Impact of offshoring on firm performance

Abstract

Despite the growing importance of IT enabled offshoring in the present day business, there is little academic research devoted to the subject. Moreover, to our knowledge, research on the impact of offshoring on firm performance is virtually non-existent, which is the prime motivation for this study. In this research, using resource-based view and resource dependence theory we conceptualize offshoring as a strategic resource sourcing decision for enhancing firm performance. Specifically, we assess the short term impact of offshoring event (OE) and offshoring intensity (OI) on financial performance metrics of the firm, which include revenue performance, cost performance, profitability performance, productivity performance, and market performance. Results, suggest offshoring as a viable strategic option for improving firm performance. Through this research, we make some important contributions and offer implications for research and practice.