Session 29

Strategy and Outsourcing

Track G

Date: Sunday, October 7, 2012


Time: 15:15 – 16:30


Room: Club A

Session Chair:

  • Torben Pedersen, Bocconi University

Title: Bullwhip Severity in Conditions of Uncertainty: Regional versus Global Supply Chain Strategies


  • Marcelo Alvarado-Vargas, University of Toledo
  • Keith Kelley, Florida International University

Abstract: In this paper the authors explore the effect of uncertainty on the phenomenon known as the Bullwhip Effect in supply chains. Using VENSIM software, the authors simulate a multi-echelon supply chain and demonstrate the bullwhip effect. The authors then simulate conditions of uncertainty and implement regional, as well as global, supply chain parameters to compare the severity of the bullwhip effect. The authors show that the bullwhip effect is a real phenomenon that is increased in intensity during conditions of uncertainty. The authors also show that regional supply chain strategies have reduced bullwhip severity in conditions of uncertainty when compared to global supply chain strategies, thus leading the authors to argue that global supply chains may be suboptimal in an uncertain world.

Title: Offshore Outsourcing Dynamics: An Operation Mode Perspective


  • Gabriel R G Benito, BI Norwegian Business School
  • Olesya Dovgan, SimCorp A/S
  • Bent Petersen, Copenhagen Business School
  • Lawrence Welch, Melbourne Business School

Abstract: While the extant literature on offshore outsourcing basically deals with this operation mode in isolation, we address outsourcing in the context of the broader question of how companies use outsourcing as part of their foreign operation mode development. Based on a case study of the Danish company SimCorp and the development of its operations in Kiev, Ukraine, we argue that involvement in the foreign market generates learning that provides a foundation for eventual mode development or change. Restrictions on independent vendors’ access to confidential client data and protection of specific investments in human assets also become drivers for mode change, to ensure more effective control. Finally, the study shows how outsourcing can be used proactively as a springboard to deeper activities in a foreign market.

Title: The Attractiveness of a Reactive Strategy to Offshoring: A Simulation Study


  • Marcus Møller Larsen, Copenhagen Business School
  • Christian Asmussen, Copenhagen Business School
  • Torben Pedersen, Bocconi University

Abstract: Firms that engage in offshoring face increased coordination costs and higher uncertainty. In this regards, extant literature holds that a proactive strategy to offshoring is beneficial, in which firms prepare by articulating deliberate plans and guidelines for the prior to the implementation of offshoring. We investigate the performance implications of a proactive versus a reactive strategy to offshoring through a computational model of organizational adaptation. Our results suggest that the attractiveness of the reactive strategy to offshoring decreases with increasing coordination costs, but that it increases with higher uncertainty. Moreover, we find that uncertainty has a positive moderating effect on the relationship between international coordination costs and the attractiveness of the reactive strategy. Accordingly, we explicate important contingencies to offshoring strategies and show that a proactive approach to offshoring is not always beneficial.

Title: The Strategic Choice between Outsourcing and FDI in Assessing the Effects of Location Characteristics on the Offshoring Performance


  • Stefano Elia, Polytechnic University of Milan
  • Federico Caniato, Polytechnic University of Milan
  • Davide Luzzini, Polytechnic University of Milan
  • Lucia Piscitello, Polytechnic University of Milan
  • Stefano Ronchi, Polytechnic University of Milan

Abstract: The present paper deals with the performance implications of the offshoring of service activities. Offshoring is intended as delocalization of business services in foreign countries that may occur either through a wholly-owned company (Captive Offshoring) or by outsourcing the service activity (Offshore Outsourcing). We investigate the relationship between distinctive location specific characteristics of the host countries (cost of labor, resource availability, cultural proximity, and the presence of local interests) and performance of the offshoring firm. We extend the literature by investigating both the direct effect of the governance model and its moderating role of the locations specific characteristics on performance. Our results show that the direct effect arises only when considering operational performance, while the moderating effect is more specific of strategic performance

All Sessions in Track G...

Sun: 08:00 – 09:15
Session 129: Strategy Implementation: Global Challenges
Sun: 09:30 – 10:45
Session 130: Practicing Strategy in Transition Economies: Reframing, Rethinking and Renewing
Sun: 11:15 – 12:30
Session 131: Global Strategies in the Service Sector
Sun: 15:15 – 16:30
Session 29: Strategy and Outsourcing
Mon: 08:00 – 09:15
Session 32: The Dynamics of Internationalization
Mon: 09:30 – 10:45
Session 34: Emerging Market/Advanced Market Strategic Interactions
Mon: 13:30 – 14:45
Session 33: Internationalization, Diversification & Performance
Mon: 16:30 – 17:45
Session 35: Entry Modes, Exit and Outcomes
Session 39: Global Strategies
Tue: 08:00 – 09:15
Session 37: Subsidiary Strategy
Tue: 11:00 – 12:15
Session 41: International M&A as an Entry Mode Strategy
Tue: 14:15 – 15:30
Session 30: Politics, Institutions, Political Risk & Global Strategy
Tue: 15:45 – 17:00
Session 40: Knowledge, Innovation and Global Strategy
Session 42: A Q&A with Pilsner Urquell: Strategy from a Small Nation
Tue: 17:30 – 18:45
Session 38: Global Managers and Managing Globally

Strategic Management Society