An evolutionary stage model of outsourcing and competence destruction: a triad comparison of the consumer electronics industry

Masaaki Kotabe*, Michael J. Mol, Sonia Ketkar

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

64 Citations (Scopus)

Abstract

Outsourcing has gained much prominence in managerial practice and academic discussions in the last two decades or so. Yet, we still do not understand the full implications of outsourcing strategy for corporate performance. No general explanation has so far been provided for how outsourcing could lead to deterioration in a firm's competence base. We longitudinally analyze three cases of major consumer electronics manufacturers, Emerson Radio from the U.S., Japan's Sony and Philips from the Netherlands to understand the dynamic process related to their sourcing strategies. We develop an evolutionary stage model that relates outsourcing to competence development inside the firm and shows that a vicious cycle may emerge. The evolutionary stage model helps managers understand for which activities and under which conditions outsourcing across borders is not a viable option. Results suggest that each of these firms had faced a loss of manufacturing competitiveness in its home country, to which it responded by offshoring and then outsourcing production. When a loss of competences occurred, some outsourcing decisions were reversed.

Original languageEnglish
Pages (from-to)65-94
Number of pages30
JournalManagement International Review
Volume48
Issue number1
DOIs
Publication statusPublished - 2008
Externally publishedYes

Keywords

  • Competencies
  • Consumer electronics
  • Evolutionary theory
  • Offshoring global sourcing
  • Outsourcing
  • Stage theory

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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