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Tracking Offshoring and Outsourcing Strategies in Global Supply Chains

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The Offshoring Challenge

Abstract

The dynamics in industrial business networks, caused by the disaggregation of firms’ value and supply chains, cause product life cycle phases and tasks to be transferred from advanced market economies to emerging market economies. In this chapter, I track the linkages between changes in a lead firm’s business environment and changes in the lead firm’s strategic offshoring and outsourcing actions; I also track how these changes in the lead firm’s behaviour are then translated into a supplier firm’s strategy and offshoring decisions. Additionally, I discuss offshoring and outsourcing strategies in global value chains. The increasing level of highly skilled labour in emerging market economies enables industrial business networks to rearrange themselves along with shorter life cycles. Furthermore, I find that different firms typically react to their customers’ strategies with the same approach but implement and schedule their implementation in different ways. These differences in the execution and implementation patterns of offshoring and outsourcing also differ among industries.

Globalisation is much more than simply moving employment and activities from developed nations into nations with lower-cost forces. Such a simple conclusion obscures the complicated skein of cross-border relationships that have evolved out of firm strategies seeking to balance the kaleidoscope of variable including labour and inventory costs, transportation, quality, concentration of valuable knowledge in clusters and temporal proximity to customers. Understanding firm strategies at the single moment in time is complicated enough, but unfortunately, these variables also fluctuate (Kenney and Florida 2004, p 1).

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Notes

  1. 1.

    Nokia Capital Markets Day—Simon Beresford-Wiley, 28.11.2006 (Source: www.nokia.com).

  2. 2.

    Elcoteq filed for bankruptcy in 2011.

  3. 3.

    Jorma Tenkanen’s presentation at KISA-MET seminar 19th May, 2005; http://www.sc-research.fi/fi/uutiset/030605.htm (information retrieved 14.11.2011).

  4. 4.

    Grossman and Rossi-Hansberg (2006).

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Acknowledgments

The author acknowledges the assistance, discussions and comments of Jyrki Ali-Yrkkö and Torben Pedersen. This research is a part of the ongoing research project SUGAR—Finnish Firms in Global Value Networks (2010–2012) funded by the Finnish Funding Agency for Technology and Innovation.

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Authors and Affiliations

  1. ETLA, The Research Institute of the Finnish Economy, Lönnrotinkatu 4B, 00120, Helsinki, Finland

    Timo Seppälä

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  1. Timo Seppälä
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Correspondence to Timo Seppälä .

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Editors and Affiliations

  1. Department of Strategic Management, Copenhagen Business School, Kilevej 14, Frederiksberg, DK-2000, Denmark

    Torben Pedersen

  2. Department of Strategic Management, Copenhagen Business School, Sachsenhausenerstr. 43, Schwalbach a. Ts., 3500, Denmark

    Lydia Bals

  3. Center for Strategic Management, Copenhagen Business School, Porcelaenshaven 24, Frederiksberg, DK-2000, Denmark

    Peter D. Ørberg Jensen

  4. Department of Strategic Management, Copenhagen Business School, Kilevej 14, Frederiksberg, DK-2000, Denmark

    Marcus M. Larsen

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Seppälä, T. (2013). Tracking Offshoring and Outsourcing Strategies in Global Supply Chains. 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_4

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  • DOI: https://doi.org/10.1007/978-1-4471-4908-8_4

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  • Print ISBN: 978-1-4471-4907-1

  • Online ISBN: 978-1-4471-4908-8

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