Conceptualising the production offshoring organisation using the viable systems model (VSM)

Abstract

Purpose– The purpose of the paper is concerned with one of the main contributions from the field of management cybernetics, the Viable System Model (VSM) developed by Beer (1972). This paper analyses what happens in terms of the VSM when a firm engages in production offshoring.Design/methodology/approach– The paper is conceptual and develops four propositions about the nature of variety balance that production firms face, and what adjustments they make in the original viable system, both in terms of the properties of one or more of the basic subsystems and in the network of couplings between them.Findings– The paper shows the production offshoring organisation as a dynamic adaptive system in search of ways to cope effectively with external forces that undermine its viability. The paper discusses how VSM can advance production offshoring research by both supplementing and linking established approaches such as transaction cost economics, the resource-based view and the eclectic theory of international production.Originality/value– This research highlights the effects of geographical expansion of the firm’s operation on the stability of the firm itself. Using the VSM perspective, the paper provides opportunities to systematically track the changes that occur in the production offshoring firm and diagnose what they imply for the viability of the system as a whole.