A multi-theory approach to understanding the business process outsourcing decision

Research output: Contribution to journalArticle

17 Citations (Scopus)

Abstract

This paper proposes a framework for understanding location distance and governance model choice in the business process outsourcing (BPO) decision. Much of the current international business (IB) literature employs location-specific factors alone to explain the BPO decision, and this literature is dominated by studies of the offshore location option, with limited attention given to the local and nearshore location distance options as alternatives to offshoring. The framework proposed here was developed from integrating firm-level and process-level factors with location attractiveness factors, and undertaking in-depth case study analysis of a number of German companies. The findings highlight the value of integrating firm-level and process-level factors with location attractiveness factors to understand location distance and governance model choice in the BPO decision, and support those who have argued that existing frameworks in this area cannot fully explain the complexities of the BPO decision. Moreover, the findings provide important insights into how these factors interact to influence location distance and governance model choice. The proposed BPO framework also provides a useful basis for practical prescription.
LanguageEnglish
Pages505-518
JournalJournal of World Business
Volume50
Issue number3
Early online date31 May 2015
DOIs
Publication statusPublished - 1 Jul 2015

Fingerprint

Business process outsourcing
Factors
Governance
Model choice
Attractiveness
Offshoring
International business
Prescription
Limited attention
Specific factors

Keywords

  • Business process outsourcing
  • Nearshore
  • Offshore
  • Resource-based view
  • Transaction cost economics
  • Eclectic theory

