Abstract
Emerging economies as destinations for offshoring value activities is now a widely recognized fact. Much of the academic writing on this phenomenon focuses on showing how access to low-cost inputs provides an opportunity for firms to compete more profitably. In this paper, we argue that, with the opportunity set for distributing the value activities across the world expanding, internationally oriented firms also enjoy the opportunity to be more entrepreneurial in their strategies. Such entrepreneurial globalization, however, calls for simultaneous changes in multiple aspects of the firm. Drawing on case studies of European firms of different sizes, we show how firms have sought to rethink their businesses from ground up, reconfigure their value chain activities globally, leverage the resources of other firms, create strategic options for their firms, and have improved their competitive position in the market. Such firms may well be in the vanguard of an industrial renaissance in Europe, a continent that has hitherto been less receptive to the use of offshore opportunities offered by emerging economies. We conclude by identifying some implications for managers, policy makers, and academic researchers.
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Notes
- 1.
The four case studies below were originally done as part of research work funded by the consulting firm Value Leadership Group (VLG) based in Frankfurt, Germany. They have earlier been published as stand-alone case studies by VLG in 2006. See Value Leadership Group (2006).
- 2.
DeDuCo’s ways of disaggregating the value chain and dispersing it between Belgium and India according to the level of value creation illustrate well the theoretical arguments made along those lines by other researchers [Yoshino and Rangan (1995); Mudambi (2007, 2008)]. What is interesting is that this approach in a service industry follows a similar strategic pattern seen in manufacturing by firms like Nike (Yoffie 1991) and Acer (Everatt et al. 1999).
- 3.
This need to develop new organizational processes and routines to facilitate better coordination across geographically disbursed value chain activities is a good instance of the important role such conscious development of organizational capabilities play in entrepreneurially reinventing and implementing firm-level strategies. Other researchers have pointed out that such linkage economies (Zollo and Winter 2002; Marrone et al. 2007) permit not only coordination across value activities but also possibly learning and innovation (Mudambi 2008).
- 4.
In the authors' assessment, over the last several years, both IBM Global Services and Accenture have transformed themselves into powerhouses in the global IT services industry through an “entrepreneurial globalization” process similar to what we have outlined above. Both firms now have more employees in India than in the United States but their global business reach has grown dramatically during this period. In the global medical systems industry, GE seems to have followed a similar approach (Khanna and Weber 2005).
- 5.
This assessment is strongly supported by the success of the Silicon Valley’s Apple in recent years. It is now among the most valuable technology companies (WSJ 2012). Much of this success could be attributed to the way it disaggregates the value chain across hundreds of firms across the globe and managing that network flexibly and effectively as narrated in a long and insightful story in the New York Times recently (Duhigg and Bradsher 2012).
- 6.
The authors of this chapter are working on a long-term research project looking at many of the research questions listed here.
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Srinivasa Rangan, U., Schumacher, P. (2013). Entrepreneurial Globalization: Lessons From the Offshoring Experiences of European Firms. In: Pedersen, T., Bals, L., Ørberg Jensen, P., Larsen, M. (eds) The Offshoring Challenge. Springer, London. https://doi.org/10.1007/978-1-4471-4908-8_3
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