taiwan

Abstract This research focuses on the popular measure of ethnocentrism, CETSCALE and attempts to validate the multi-item scale in China, India, and Taiwan. LISREL is utilized to test the unidimensionality of the scale and multiple tests are used to analyze the internal consistency reliability of the scale in these countries. Further, given the cultural differences between China, India, and Taiwan, this research hypothesizes and tests for differences in ethnocentrism among consumers of these countries. The results provide useful insights for academic researchers as well as managers of multinational companies who are involved in these countries or have plans to enter them.

How Does Firm Experience and Institutional Distance Impact Ownership Choice in High‐Technology Acquisitions?

One of the critical reasons for a firm to acquire other firms is to access new technology. This study seeks to understand what ownership position a firm should take in foreign markets if the target is in a high‐technology industry. Specifically, it looks at how firm‐level experience and institutional distance could impact this ownership. Using logistic regression models on a sample of 1,091 cross‐border acquisitions undertaken by firms from 36 countries over an 8‐year time period (2001–2008), we find that when firms acquire targets in a high‐technology industry, they resort to partial acquisitions. Our analysis further suggests that when firms seek targets in high‐technology industries but have experience with acquisitions or face higher institutional distance, the likelihood of full acquisitions over partial ones increases. Study findings contribute to our understanding of the interactive relationship among technology, experience, and institutional distance in determining appropriate ownership choices.

International Business and Global Information Management Research: Toward a Cumulative Tradition

This work reviews the relationship between the disciplines of international business and global information management (GIM), examining how international business has served as a reference discipline for GIM and how GIM has contributed to the development of international business. GIM contributions are considered in terms of their findings as well as topic and approach. Based on a review of all Journal of Global Information Management (JGIM) articles since the inception of the journal, this paper identifies international business scholars that have been important to the field of GIM and some who might deserve more attention.

Global Outsourcing and Offshoring: Global outsourcing and offshoring

Introduction The activities of any enterprise can be broken down into a large number of discrete steps along its value chain, from research and design, to production, marketing and distribution, to customer service. Even these are but broad categories which can be micro-dissected into their component pieces. For instance, the “research” function can include creative design, requiring high technical skills and intelligent market feedback into the design process. But research also entails several mundane activities such as field testing, patent applications, and data compilation. This chapter deals with three broad trends affecting the reconfiguration of company functions, for which we propose an integrated approach for theory and strategy: (a) The increasingly finer micro-dissection of company functions all along the value chain. This enables a finer-grained evaluation of which of the micro-activities are best performed within the company, and which may be outsourced – in short, the organizational relocation of functions which previously may have been performed in-house. (b) Geographical relocation and the choice of foreign country and partner. (c) The greater outsourcing and offshoring of activities that used to be considered “core,” proprietary, or strategically crucial, such as Research and Development vital to the continued competitiveness of the firm. The chapter addresses a crucial global strategy question, “What is the optimal global and organizational configuration for each micro-activity or function for a company?” Although the driving forces of outsourcing and offshoring have recently escalated, the roots of geographical and organizational restructuring of economic activity can be traced back into prehistory.

Impact of ownership and location factors on service multinationals' internalisation

Foreign direct investment in the service sector has been gaining importance in the past decade as more countries transform themselves into post-industrialised economies. The transition from a centrally planned economy to market-based economy has generated a surge of foreign direct investment from industrialised countries to Central and Eastern European Countries. This paper examines the impact of ownership and location factors on the extent of internalisation for service multinationals seeking to enter into the Czech Republic, Hungary, and Poland, as these countries launch their economies towards increased privatisation, deregulation, and liberalisation. Using foreign direct investment data of 76 firms during 1990–2000, we find significant support for our main hypotheses.