Date of Award

11-18-2008

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PHD)

Degree Program

Global Leadership - with a specialization in Corporate and Organizational Management

Department

College of Business and Management

First Advisor

Ralph Norcio

Second Advisor

John Cipolla

Third Advisor

Eldon Bernstein

Abstract

Offshore outsourcing became a common business practice by most U.S. and Western businesses after the Internet became viable. It is expected that by 2015 the U.S. market will outsource 3.3 million employment opportunities and will pay an estimated $136 billion in salaries to Asian countries (Hemphill, 2004). Outsourcing became a necessity for corporations to reduce cost and maintain competitiveness in the marketplace, but its effectiveness in achieving superior performance and competitive advantage needs to be explored.

The relationship among offshore outsourcing, market freedom, and competitive advantage is an important issue for multinational corporations to conduct business and gain competitive advantage. National culture is also a component of the analysis based upon the role that cultural perceptions play in the cultivation of relationships with foreign nationals and representative companies. The critical analysis of theoretical and empirical literature explored the factors influencing competitive advantage, investigated the impact of offshore outsourcing on competitive advantage, and identified future areas of scholarly inquiry. This literature indicated that U.S. multinational corporations use offshore outsourcing as part of their strategy to establish competitive advantages and better performance. Sources used in this paper focus predominantly on the theoretical, empirical, and historical literature relating to offshoring and outsourcing. This dissertation focuses on U.S. multinational corporations, and discusses the relationship among offshore outsourcing, national culture, market freedom and competitive advantage.

The review of the literature suggests a strong level of ambiguity within the initial data. The ambiguity is the result of themes within the literature that contain contradictory subject matter, as well as conflict over how and why specific information is relevant to competitive advantage within the offshore outsourcing process. Problems of ambiguity are further exacerbated in respect to the research methodology used to approach these areas of research. Conflicting results are suggestive of flawed decision-making strategies (such as confusion of terms and limitations on the criteria concerning offshoring and outsourcing) used within the research methodology. It is also indicative of problems in isolating themes that are best applicable to these processes. Of note are problems in the empirical literature in which researchers presented conflicting opinions regarding successful application of offshore outsourcing. This indicates that increased inquiry is required into the study of offshore outsourcing to identify the themes within the literature, and to assess the overall impact of these processes on competitive advantage.

The analysis of variance and simple regression results used in this dissertation indicated that offshore outsourcing has no significant impact on competitive advantage. However, a positive relationship does exist. Market freedom factors and multinational corporations' offshore outsourcing are significant variables of the competitive advantage of multinational corporations. The study indicated that an increase of one unit in market freedom in China will result in an increase of competitive advantage by .37 units. Similarly, a one unit increase in market freedom in India will result in an increase of competitive advantage by .45 units.

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