Cite this

@article{5cc0eca4abf44557b11f4b627f34bb54,
title = "A multi-theory approach to understanding the business process outsourcing decision",
abstract = "This paper proposes a framework for understanding location distance and governance model choice in the business process outsourcing (BPO) decision. Much of the current international business (IB) literature employs location-specific factors alone to explain the BPO decision, and this literature is dominated by studies of the offshore location option, with limited attention given to the local and nearshore location distance options as alternatives to offshoring. The framework proposed here was developed from integrating firm-level and process-level factors with location attractiveness factors, and undertaking in-depth case study analysis of a number of German companies. The findings highlight the value of integrating firm-level and process-level factors with location attractiveness factors to understand location distance and governance model choice in the BPO decision, and support those who have argued that existing frameworks in this area cannot fully explain the complexities of the BPO decision. Moreover, the findings provide important insights into how these factors interact to influence location distance and governance model choice. The proposed BPO framework also provides a useful basis for practical prescription.",
keywords = "Business process outsourcing, Nearshore, Offshore, Resource-based view, Transaction cost economics, Eclectic theory",
author = "Martina Gerbl and Ronan McIvor and Sharon Loane and Paul Humphreys",
note = "Reference text: Argyres, N., & Mayer, K. (2007). Contract design as a firm capability: An integration of learning and transaction cost perspectives. Academy of Management Review, 32: 1060–1077. Aron, R., & Singh, J. V. (2005). Getting offshoring right. Harvard Business Review, 83(12): 135–143. Bahli, B., & Rivard, S. (2005). Validating measures of information technology outsourcing risk factors. OMEGA, 33: 175–187. Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17: 49–61. Barney, J. B. (1999). How a firm’s capabilities affect boundary decisions. Sloan Management Review, 40(3): 137–145. Blinder, A. S. (2006). Offshoring: The next industrial revolution? Foreign Affairs, 85(2): 113–128. Bowman, C., & Ambrosini, V. (2000). Value creation versus value capture: Towards a coherent definition of value in strategy. British Journal of Management, 11(1): 1–15. Boyson, S., Corsi, T., Dresner, M., & Rabinovich, E. (1999). Managing effective third party logistics relationships: What does it take? Journal of Business Logistics, 20(1): 73– 100. Brouthers, K. D., & Brouthers, L. E. (2001). Explaining the national cultural distance power. Journal of International Business Studies, 32: 177–189. Bunyaratavej, K., Hahn, E. D., & Doh, J. P. (2007). International offshoring of services: A parity study. Journal of International Management, 13(1): 7–21. Bunyaratavej, K., Hahn, E. D., & Doh, J. P. (2008). Multinational investment and host country development: Location efficiencies for services offshoring. Journal of World Business, 43(2): 227–242. Ceci, F., & Prencipe, A. (2013). Does distance hinder coordination? Identifying and bridging boundaries of offshored work. Journal of International Management, 19(4): 324–332. Child, J., Rodrigues, S. B., & George Frynas, J. (2009). Psychic distance, its impact and coping modes and interpretations of SME decision makers. Management International Review, 49(2): 199–224. Combs, J. B., & Ketchen, D. J. (1999). Explaining inter-firm cooperation and performance: Toward a reconciliation of predictions from the resource-based view and organizational economics. Strategic Management Journal, 20: 867–888. Currie, W., Michell, V., & Abanishe, O. (2008). Knowledge process outsourcing in financial services: The vendor perspective. European Management Journal, 26: 94–104. Demirbag, M., & Glaister, K. W. (2010). Factors determining offshore location choice for R&D projects: A comparative study of developed and emerging regions. Journal of Management Studies, 47: 1534–1560. Doh, J. P., Bunyaratavej, K., & Hahn, E. G. (2009). Separable but not equal: The location determinants of discrete services offshoring activities. Journal of International Business Studies., 40: 926–943. Dunning, J. H. (1977). Trade, location of economic activity and the MNE: A search for an eclectic approach. In B. Ohlin, P. O. Hessleborn, & P. M. Wijkmann (Eds.), The international allocation