Differences in outsourcing strategies between firms in emerging and in developed markets

Abstract

PurposeThe vast majority of literature relating to operations management originates from studies in developed markets. Emerging markets are increasingly important in global business. With this in mind, the purpose of this paper is to analyze differences in outsourcing strategies between manufacturing firms from emerging markets and from developed markets.Design/methodology/approachThe paper is based on statistical analyses of a large data set of manufacturing firms obtained from the International Manufacturing Strategy Survey (IMSS).FindingsThe findings suggest that companies that outsource internationally focus on achieving cost benefits, while companies that outsource domestically focus on achieving capacity flexibility. In addition, the reasons to outsource were found to be independent of the location of firms in both emerging and developed markets. However, within the group of firms from emerging markets, strategies seem to differ according to whether firms are domestically owned or are subsidiaries of companies from developed markets.Practical implicationsThe decisions of firms to outsource do not differ much whether the firms are located in developed‐ or in emerging‐market economies. Firms outsource domestically when they want to increase their capacity flexibility; they outsource internationally when looking for cost advantages.Originality/valueThe value of the paper is that it illuminates an important contemporary phenomenon based on analyses on data from a large‐scale international survey encompassing firms both in developed and in emerging markets.