Predicting negative consumer reactions to
services offshoring
Shawn T. Thelen
Department of Marketing and International Business, Hofstra University, Hempstead, New York, USA
Terri Shapiro
Department of Psychology, Hofstra University, Hempstead, New York, USA
Abstract
Purpose – The purpose of this paper is to examine behavioral changes by consumers (i.e. changing time of day they contact a firm, requesting a
domestic service provider, and ceasing doing business with the firm) when faced with being provided a service from abroad.
Design/methodology/approach – Data were collected from a pre-recruited internet panel of 394 American consumers. Hierarchical regression
analysis, including demographic and psychographic variables, was employed to determine which variables were instrumental in predicting behavioral
changes among consumers when being provided a service from abroad.
Findings – The results suggest that American consumers are wary of services offshoring and that psychographic variables (boycott issue importance
and negative word of mouth) are more instrumental than demographic variables in predicting behavioral changes by consumers.
Research limitations/implications – Future research should examine consumer attitudes about services offshoring from populations in countries
other than the US, and in relation to different types of services and the importance of those services to consumers.
Practical implications – Implications for firms include assessing their customer’s perceptions of offshoring, proactively communicating with
customers about offshoring practices, and providing customers with some control over their service interactions.
Originality/value – Previous researchers have highlighted the benefits of services offshoring to firms but also hypothesized that consumers may react
negatively when provided services from abroad. In this research, it is found that consumers will change the way they interact with a firm when faced
with being provided a service from abroad.
Keywords Services offshoring, Boycott, Negative word of mouth, Customer attitudes, Outsourcing, Perception
Paper type Research paper
An executive summary for managers and executive
readers can be found at the end of this article.
Introduction
The use of information technology such as real-time
electronic data transmission and telephony has resulted in
the dramatic growth of services offshoring, modified how
services are delivered, and changed interactions between
service providers and recipients (Javalgi and Whit, 2002;
Kirkegarrd, 2004). The relationship between a firm and its
customers can be potentially damaged when customers learn,
either by detecting it themselves or through other sources
(media, unions, books, watch lists, etc.), that the firm is
providing them services from abroad. The issue has been
sensitive enough that some firms, e.g. US Airways, Dell and
Lehman Brothers, closed some of their overseas service
operations while other firms, e.g. Powergen, Royal Bank of
Scotland – NatWest, and Commerce Bank (TD Bank),
highlight that they have domestic service operations as an
appeal to consumers (Scott, 2007; Bernstel, 2006). The
ability of firms to conceal the extent of their offshoring
activities (e.g. tax preparation, medical transcription, X-ray
diagnosis, credit card processing, accounting, insurance
processing, tutoring, financial analysis, customer care, home
mortgage handling, overdraft notification, and wedding
planning) is becoming increasingly difficult, even that of
back office operations, due to the popularity of the subject in
the media as well as federal and state laws being introduced
forcing full disclosure to consumers of offshoring activities
(Woodrow Wilson International Center for Scholars, 2008).
Therefore, consumers are increasingly aware that firms are
employing offshore service providers and sending information
about them (the consumer) outside the country for
processing.
Resultant of the less than flattering portrayal of offshoring,
72 percent of the American public view it negatively
(Woodrow Wilson International Center for Scholars, 2008).
Although subjective information (media stories and survey
results) are supportive of consumer disapproval of services
offshoring, it is still undetermined if consumers are willing to
change how they interact with a firm when provided services
from abroad. Specifically, in this research we seek to
determine if psychographic variables, negative word of
mouth (NWOM) and boycott issue importance, provide
insight into changes in consumer behavior when provided a
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0887-6045.htm
Journal of Services Marketing
26/3 (2012) 181– 193
q Emerald Group Publishing Limited [ISSN 0887-6045]
[DOI 10.1108/08876041211223988]
The authors would like to thank the Frank G. Zarb School of Business at
Hofstra University for providing financial support for this research.
181