of economic activity (pp. 395–418). London: Macmillan. Dunning, J. H. (1988). The eclectic paradigm of international production: A restatement and some possible extensions. Journal of International Business Studies, 19: 1–31. Dunning, J. H. (2001). The eclectic (OLI) paradigm of international production: Past, present and future. International Journal of the Economics of Business, 8(2): 173–190. Eden, L., & Dai, L. (2010). Rethinking the O in Dunning’s OLI/eclectic paradigm. Multinational Business Review, 18(2): 13–34. Eisenhardt, K. M., & Graebner, M. E. (2007). Theory building from case studies: Opportunities and challenges. Academy of Management Journal, 50(1): 25–32. Ghauri, P. (2004). Designing and conducting case studies in international business. In R. Marschan-Piekkari & C. Welch (Eds.), Handbook of qualitative research methods for international business (pp. 109–124). Cheltenham, UK: Edward Elgar. Gopal, A., Konduru, S., Krishnan, M. S., & Mukhopadhyay, T. (2003). Contracts in offshore software development: An empirical analysis. Management Science, 49(12): 1671–1683. Graf, M., & Mudambi, S. M. (2005). The outsourcing of IT-enabled business processes: A conceptual model of the location decision. Journal of International Management, 11(2): 253–268. Gummesson, E. (1991). Qualitative methods in management research. Newbury Park, CA: Sage. Hahn, E. D., Bunyaratavej, K., & Doh, J. P. (2011). Impacts of risk and service type on nearshore and offshore investment location decisions: An empirical approach. Management International Review, 51(3): 357–380. Ha¨to¨nen, J. (2009). Making the locational choice: A case approach to the development of a theory of offshore outsourcing and internationalization. Journal of International Management, 15(1): 61–76. Ha¨to¨nen, J., & Eriksson, T. (2009). 30+ years of research and practice of outsourcing – Exploring the past and anticipating the future. Journal of International Management, 15(2): 142–155. Huber, G. P., & Power, D. J. (1985). Retrospective reports of strategic-level managers: Guidelines for increasing their accuracy. Strategic Management Journal, 6(2): 171–180. Hutzschenreuter, T., Lewin, A. Y., & Ressler, W. (2011). The growth of white-collar offshoring: Germany and the US from 1980 to 2006. European Management Journal, 29(4): 245–259. Jacobides, M. G., & Winter, S. G. (2005). The co-evolution of capabilities and transaction costs: Explaining the institutional structure of production. Strategic Management Journal, 26(5): 395–413. Jensen, P. (2012). A Passage to India: A dual case study of activities, processes and resources in offshore outsourcing of advanced services. Journal of World Business, 47(2): 311–326. Jensen, P., & Pedersen, T. (2011). The economic geography of offshoring: The fit between activities and local context. Journal of Management Studies, 48(2): 352–372. Kedia, B. L., & Mukherjee, D. (2009). Understanding offshoring: A research framework based on disintegration, location and externalization advantages. Journal of World Business, 44: 250–261. Kuivalainen, O. (2003). Knowledge-based view of internationalization – Studies on small and medium-sized information and communication technology firms (Doctoral thesis) Lappeenranta: Lappeenranta University of Technology. Kumar, K., van Fenema, P., & von Glinow, M. A. (2009). Offshoring and the global distribution of work: Implications for task interdependence theory and practice. Journal of International Business Studies, 40(4): 642–667. Lacity, M., Solomon, S., Yan, A., & Willcocks, L. (2011). Business process outsourcing studies: A critical review and research directions. Journal of Information Technology, 26: 221–258. Lahiri, S., & Kedia, B. L. (2011). Co-evolution of institutional and organizational factors in explaining offshore outsourcing. International Business Review, 20(3): 252–263. Lampel, J., & Bhalla, A. (2011). Living with offshoring: The impact of offshoring on the evolution of organizational configurations. Journal ofWorld Business, 46(3): 346–358. Lewin, A. Y., & Peeters, C. (2006). The top-line allure of off-shoring. Harvard Business Review, (March): 22–24. Lewin, A. Y., & Volberda, H. W. (2011). Co-evolution of global sourcing: The need to understand the underlying mechanisms of firm-decisions to offshore. International Business Review, 20(3): 241–251. Loane, S., Bell, J., & Mc Naughton, R. (2006). Employing information communication technologies (ICT) to enhance qualitative international marketing enquiry. International Marketing