Advanced Service Offshore Outsourcing: Exploring the Determinants of Capability Development in Emerging Market Firms

We analyze the effect of offshored service task types on the development of capabilities in emerging market service provider firms. Using multiple case studies, we find that dependent on task interdependent service types, implying different client interactions (firm-external determinants), organizational capabilities are developed. More specifically, reciprocal task interdependent services generate human capital and management capabilities, while sequential task interdependent services generate organizational capital and management capabilities. Moreover, we find a relationship between the capabilities, where the deficient development of one capability can be mitigated by the development of another capability (firm-internal determinants). Grounded in organization and service production theory, the paper contributes to the thematic literature on service offshoring and literature on organizational capabilities, with a particular focus on emerging market firms.