How Offshoring Elicits Reconfiguration of the Service Production System

Abstract

Service production systems can be seen as a structure consisting of task execution, resources executing tasks and the service output received by the client. Offshoring acts as an exogenous shock to such a service production system. Drawing on practice theory and applying a multiple case methodology to a large, multinational shipping company we investigate how offshoring to an emerging economy leads to misalignment of the system. We then find that agents undertake actions, both top-down and bottom up initiatives, to attempt to realign the service production system. We develop a set of propositions that explains how structures and agents interact to deal with misalignment and how service output changes due to offshoring. The major contribution of this paper is that is provides a theoretically grounded explanation of how service production systems evolve over time. We also contribute to an understanding of the impact of offshoring and to practice theory.