Review, 23(4): 438–455. Madhok, A. (2002). Reassessing the fundamentals and beyond: Ronald Coase, the transaction cost and resource-based theories of the firm and the institutional structure of production. Strategic Management Journal, 23: 535–550. Mani, D., Barua, A., & Whinston, A. B. (2006). Successfully governing business process outsourcing relationships. MIS Quarterly Executive, 5(1): 15–29. Martı´nez-Noya, A., Garcı´a-Canal, E., & Guille´n, M. F. (2012). International R&D service outsourcing by technology-intensive firms: Whether and where? Journal of International Management, 18: 18–37. Maskell, P., Pedersen, T., Petersen, B., & Dick-Nielsen, J. (2007). Learning paths to offshore outsourcing: From cost reduction to knowledge seeking. Industry & Innovation, 14(3): 239–257. McIvor, R. (2008). What is the right outsourcing strategy for your process? European Management Journal, 26: 24–34. McIvor, R. (2009). How the transaction cost and resource-based theories of the firm inform outsourcing evaluation. Journal of Operations Management, 27(1): 45–63. McIvor, R. (2010). Global services outsourcing. New York: Cambridge University Press. Miles, M. B., & Huberman, A. M. (1994). Qualitative data analysis: An expanded sourcebook (2nd ed.). Thousand Oaks: Sage Publications. {\O}rberg Jensen, P. D., & Pedersen, T. (2007). Whether and what to offshore?.. SMG Working Paper No. 4/2007, Available at: http://openarchive.cbs.dk/bitstream/ handle/10398/7419/cbs{\%}20forskningsindberetning{\%}20smg{\%}2074{\%}202007- 004.pdf?sequence=1 (accessed 15.02.10). Peteraf, M. A. (1993). The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14: 179–191. Peng, M. (2001). The resource-based view and international business. Journal of Management, 27(6): 803–829. Poppo, L., & Zenger, T. (1998). Testing alternative theories of the firm: Transaction cost, knowledge-based and measurement explanations of make-or-buy decisions in information services. Strategic Management Journal, 19(9): 853–877. Poppo, L., & Zenger, T. (2002). Do formal contracts and relational governance function as substitutes or complements? Strategic Management Journal, 23(8): 707–725. Rottman, J., & Lacity, M. (2006). Proven practices for effectively offshoring IT work. Sloan Management Review, 47(3): 56–63. Sako, M. (2006). Outsourcing and offshoring: implications for productivity of business services. Oxford Review of Economic Policy, 22(4): 49 Sako, M. (2009). Globalisation of knowledge-intensive professional services. Communications of the ACM, 52(7): 31–33. Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business students (5th ed.). England: Prentice Hall. Schmeisser, B. (2013). A systematic review of literature on offshoring of value chain activities. Journal of International Management, 19(4): 390–406. Shi, Y. (2007). Today’s solution and tomorrow’s problem: The business process outsourcing risk management puzzle. California Management Review, 49(3): 27–44. Stake, R. E. (1995). The art of case study research. Thousand Oaks, CA: Sage. Stoian, C. R., & Filippaios, F. (2008). Dunning’s eclectic paradigm: A holistic, yet context specific framework for analysing the determinants of outward FDI: Evidence from international Greek investments. International Business Review, 17(3.): 349–367. Stringfellow, A., Teagarden, M. B., & Nie, W. (2008). Invisible costs in offshoring services work. Journal of Operations Management, 26(2): 164–179. Teece, D. J. (2014). A capabilities based theory of the MNE. Journal of International Business Studies, 45: 8–37. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7): 509–533. Warner, K., & Carrick, J. (2011). Rapid internationalization and sustained competitive advantage in US and UK life science international new ventures: A resource based view. In M. V. Jones, C. Wheeler, & P. Dimitratos (Eds.), International entrepreneurship in the life sciences (pp. 175–193). UK: Cheltenham. Williamson, O. E. (1975). Markets and hierarchies. New York: Free Press. Williamson, O. E. (1985). The economic institutions of capitalism: Firms, markets and relational contracting. New York: Free Press. Williamson, O. E. (1991). Strategizing, economizing, and economic organization. Strategic Management Journal, 12: 75–94. Yin, R. K. (2009). Case study research design and methods (4th ed.). Sage",
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A multi-theory approach to understanding the business process outsourcing decision. / Gerbl, Martina; McIvor, Ronan; Loane, Sharon; Humphreys, Paul.

