Innovation Offshoring:Asia's Emerging Role in Global Innovation Networks

Most analysts agree that critical ingredients for economic growth, competitiveness, and welfare in the United States have been policies that encourage strong investment in research and development (R&D) and innovation. In addition, there is a general perception that technological innovation must be based in the United States to remain a pillar of the American economy. Over the past decade, however, the rise of Asia as an important location for "innovation offshoring" has begun to challenge these familiar notions. Based on original research, this report demonstrates that innovation offshoring is driven by profound changes in corporate innovation management as well as by the globalization of markets for technology and knowledge workers. U.S. companies are at the forefront of this trend, but Asian governments and firms are playing an increasingly active role as promoters and new sources of innovation. Innovation offshoring has created a competitive challenge of historic proportions for the United States, requiring the nation to respond with a new national strategy. This report recommends that such a strategy include the following elements: output forecasting techniques ... Improve access to and collection of innovation-related data to inform the national policy debate; Address "home-made" causes of innovation offshoring by sustaining and building upon existing strengths of the U.S. innovation system; Support corporate innovation by (1) providing tax incentives to spur early-state investments in innovation start-ups and (2) reforming the U.S. patent system so it is more accessible to smaller inventors and innovators; and Upgrade the U.S. talent pool of knowledge workers by (1) providing incentives to study science and engineering, (2) encouraging the development of management, interpretive, cross-cultural, and other "soft" capabilities, and (3) encouraging immigration of highly skilled workers.Innovation Networks, Innovation Offshoring, Asia

The Role of Technological Complexity and Absorptive Capacity in Internalization Decision

Technology transfer costs have a profound influence on the firm’s entry mode into a production sharing relationship. To explore this nexus, we associate technological complexity of the off-shored input with the organizational mode of international production sharing by extending the Antràs (2005) model. We modify the Antràs model by proposing that the low-tech input, as qualified within the model, cannot be produced in the low wage south without costly technology transfer. The cost of technology transfer in turn depends on three factors, which are the technological complexity of this input, the absorptive capacity of the host country and the wages of the host country. Our model refines the results obtained in Antràs (2005). We find that 1. For high-tech goods, intra-firm transfer is preferred vis-à-vis outsourcing only for intermediate range of technological complexity of the off-shored input, 2. On the other hand, for low-tech goods, where the likelihood of outsourcing is higher in Antràs, intra-firm offshore contract is still possible for low range of technological complexity. Our model has policy suggestions for host countries which aspire to maximize their benefits from the exploding global production phenomenon. As the wage gap between the source and the host country falls, cost considerations for offshoring disappear. New sources of comparative advantage should therefore be created in the host country by subsidizing technology investment and higher education to build higher absorptive capacity.Outsourcing, Foreign Direct Investment, Technology Transfer, Absorptive Capacity.

Job related factors and moderating effect of flexible work arrangement on job satisfaction among Malaysian offshore outsourcing support employees

Job Satisfaction, organization performance and employee turnover intention are closely interlinked. High performance culture organizations that promote both job satisfaction and work-life balance often produce good results and have the ability to attract and retain talented employees. Job satisfaction of fixed scheduled employees in the Malaysian offshore outsourcing support is constantly challenged from working long irregular hours to fulfill global "Follow-the-sun" workflow commitment and maintaining effective communication in a temporal dispersed virtual organization. The work time demand is felt more as the temporal dispersion variance between parties in communication widens. This research was initiated with the objective of understanding employees working under such conditions and whether having good management policies such as flexible work arrangement buffer the impact and restore job satisfaction. For this quantitative survey, 306 Information Technology Outsourcing, and Business Process Outsourcing respondents, located in the MSC flagship town of Cyberjaya, were identified. The results reveal that Malaysian offshore outsourcing workers are generally satisfied with their work environment. Whilst global communication remains a temporal dispersion challenge, flexible work arrangement does not alleviate the impact of long irregular work hours; however, it promotes job satisfaction. The findings also confirm the importance of co-workers and supervisory support in mitigating the demands of work. Contrary to the belief that globalization emphasizes cost optimization and reluctance of MNCs in spending and developing resources, most respondents acknowledged that good support from their co-workers and supervisors are vital. The study highlights the critical impact of globalization and temporal dispersion on job satisfaction among fixed working arrangement employees who support Malaysian offshore outsourcing

Offshoring of High-Value Functions: A Case Study of U.S.-India Trade in Medical Transcription Services

The offshoring industry in the developing world is rapidly moving into a higher gear. It started with relatively low-end works such as back-office support, customer service, and data entry. In recent years, developed-world-based firms are increasingly outsourcing more sophisticated work such as computer coding, insurance underwriting, claims processing, and medical transcription to developing economies (Reich, 2005). An estimate suggested that “high-value” business process outsourcing (BPO), such as accounting, paralegal, medical, research, and banking will reach $50 billion by 2010 (Mehta et al., 2006)

Uncovering the hidden costs of offshoring: The interplay of complexity, organizational design, and experience

