The role of peripheral vendors in enhancing the absorptive capacity of offshore software development teams in challenging institutional environments

Abstract

This study aims to elucidate how vendors located at the periphery facilitate the advancement of offshore software development (OSD) teams' absorptive capacity (AC) despite the unfavourable skill environment prevalent in their home country. Current research does not explain whether and how vendor teams located at the periphery respond to adverse skill environments and contribute towards OSD teams’ AC in spatially distant linkages with international clients at the core. Using an inductive approach, this study developed a conceptual framework that outlines how vendor teams at the periphery acquire the “need knowledge” embedded in the context of clientele teams and subsequently transfer “solution knowledge” to international clients. Our findings highlight the importance of recursive interaction between the periphery vendor team, client teams, external agents, global experts, consultants, and incubators that facilitate this process. All these actors co-drive the AC process whereby periphery vendor teams are not just recipients of knowledge but also contributors of knowledge towards international clients in core regions.