Offshoring of services: a review of the literature and organizing framework.
| Verfasser | Pisani, Niccolo |
| Posten | RESEARCH PAPER - Report - Abstract |
Abstract Offshoring of services (OS), commonly defined as the international relocation of service activities that companies previously performed in their home country, has emerged as a relevant phenomenon in international business (IB). Over the past two decades, OS has grown rapidly in the global economy and it has increasingly attracted IB scholars' attention. In this study, we systematically review the literature to map and assess the body of IB research focused on the OS phenomenon. To achieve our goal, we identify and analyze a total of 79 studies that appeared from 1990 to 2014 in a select group of 14 journals that are widely considered leading publishers of IB research. This review seeks to make a threefold contribution to the IB discipline. First, it provides an in-depth analysis of the OS literature through a synthesis of the theoretical perspectives adopted and an assessment of the empirical findings obtained. Second, it offers an organizing framework that contributes to a more nuanced understanding of the OS phenomenon. Third, it identifies emerging topics on the OS frontier and suggests potential avenues for future research.
Keywords Offshoring of services * Services relocation * Offshore outsourcing * Globally distributed work * Systematic review
1 Introduction
Offshoring of services (OS) represents a remarkable economic and social phenomenon in the international business (IB) scenario of the past two decades. OS can be defined as "the transnational relocation or dispersion of service activities" that companies previously performed in their home country, including captive (internal) and outsourced (external) delivery modes (Doh et al. 2009, p. 927). (1) Services include a wide spectrum of activities, ranging from software development to medical transcription. Service activities have been characterized traditionally by four essential qualities: intangibility, heterogeneity in outputs, perishability, and inseparability of production and consumption (Bessom and Jackson 1975; Di Gregorio et al. 2009; Erramilli and Rao 1990). The impossibility of separating the production and consumption of a service has obviously precluded the geographic relocation of its production away from the consumer. Recent advances in information and communications technology (ICT) and the emergence of a global workforce have helped loosen this constraint, enabling companies to relocate service activities formerly considered nonoffshorable to foreign locations, where they can be performed more efficiently and coordinated in a global system (Apte and Mason 1995; Bunyaratavej et al. 2007; Hahn et al. 2011; Murray and Kotabe 1999; Tambe and Hitt 2012).
Over the past two decades the OS phenomenon has grown substantially (NASSCOM and McKinsey 2009; UNCTAD 2004) and attracted the increased attention of political spheres, practitioners, and the popular press (Booth 2013; Bunyaratavej et al. 2011; Dossani and Kenney 2007). IB scholars have progressively investigated OS-related topics, widely reputed to be at the frontier of IB thinking (Doh et al. 2009; Luo et al. 2012; Manning et al. 2008; Parkhe 2007). Published studies have highlighted that OS represents a new type of internationalization, which interests a variety of service activities (Javalgi et al. 2009; Lewin et al. 2009; Lewin and Peeters 2006; Nieto and Rodriguez 2011) and implies considerable repercussions at the individual, firm, and country levels (Bunyaratavej et al. 2008; Contractor et al. 2010; Kumar et al. 2009; Liesch et al. 2012; Manning et al. 2010). Scholars have also suggested that OS generates important challenges to established IB theories, raising a host of stimulating questions and offering a fertile setting for research (Bunyaratavej et al. 2011; Doh 2005; Doh et al. 2009; Kenney et al. 2009). As a result, the OS literature has begun to develop within the broader IB field.
While reviews and conceptual articles related to the general offshoring phenomenon have appeared in the recent past, a systematic review specifically focused on the OS literature is still lacking. IB scholars have dedicated special issues to the offshoring topic (Contractor et al. 2010; Jensen et al. 2013; Kenney et al. 2009; Kotabe and Mudambi 2009; Lewin and Volberda 2011; Parkhe 2007) and published insightful reviews on the offshoring of value chain activities (Schmeisser 2013) and the particular governance mode of offshore outsourcing 1 (Hatonen and Eriksson 2009). Others have limited the scope of their reviews to particular aspects of the offshoring phenomenon and grounded their works in different fields, focusing on the relocation of knowledge-intensive, higher value-adding tasks, business functions, processes, or IT-related activities (Javalgi et al. 2009; Lacity et al. 2010, 2011; Rilla and Squicciarini 2011; Youngdahl and Ramaswamy 2008). Only Bunyaratavej et al. (2011) limited the scope of their review to OS but they investigated articles that appeared before 2010, restricted their analysis to specific aspects of the received literature, and provided a relatively narrative appraisal of this body of research.