Vol. 50, No. 3, 01.07.2015, p. 505-518.

Research output: Contribution to journalArticle

TY - JOUR

T1 - A multi-theory approach to understanding the business process outsourcing decision

AU - Gerbl, Martina

AU - McIvor, Ronan

AU - Loane, Sharon

AU - Humphreys, Paul

N1 - Reference text: Argyres, N., & Mayer, K. (2007). Contract design as a firm capability: An integration of learning and transaction cost perspectives. Academy of Management Review, 32: 1060–1077. Aron, R., & Singh, J. V. (2005). Getting offshoring right. Harvard Business Review, 83(12): 135–143. Bahli, B., & Rivard, S. (2005). Validating measures of information technology outsourcing risk factors. OMEGA, 33: 175–187. Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17: 49–61. Barney, J. B. (1999). How a firm’s capabilities affect boundary decisions. Sloan Management Review, 40(3): 137–145. Blinder, A. S. (2006). Offshoring: The next industrial revolution? Foreign Affairs, 85(2): 113–128. Bowman, C., & Ambrosini, V. (2000). Value creation versus value capture: Towards a coherent definition of value in strategy. British Journal of Management, 11(1): 1–15. Boyson, S., Corsi, T., Dresner, M., & Rabinovich, E. (1999). Managing effective third party logistics relationships: What does it take? Journal of Business Logistics, 20(1): 73– 100. Brouthers, K. D., & Brouthers, L. E. (2001). Explaining the national cultural distance power. Journal of International Business Studies, 32: 177–189. Bunyaratavej, K., Hahn, E. D., & Doh, J. P. (2007). International offshoring of services: A parity study. Journal of International Management, 13(1): 7–21. Bunyaratavej, K., Hahn, E. D., & Doh, J. P. (2008). Multinational investment and host country development: Location efficiencies for services offshoring. Journal of World Business, 43(2): 227–242. Ceci, F., & Prencipe, A. (2013). Does distance hinder coordination? Identifying and bridging boundaries of offshored work. Journal of International Management, 19(4): 324–332. Child, J., Rodrigues, S. B., & George Frynas, J. (2009). Psychic distance, its impact and coping modes and interpretations of SME decision makers. Management International Review, 49(2): 199–224. Combs, J. B., & Ketchen, D. J. (1999). Explaining inter-firm cooperation and performance: Toward a reconciliation of predictions from the resource-based view and organizational economics. Strategic Management Journal, 20: 867–888. Currie, W., Michell, V., & Abanishe, O. (2008). Knowledge process outsourcing in financial services: The vendor perspective. European Management Journal, 26: 94–104. Demirbag, M., & Glaister, K. W. (2010). Factors determining offshore location choice for R&D projects: A comparative study of developed and emerging regions. Journal of Management Studies, 47: 1534–1560. Doh, J. P., Bunyaratavej, K., & Hahn, E. G. (2009). Separable but not equal: The location determinants of discrete services offshoring activities. Journal of International Business Studies., 40: 926–943. Dunning, J. H. (1977). Trade, location of economic activity and the MNE: A search for an eclectic approach. In B. Ohlin, P. O. Hessleborn, & P. M. Wijkmann (Eds.), The international allocation of economic activity (pp. 395–418). London: Macmillan. Dunning, J. H. (1988). The eclectic paradigm of international production: A restatement and some possible extensions. Journal of International Business Studies, 19: 1–31. Dunning, J. H. (2001). The eclectic (OLI) paradigm of international production: Past, present and future. International Journal of the Economics of Business, 8(2): 173–190. Eden, L., & Dai, L. (2010). Rethinking the O in Dunning’s OLI/eclectic paradigm. Multinational Business Review, 18(2): 13–34. Eisenhardt, K. M., & Graebner, M. E. (2007). Theory building from case studies: Opportunities and challenges. Academy of Management Journal, 50(1): 25–32. Ghauri, P. (2004). Designing and conducting case studies in international business. In R. Marschan-Piekkari & C. Welch (Eds.), Handbook of qualitative research methods for international business (pp. 109–124). Cheltenham, UK: Edward Elgar. Gopal, A., Konduru, S., Krishnan, M. S., & Mukhopadhyay, T. (2003). Contracts in offshore software development: An empirical analysis. Management Science, 49(12): 1671–1683. Graf, M., & Mudambi, S. M. (2005). The outsourcing of IT-enabled business processes: A conceptual model of the location decision. Journal of International Management, 11(2): 253–268. Gummesson, E. (1991). Qualitative methods in management research. Newbury Park, CA: Sage. Hahn, E. D., Bunyaratavej, K., & Doh, J. P. (2011). Impacts of risk and service type on nearshore and offshore investment location decisions: An empirical approach. Management International Review, 51(3): 357–380. Ha¨to¨nen, J. (2009). Making the locational choice: A case approach to the development of a theory of offshore outsourcing and internationalization. Journal of International Management, 15(1): 61–76. Ha¨to¨nen, J., & Eriksson, T. (2009). 30+ years of research and practice of outsourcing – Exploring the past and anticipating the future. Journal of International Management, 15(2): 142–155. Huber, G. P., & Power, D. J. (1985). Retrospective reports of strategic-level managers: Guidelines for increasing their accuracy. Strategic Management Journal, 6(2): 171–180. Hutzschenreuter, T., Lewin, A. Y., & Ressler, W. (2011). The growth of white-collar offshoring: Germany and the US from 1980 to 2006. European Management Journal, 29(4): 245–259. Jacobides, M. G., & Winter, S. G. (2005). The co-evolution of capabilities and transaction costs: Explaining the institutional structure of production. Strategic Management Journal, 26(5): 395–413. Jensen, P. (2012). A Passage to India: A dual case study of activities, processes and resources in offshore outsourcing of advanced services. Journal of World Business, 47(2): 311–326. Jensen, P., & Pedersen, T. (2011). The economic geography of offshoring: The fit between activities and local context. Journal of Management