International Journal of Physical Distribution & Logistics Management

Tate, Wendy L.; Bals, Lydia

2017 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/IJPDLM-11-2016-0314

PurposeThe last decades have seen manufacturing and services offshoring on the rise, often motivated by low prices and without consideration of other important criteria such as additional cost measures and risk. With wages in former low-cost countries and automation/robotization increasing, these decisions are increasingly contested. Re-evaluations of “shoring” decisions inherently create a need to re-examine theoretical and academic contributions to this rapidly changing phenomenon. Therefore, the special issue sought manuscripts that added to the exciting and dynamic body of knowledge on “rightshoring”. The paper aims to discuss this issue.Design/methodology/approachThe paper starts out by delimiting outsourcing/insourcing and offshoring/reshoring as part of a conceptual “rightshoring” framework to establish a common terminology and context for the insights gathered in the special issue. It illustrates that “shoring” options can be classified along geographical and governance dimensions.FindingsBoth the geographical and governance dimensions are part of the rightshoring decision which is an important conceptual foundation for this special issue, as it invited insightful pieces on all of these phenomena (e.g. outsourcing, insourcing, offshoring, reshoring), acknowledging that these decisions are embedded in the same context – firms making governance and location decisions. Therefore, papers 1-4 primarily focus on offshoring, whereas paper 5 focuses on insourcing and paper 6 on reshoring. Their main findings are summarized in Table II.Research limitations/implicationsSuggestions for future research out of the six papers are summarized in Table III. There is ample opportunity to further shed light on these suggestions as well as to cover parts of the “rightshoring” framework presented, that remain less covered here (e.g. insourcing and/or reshoring).Practical implicationsThe array of potential “rightshoring” options fosters clarity about the phenomena studied and their implications. The main practical implications of the six papers are summarized in Table II.Originality/valueThe overall conceptual framework highlights the positioning of the final papers included into the special issue and provides guidance to scholars and managers alike.

Lin, Nidthida; Tan, Hao; Chen, Stephen

2017 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/IJPDLM-09-2015-0230

PurposeThe purpose of this paper is to examine how three key dimensions of a firm’s offshoring portfolio – location diversity, functional diversity and governance mode – affect the financial and innovation outcomes of offshoring.Design/methodology/approachThe authors investigate the relationships between the diversity of a firm’s offshoring portfolio and its offshoring outcomes using a sample of US, European and Asia Pacific firms engaging in offshoring activities.FindingsThe authors found that: location diversity shows a significant “flipped S-shape” relationship with innovation outcomes, but has a negative impact on financial outcomes, functional diversity has a significant and positive effect on innovation outcome and the use of an outsourcing governance mode significantly moderates these relationships, such that the degree of offshore outsourcing weakens some of these effects.Originality/valueThe authors conclude that firms which strategically coordinate all three dimensions of their offshoring portfolio are more likely to achieve better innovation or financial outcomes from their use of offshoring in global supply chain and sourcing.

Brandl, Kristin

2017 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/IJPDLM-09-2015-0239

PurposeDespite increasing interest in offshoring of knowledge-intensive services, it is still undetermined as to whether the sourcing of services truly creates the anticipated value for clients. Moreover, even less is known about whether value is created for service providers in the process beyond the general service trade. This lack of knowledge is due to the challenges of capturing value creation, the unique production process of the services, and the impact of offshoring on both value creation and the production process. The purpose of this paper is to study offshored service production processes of knowledge-intensive services in order to identify direct and indirect value creation for clients as well as service providers in the process.Design/methodology/approachThe paper applies a multiple case study method and studies one conglomerate with three offshored service production processes. The chosen method allows for the investigation of the service production process and indirect/direct value creation within the process.FindingsThe study finds that there is direct value creation for the client and the service provider towards the end of the production processes as expected. However, more importantly, it finds additional indirect value creation in various production stages. The indirect value is reflected in enhanced understanding of problems and own operations for the client and increased knowledge about clients and problem-solving approaches for the service provider.Research limitations/implicationsThis study contributes to offshoring literature by providing a comprehensive understanding of value creation in service offshoring for clients as well as service providers. It also contributes to the service management literature as a study of direct and indirect value creation in services, particularly within the production process of the services.Practical implicationsThe study allows practitioners to gain insights on the value creation logic of offshored services and the value created beyond that logic. More specifically, it allows client firms to gain details of various values and benefits of service offshoring and service provider firms to gain a focused perspective on value creation in their own service production that can lead to competitive advantages.Originality/valueThe paper is novel and original through its approach to study offshoring from a value creation logic perspective, including not only the client but also the service provider perspective. It also applies a service production process perspective that is novel in offshoring literature.