The purpose of our study is to fill this gap by offering a systematic review of the IB literature focused on the OS phenomenon. To do so, we undertake a rigorous review process that leads to the identification and analysis of a total of 79 OS-related studies that appeared from 1990 to 2014 in a select group of 14 journals widely considered to be leading publishers of IB research. Our work updates and expands on earlier reviews by providing a historical assessment of the theoretical lenses adopted in OS research, an analytical appraisal of the key attributes of this literature, and a synthesis of the empirical findings obtained in OS-related studies published up to December 2014. Moreover, we build upon the conceptual work of Schmeisser (2013) on the broader offshoring of value chain activities to offer an organizing framework that helps to contextualize OS and appreciate its peculiarities.
We acknowledge that the OS phenomenon has important implications for other fields beyond IB and is the object of substantial research in other literatures as well, such as information systems (IS) and operations management (OM). In an effort to show how the IB field can benefit by working more closely with other related fields, our study also contains an ad hoc review of OS-related studies that appeared from 1990 to 2014 in three leading IS journals. Aside from this additional analysis related to the IS literature, our review deliberately focuses only on the IB field, seeking to contribute to the IB discipline in three ways: first, it offers an analytical assessment of the key attributes of the OS literature and provides a systematic analysis of this body of research through a synthesis of theoretical perspectives adopted and empirical findings obtained; second, it offers a framework that contributes to a more nuanced understanding of the OS phenomenon and helps to contextualize the features that are unique to the OS scenario within the broader IB field; third, it identifies emerging topics and suggests promising avenues for future research.
The remainder of the article is organized into five sections. In the following section, we introduce the methodology adopted in the review process. In the third section, we provide a descriptive analysis of the articles selected and an assessment of the main theoretical lenses used. The fourth section contains a thematic analysis of the OS literature where we synthesize the articles reviewed and offer insights on the findings obtained. In the fifth section, we elaborate an organizing framework for understanding OS and its mechanisms, discuss emerging topics on the OS frontier, and identify promising avenues for future research. The sixth and last section contains our concluding remarks.
2 Methodology
To map and review the body of IB research on the OS phenomenon we applied the methodology delineated by Tranfield et al. (2003), which was employed recently by Schmeisser (2013). In the work of Tranfield et al. (2003), management reviews comprise three fundamental stages: (1) a thorough a priori planning of the review that identifies its aim and delineates its subject area, (2) a systematic completion of the review process conducted via a comprehensive, unbiased search whose details are conveyed in sufficient detail to guarantee its replicability, and (3) an exhaustive dissemination of results. In the introduction we tackled the first stage, discussing the underlying motivation of this review and defining its subject area. In this section, we concentrate on the second stage and describe the search criteria used to identify and select relevant studies. In the following section we will focus on the third stage, assessing the articles reviewed and providing insights on the findings obtained.
2.1 Selection of Journals
We focused on publications in peer-reviewed academic journals, excluding other publication outlets such as books, monographs, or conference proceedings. We selected journals that are widely acknowledged as the leading publishers of IB research in order to identify all high-quality scholarly investigations on OS. Thus, we selected 14 journals--five leading journals focused exclusively on IB topics and nine top-ranked journals within the broader realm of management. The inclusion of this second set of journals was necessary as the existing research corroborates the view that a significant portion of high-quality IB research appears in these outlets as well (Inkpen 2001; Pisani 2009; Schmeisser 2013). To maintain a clear focus on the IB field, we excluded journals from other fields (e.g., marketing) whose inclusion would have diverted the scope of our review significantly.
For the first group of journals, our selection was grounded in previous reviews (Chan et al. 2006; Ellis and Zhan 2011; Kothari and Lahiri 2012; Lahiri and Kumar...
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