Studies, 48(2): 352–372. Kedia, B. L., & Mukherjee, D. (2009). Understanding offshoring: A research framework based on disintegration, location and externalization advantages. Journal of World Business, 44: 250–261. Kuivalainen, O. (2003). Knowledge-based view of internationalization – Studies on small and medium-sized information and communication technology firms (Doctoral thesis) Lappeenranta: Lappeenranta University of Technology. Kumar, K., van Fenema, P., & von Glinow, M. A. (2009). Offshoring and the global distribution of work: Implications for task interdependence theory and practice. Journal of International Business Studies, 40(4): 642–667. Lacity, M., Solomon, S., Yan, A., & Willcocks, L. (2011). Business process outsourcing studies: A critical review and research directions. Journal of Information Technology, 26: 221–258. Lahiri, S., & Kedia, B. L. (2011). Co-evolution of institutional and organizational factors in explaining offshore outsourcing. International Business Review, 20(3): 252–263. Lampel, J., & Bhalla, A. (2011). Living with offshoring: The impact of offshoring on the evolution of organizational configurations. Journal ofWorld Business, 46(3): 346–358. Lewin, A. Y., & Peeters, C. (2006). The top-line allure of off-shoring. Harvard Business Review, (March): 22–24. Lewin, A. Y., & Volberda, H. W. (2011). Co-evolution of global sourcing: The need to understand the underlying mechanisms of firm-decisions to offshore. International Business Review, 20(3): 241–251. Loane, S., Bell, J., & Mc Naughton, R. (2006). Employing information communication technologies (ICT) to enhance qualitative international marketing enquiry. International Marketing Review, 23(4): 438–455. Madhok, A. (2002). Reassessing the fundamentals and beyond: Ronald Coase, the transaction cost and resource-based theories of the firm and the institutional structure of production. Strategic Management Journal, 23: 535–550. Mani, D., Barua, A., & Whinston, A. B. (2006). Successfully governing business process outsourcing relationships. MIS Quarterly Executive, 5(1): 15–29. Martı´nez-Noya, A., Garcı´a-Canal, E., & Guille´n, M. F. (2012). International R&D service outsourcing by technology-intensive firms: Whether and where? Journal of International Management, 18: 18–37. Maskell, P., Pedersen, T., Petersen, B., & Dick-Nielsen, J. (2007). Learning paths to offshore outsourcing: From cost reduction to knowledge seeking. Industry & Innovation, 14(3): 239–257. McIvor, R. (2008). What is the right outsourcing strategy for your process? European Management Journal, 26: 24–34. McIvor, R. (2009). How the transaction cost and resource-based theories of the firm inform outsourcing evaluation. Journal of Operations Management, 27(1): 45–63. McIvor, R. (2010). Global services outsourcing. New York: Cambridge University Press. Miles, M. B., & Huberman, A. M. (1994). Qualitative data analysis: An expanded sourcebook (2nd ed.). Thousand Oaks: Sage Publications. Ørberg Jensen, P. D., & Pedersen, T. (2007). Whether and what to offshore?.. SMG Working Paper No. 4/2007, Available at: http://openarchive.cbs.dk/bitstream/ handle/10398/7419/cbs%20forskningsindberetning%20smg%2074%202007- 004.pdf?sequence=1 (accessed 15.02.10). Peteraf, M. A. (1993). The cornerstones of competitive advantage: A resource-based view. Strategic Management Journal, 14: 179–191. Peng, M. (2001). The resource-based view and international business. Journal of Management, 27(6): 803–829. Poppo, L., & Zenger, T. (1998). Testing alternative theories of the firm: Transaction cost, knowledge-based and measurement explanations of make-or-buy decisions in information services. Strategic Management Journal, 19(9): 853–877. Poppo, L., & Zenger, T. (2002). Do formal contracts and relational governance function as substitutes or complements? Strategic Management Journal, 23(8): 707–725. Rottman, J., & Lacity, M. (2006). Proven practices for effectively offshoring IT work. Sloan Management Review, 47(3): 56–63. Sako, M. (2006). Outsourcing and offshoring: implications for productivity of business services. Oxford Review of Economic Policy, 22(4): 49 Sako, M. (2009). Globalisation of knowledge-intensive professional services. Communications of the ACM, 52(7): 31–33. Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business students (5th ed.). England: Prentice Hall. Schmeisser, B. (2013). A systematic review of literature on offshoring of value chain activities. Journal of International Management, 19(4): 390–406. Shi, Y. (2007). Today’s solution and tomorrow’s problem: The business process outsourcing risk management puzzle. California Management Review, 49(3): 27–44. Stake, R. E. (1995). The art of case study research. Thousand Oaks, CA: Sage. Stoian, C. R., & Filippaios, F. (2008). Dunning’s eclectic paradigm: A holistic, yet context specific framework for analysing the determinants of outward FDI: Evidence from international Greek investments. International Business Review, 17(3.): 349–367. Stringfellow, A., Teagarden, M. B., & Nie, W. (2008). Invisible costs in offshoring services work. Journal of Operations Management, 26(2): 164–179. Teece, D. J. (2014). A capabilities based theory of the MNE. Journal of International Business Studies, 45: 8–37. Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7): 509–533. Warner, K., & Carrick, J. (2011). Rapid internationalization and sustained competitive advantage in US and UK life science international new ventures: A resource based view. In M. V. Jones, C. Wheeler, & P. Dimitratos (Eds.), International entrepreneurship in the life sciences (pp. 175–193). UK: Cheltenham. Williamson, O. E. (1975). Markets and hierarchies. New York: Free Press. Williamson, O. E. (1985). The economic institutions of capitalism: Firms, markets and relational contracting. New York: Free Press. Williamson, O. E. (1991). Strategizing, economizing, and economic organization. Strategic Management Journal, 12: 75–94. Yin, R. K. (2009). Case study research design and methods (4th ed.). Sage

