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RA16WP 2013 SMJ Hidden Costs.pdf (253.96 kB)

Uncovering the hidden costs of offshoring: the interplay of complexity, organizational design and experience

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journal contribution
posted on 2023-06-09, 19:04 authored by Marcus M. Larsen, Stephan ManningStephan Manning, Torben Pedersen
This study investigates estimation errors due to hidden costs—the costs of implementation that are neglected in strategic decision-making processes—in the context of services offshoring. Based on data from the Offshoring Research Network, we find that decision makers are more likely to make cost-estimation errors given increasing configuration and task complexity in captive offshoring and offshore outsourcing, respectively. Moreover, we show that experience and a strong orientation toward organizational design in the offshoring strategy reduce the cost-estimation errors that follow from complexity. Our findings contribute to research on the effectiveness of sourcing and global strategies by stressing the importance of organizational design and experience in dealing with increasing complexity.

History

Publication status

  • Published

File Version

  • Accepted version

Journal

Strategic Management Journal

ISSN

0143-2095

Publisher

Wiley

Issue

5

Volume

34

Page range

533-552

Department affiliated with

  • Business and Management Publications

Full text available

  • Yes

Peer reviewed?

  • Yes

Legacy Posted Date

2019-09-27

First Open Access (FOA) Date

2019-09-27

First Compliant Deposit (FCD) Date

2019-09-27

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