Offshore Outsourcing of Manufacturing SMEs and Developing Value Ladder

Proceedings of the 9th International Conference on Modern Research in Management, Economics and Accounting

Year: 2018| Page No:39-74


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Offshore Outsourcing of Manufacturing SMEs and Developing Value Ladder

Muhammad Mohiuddin, Samim-Al Azad


Research on production efficiency from offshore outsourcing is abundant. In a hyper-competitive business environment, the SMEs need not only efficiency related strategy but also growth oriented strategy by improving their dynamic capabilities that lead towards Sustainable Competitive advantages (SCA). However, there are insignificant research that addresses the offshore outsourcing as a medium of dynamic capabilities development. The objective of this paper is to explore on how manufacturing SMEs enhance their dynamic capabilities through offshore outsourcing in addition to the efficient related advantages that firms gain from this strategy. Organizational dynamic capabilities development process includes among others increasing focus on Core competency of the focal firm, developing innovation capabilities, increasing market share in existing and/or new markets, and improving flexibility of the firm to match with the volatile market trends. Results from the case study on ten manufacturing SMEs from Quebec show that offshore outsourcing contributes to the development of dynamic capabilities with varying degrees of success. It shows an evolutionary path of dynamic capability development process. This article open-up a new horizon on offshore outsourcing research and shed light on growth perspective and sustainable competitive advantages (SCA) that offshore outsourcing bring to manufacturing SMEs despite the size and resource constraints that they inherit.

Keywords: Dynamic capability, Offshore outsourcing, SMEs.