Presbitero, Alfred; Roxas, Banjo; Chadee, Doren

2017 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/IJPDLM-07-2015-0171

PurposeHow do knowledge-intensive technology-based offshore information technology service providers (ITSPs) in developing countries sustain their innovation and remain competitive? The purpose of this paper is to answer this question by drawing from the knowledge-based view of firm innovation to argue that organisational collectivism (COLL) plays a crucial role in influencing the effects of knowledge-based capabilities on innovation of ITSPs.Design/methodology/approachThe study develops a model which shows that learning mediates the effects of knowledge sharing on innovation and that COLL moderates the effects of knowledge sharing on both innovation and learning. A moderated-mediation model is tested using structural equation modelling techniques and data (n=388) from a survey of ITSPs in the Philippines.FindingsThe results show that knowledge sharing capability is positively related to innovation and that organisational learning capability fully mediates the effects of knowledge sharing on innovation. Moreover, COLL is found to significantly and positively moderate the effects of knowledge sharing on both organisational learning and innovation. The results indicate that organisational learning serves as the mechanism that transforms knowledge into innovation, but this effect is contingent on COLL of ITSPs.Practical implicationsThe findings suggest that ITSPs from developing countries can look beyond costly investments in research and development activities to invigorate their innovative capabilities. ITSPs can focus on the development of their intangible assets such as COLL to enhance the effects of knowledge-based resources on innovation for sustaining their competitiveness.Originality/valueThe moderated-mediation analytical approach to assessing the joint effects of knowledge sharing, organisational learning and collectivism on innovation is novel. The significant effects of the moderator suggest that the mediation mechanisms might differ depending on the levels of development of COLL in the organisation.

Paz-Aparicio, Carmen; Ricart, Joan E.; Bonache, Jaime

2017 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/IJPDLM-09-2015-0224

PurposeOffshoring has been studied widely in the literature on strategic management and international business. However, apart from its consideration as an administrative activity, scant attention has been paid to the offshoring of the human resource (HR) function. Research in this regard has instead focussed on outsourcing (Reichel and Lazarova, 2013). The purpose of this paper is to achieve a better understanding of companies’ decisions to offshore HR activities. It adapts the outsourcing model of Baron and Kreps (1999) by including the HR offshoring phenomenon and a dynamic perspective.Design/methodology/approachWhile the analysis is mostly conceptual, the authors ground the author’s arguments in offshoring data from the Offshoring Research Network, to explore whether the drivers for offshoring HR differ from the drivers for offshoring other administrative activities. The idiosyncrasy of the HR function is supported by the authors’ exploratory analysis and also by the descriptive case of a multinational and its experience with offshoring.FindingsA coevolutionary model is proposed for understanding the behaviour of companies offshoring their HR activities. This study contends that companies should address their decision to offshore HR activities from a dynamic perspective, being aware of three processes that are in constant change: the evolution of the HR function, the evolution of service providers, and the evolution of offshoring decisions.Originality/valueThis study seeks to make a threefold contribution to the international business, strategy, and HR management disciplines.

Hartman, Paul L.; Ogden, Jeffrey A.; Hazen, Benjamin T.

2017 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/IJPDLM-09-2015-0220

PurposeDiscussion regarding the implications of and antecedents to the decision to outsource manufacturing functions has dominated both the academic literature and popular press for over 30 years. However, economic and competitive landscapes across the globe have changed such that the tenability of outsourcing is being re-evaluated by many organizations. Using the rich body of literature regarding the decision to outsource as a starting point, the purpose of this paper is to investigate the reasons why firms insource and the associated implications thereof.Design/methodology/approachThis case study research captures data from 12 firms in the manufacturing industry that have insourced a previously outsourced function. Data were collected via interviews with executives, researcher observations, and archival records over a nine-month period.FindingsThe findings suggest that the primary drivers for insourcing were predominantly the same as those cited for outsourcing. However, insourcing decisions are often made in response to a specific, external trigger event and not necessarily in concert with long-term, strategic goals. This is in contrast to firms’ desires to make more strategic location decisions. The findings also show that insourcing/outsourcing location decisions require continuous evaluation in order to optimize competitiveness and align with long-term firm goals.Research limitations/implicationsThis research contributes by not only assimilating and gaining an understanding of key factors affecting insourcing decisions, but also by establishing a baseline for future investigation into this burgeoning area via the presentation of testable propositions.Practical implicationsThis paper provides insights for supply chain, logistics, and operations management professionals who seek to better understand the critical factors that should be considered when deciding whether or not to insource.Originality/valueThe benefits of insourcing are being considered to a greater extent across industry, yet there is a dearth of academic or practitioner literature that business leaders and academicians can use as the basis for examining this decision. This research provides both the basis and motivation for developing knowledge in this area of increasing importance.

Moradlou, Hamid; Backhouse, Chris; Ranganathan, Rajesh

2017 International Journal of Physical Distribution & Logistics Management

doi: 10.1108/IJPDLM-06-2015-0149

PurposeDue to today’s volatile business environment companies have started to establish a better understanding of the total risk/benefit-balance concerning manufacturing location decisions of their component supply. The focus is now much more on comprehensive and strategic supply chain issues rather than simply relying on piece-part cost analysis. This has led to an emerging trend called re-shoring. The purpose of this paper is to understand the primary motivation behind the re-shoring strategy in the UK and investigate the factors that influence this decision from Indian industries perspectives.Design/methodology/approachThe analysis of the paper is based on interviews conducted in the UK and India (state of Tamil Nadu) in various industries including automotive, industrial goods, textile, and marine. For this purpose an interview framework based on key enablers identified from the literature, being information technology solutions, manufacturing equipment and human factors. This provided an assessment of the capability of the companies for being responsive to western demand.FindingsThe findings indicate that re-shoring to the UK is the result of inadequacy in responsiveness and long production lead times of the Indian suppliers. The outcome of this paper indicates that the top factors behind this inadequacy in responsiveness are logistics and transportation, electricity shortage, excessive paperwork and working attitude.Originality/valueThis paper aims to fill the gap in the re-shoring literature by providing a clear picture behind the reason for re-shoring in the UK and identify the drivers behind this shortcoming in the component supply from India.