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Facilitating offshoring with enterprise technologies: Reducing operational friction in the governance and production of services
Author(s) -
Stratman Jeff K.
Publication year - 2008
Publication title -
journal of operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.649
H-Index - 191
eISSN - 1873-1317
pISSN - 0272-6963
DOI - 10.1016/j.jom.2007.02.006
Subject(s) - offshoring , business , industrial organization , transaction cost , offshore outsourcing , corporate governance , process management , service (business) , production (economics) , knowledge management , marketing , outsourcing , economics , computer science , finance , macroeconomics
The development of cheap and robust communications technologies has lowered the cost of conducting business transactions across international boarders and opened up low wage rate global labor markets to firms facing demand for cheap and efficient service delivery. A review of transaction cost theory and operations management models of service process disaggregation reveals parallels between the how firm boundaries are determined and how certain service process elements can be disaggregated from face‐to‐face customer contact. This theoretical background is used to identify challenges to the effective offshoring of service processes. The competitive capability literature offers suggestions as to how firms might acquire the internal capabilities required to manage offshore service processes. Propositions are developed on how the standardized transactional infrastructure of enterprise technologies (and the organizational competencies developed by successful enterprise system adopters) may help mitigate the challenges of offshore governance.