Offshore Sourcing: Reaction, Maturation, and Consolidation of U.S. Multinationals

Abstract

The authors conducted a quasi-longitudinal investigation of U.S. multinationals' R&D, manufacturing, offshore sourcing strategies, and resultant global market performance implications, utilizing comprehensive data collected by the 1977, 1982 and 1989 benchmark surveys of U.S. direct investment abroad. Hypotheses were tested in a path analytic framework. Despite increased competition at home and abroad causing their global market share positions to weaken in recent years, U.S. multinationals have maintained, and even may have improved, their global consolidated profitability levels by skillfully exploiting their technological prowess through technology transfer and off-shore sourcing. Rapidly changing roles of U.S. parent firms and their foreign affiliates in technology development and global sourcing relationships portend a maturing, yet arduous, shift toward a global rationalization.