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SMALL AND MIDDLE-SIZED ENTERPRISES' OFFSHORING PRODUCTION: A STUDY OF FIRM DECISIONS AND CONSEQUENCES

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Abstract:

ABSTRACT

The current massive offshoring of manufacturing represents a significant relocation of employment. Therefore it constitutes an interesting phenomenon from the perspectives of economic geography, geopolitical policy and international small business management. In this qualitative study, we investigate the offshoring decisions in 10 Norwegian small and middle-sized enterprises (SMEs) that have established manufacturing capabilities in low cost countries. The focus lies on their initial motivation for offshoring production, selection of location, choice of entry mode, evolution of foreign production capabilities, and finally, foreign market sales initiation and development. By analysing the findings in this study from different theoretical perspectives we conclude that combining Dunning's eclectic paradigm with behavioural internationalisation models offers valuable insight in the initiation and organisation of offshore manufacturing facilities among small firms. However, to fully understand the external influence on offshore location decisions among SMEs we should incorporate business network theories and theories from economic and social geography.

Keywords: Global production; entry modes; location; manufacturing; offshoring; small and middle-sized enterprises

Document Type: Research Article

DOI: http://dx.doi.org/10.1111/j.1467-9663.2009.00585.x

Affiliations: 1: Department for Industrial Economics and Technology Management, Norwegian University of Science and Technology, N-7491Trondheim, Norway., Email: arild.aspelund@iot.ntnu.no 2: ABB AS, Ole Deviks Vei 10, 0666 Oslo, Norway., Email: vitali.butsko@no.abb.com

Publication date: July 1, 2010

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