PY - 2015/7/1

Y1 - 2015/7/1

N2 - This paper proposes a framework for understanding location distance and governance model choice in the business process outsourcing (BPO) decision. Much of the current international business (IB) literature employs location-specific factors alone to explain the BPO decision, and this literature is dominated by studies of the offshore location option, with limited attention given to the local and nearshore location distance options as alternatives to offshoring. The framework proposed here was developed from integrating firm-level and process-level factors with location attractiveness factors, and undertaking in-depth case study analysis of a number of German companies. The findings highlight the value of integrating firm-level and process-level factors with location attractiveness factors to understand location distance and governance model choice in the BPO decision, and support those who have argued that existing frameworks in this area cannot fully explain the complexities of the BPO decision. Moreover, the findings provide important insights into how these factors interact to influence location distance and governance model choice. The proposed BPO framework also provides a useful basis for practical prescription.

AB - This paper proposes a framework for understanding location distance and governance model choice in the business process outsourcing (BPO) decision. Much of the current international business (IB) literature employs location-specific factors alone to explain the BPO decision, and this literature is dominated by studies of the offshore location option, with limited attention given to the local and nearshore location distance options as alternatives to offshoring. The framework proposed here was developed from integrating firm-level and process-level factors with location attractiveness factors, and undertaking in-depth case study analysis of a number of German companies. The findings highlight the value of integrating firm-level and process-level factors with location attractiveness factors to understand location distance and governance model choice in the BPO decision, and support those who have argued that existing frameworks in this area cannot fully explain the complexities of the BPO decision. Moreover, the findings provide important insights into how these factors interact to influence location distance and governance model choice. The proposed BPO framework also provides a useful basis for practical prescription.

KW - Business process outsourcing

KW - Nearshore

KW - Offshore

KW - Resource-based view

KW - Transaction cost economics

KW - Eclectic theory

U2 - 10.1016/j.jwb.2014.08.009

DO - 10.1016/j.jwb.2014.08.009

M3 - Article

VL - 50

SP - 505

EP - 518

IS - 3

ER -