This study investigates estimation errors due to hidden costs—the costs of implementation that are neglected in strategic decision-making processes—in the context of services offshoring. Based on data from the Offshoring Research Network, we find that decision makers are more likely to make cost-estimation errors given increasing configuration and task complexity in captive offshoring and offshore outsourcing, respectively. Moreover, we show that experience and a strong orientation toward organizational design in the offshoring strategy reduce the cost-estimation errors that follow from complexity. Our findings contribute to research on the effectiveness of sourcing and global strategies by stressing the importance of organizational design and experience in dealing with increasing complexity

Approaching the seismogenic source of the Calabria 8 September 1905 earthquake: New geophysical, geological and biochemical data from the S. Eufemia Gulf (S Italy)

Recognizing the seismogenic source of major historical earthquakes, particularly when these have occurred offshore, is a long-standing issue across the Mediterranean Sea and elsewhere. The destructive earthquake (M ~7) that struck western Calabria (southern Italy) on the night of 8 September 1905 is one such case. having various authors proposed a seismogenic source, with apparently diverse hypotheses and without achieving a unique solution. To gain novel insight into the crustal volume where the 1905 earthquake took place and to seek a more robust solution for the seismogenic source associated with this destructive event, we carried out a well-targeted multidisciplinary survey within the Gulf of S. Eufemia (SE Tyrrhenian Sea), collecting geophysical data, oceanographic measurements, and biological, chemical and sedimentary samples. We identified three main tectonic features affecting the sedimentary basin in the Gulf of S. Eufemia: 1) a NE-SW striking, ca. 13-km-long, normal fault, here named S. Eufemia Fault; 2) a WNW-striking polyphased fault system; and 3) a likely E-W trending lineament. Among these, the normal fault shows evidence of activity witnessed by the deformed recent sediments and by its seabed rupture along which, locally, fluid leakage occurs. Features in agreement with the anomalous distribution of prokaryotic abundance and biopolymeric C content, resulted from the shallow sediments analyses. The numerous seismogenic sources proposed in the literature during the past 15 years make up a composite framework of this sector of western Calabria, that we tested against a) the geological evidence from the newly acquired dataset, and b) the regional seismotectonic models. Such assessment allows us to propose the NE-SW striking normal fault as the most probable candidate for the seismogenic source of the 1905 earthquake. Re-appraising a major historical earthquake as the 1905 one enhances the seismotectonic picture of western Calabria. Further understanding of the region and better constraining the location of the seismogenic source may be attained through integrated interpretation of our data together with a) on-land field evidence, and b) seismological modeling

Sustainable Prosperity in the New Economy?: Business Organization and High-Tech Employment in the United States

Lazonick explores the origins of the new era of employment insecurity and income inequality, and considers what governments, businesses, and individuals can do about it. He also asks whether the United States can refashion its high-tech business model to generate stable and equitable economic growth.https://research.upjohn.org/up_press/1029/thumbnail.jp

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

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. Traditionally outsourcing across borders is explained as a cost-cutting exercise, but more recently the core competency argument states that outsourcing also leads to an increased focus, thereby improving effectiveness. However, 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. Thus it is appropriate to look not only at how outsourcing is influenced by an organization‟s current set of competences, but also how it alters that set over time. The four stages of the model are offshore sourcing, phasing out, increasing dependence on foreign suppliers, and finally industry exit or outsourcing reduction. 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

Exploring The Antecedents Of Successful E-business Implementations Through ERP : A Longitudinal Study of SAP-based Organisations 1999-2003

This research was carried out between 1999 and 2003 on the use of e-business applications in ERP-based organisations. A composite research method based on structured case studies was developed for this study. It combined the application of case methods by Carroll et al. (1998], Klein and Myer (1998), and Eisenhardt (1989). This was used to provide a focused, yet flexible structure, as a dynamic approach to case study interpretive research. The research method used three distinct models at three progressive stages of the study, to provide a multi-faceted view of each case. This composite case-based method was developed to maintain the balance between research rigour and relevance. A pilot case study of nine Australian SAP sites helped ground the theory of the study. This was followed by three stages of study of eleven international cases within a diverse industry context. The method revealed the antecedents of e-business success using the findings from case analyses against three separate research models B2B interaction, e-business change, and virtual organising. A final conceptual framework was developed as new theory of e-business transformation. The theory views e-business transformation as realising the benefits from virtual organising within complex B2B interactions by utilising the facilitators of successful e-business change. The research demonstrates that successful e-business transformation with ERP occurs when value propositions are realised through integration and differentiation of technologies used to support new business models to deliver products and services online. The associated management practice evolves through efficiency from self-service, effectiveness through empowerment towards customer care, and value enhancement from extensive relationship building with multiple alliances. The new theory of e-business transformation identifies the stages of e-business growth and development as a comprehensive plan that should assist managers of ERP-based organisations in migrating their company towards a successful e-business organisation. The detailed analysis of the findings offers a foundational per11pectlve of strategies, tactics and performance objectives for e-ERP implementations. The strength of the theory lies in the synthesis of multiple case analyses using three different lenses over three separate time periods. The triangulation of the three research frameworks provides a method for study at appropriate levels of complexity. It is evolutionary in nature and is content driven. Other researchers are urged to apply similar multi-viewed analysis