Mol, Michael J. and Brewster, Chris (2014) The outsourcing strategy of local and multinational firms : a supply base perspective. Global Strategy Journal, Volume 4 (Number 1). pp. 20-34. doi:10.1111/j.2042-5805.2013.01070.x

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Abstract

Firms outsource through connecting to local and global supply bases and making such connections produces costs of search and evaluation, which are a function of transaction characteristics and firm capabilities. We argue that firms outsource more when those costs are low. Hence domestic subsidiaries of multinational firms, with low cost access to both local and global supply bases, outsource more than either domestic firms or foreign subsidiaries, as confirmed by evidence from a large data panel. We also propose that among foreign subsidiaries distance from the home country co-determines search and evaluation costs, such that subsidiaries from more distant countries outsource less. This is confirmed for geographic distance, but a positive effect is found for political distance and a mixed effect for cultural distance.

Item Type:	Journal Article
Divisions:	Faculty of Social Sciences > Warwick Business School > Strategy & International Business Faculty of Social Sciences > Warwick Business School
Journal or Publication Title:	Global Strategy Journal
Publisher:	John Wiley & Sons Ltd.
ISSN:	2042-5791
Official Date:	February 2014
Dates:	Date Event February 2014 Published
Volume:	Volume 4
Number:	Number 1
Page Range:	pp. 20-34
DOI:	10.1111/j.2042-5805.2013.01070.x
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access

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