Hidden Costs and the Role of Modularity: A Study on Offshoring Process Performance

    Publikation: Kapitel i bog/rapport/konferenceprocesKonferenceabstrakt i proceedingsForskningpeer review

    Resumé

    This paper addresses estimation errors in strategic decision-making processes due to hidden costs. While previous research has investigated the antecedents of hidden costs, this paper investigates performance consequences. Using unique data on 221 offshoring implementations, it is argued that the inability to effectively estimate the costs of implementing an activity in a foreign location has a negative impact on the process performance of that activity. Performance is deterred as operations are likely to be disrupted by opportunity costs and managerial responses. However, this relationship is mitigated by the degree of modularity in the activity as it reduces the need for costly coordination in offshoring. This paper contributes to research on offshoring and strategic decision-making by emphasizing the importance of organizational design and of estimating the costs of internal organizational change.
    This paper addresses estimation errors in strategic decision-making processes due to hidden costs. While previous research has investigated the antecedents of hidden costs, this paper investigates performance consequences. Using unique data on 221 offshoring implementations, it is argued that the inability to effectively estimate the costs of implementing an activity in a foreign location has a negative impact on the process performance of that activity. Performance is deterred as operations are likely to be disrupted by opportunity costs and managerial responses. However, this relationship is mitigated by the degree of modularity in the activity as it reduces the need for costly coordination in offshoring. This paper contributes to research on offshoring and strategic decision-making by emphasizing the importance of organizational design and of estimating the costs of internal organizational change.
    SprogEngelsk
    TitelProceedings of the 55th Annual Meeting of the Academy of International Business
    RedaktørerPatricia McDougall-Covin, Tunga Kiyak
    Udgivelses stedEast Lansing, MI
    ForlagAcademy of International Business
    Dato2013
    Sider234-235
    StatusUdgivet - 2013
    BegivenhedAIB 2013 Annual Meeting : Bridging the Divide: Linking IB to Complementary Disciplines and Practice - Sabancı University, Koç University, and Özyeğin University, Istanbul, Tyrkiet
    Varighed: 3 jul. 20136 jul. 2013
    Konferencens nummer: 55
    http://aib.msu.edu/events/2013/

    Konference

    KonferenceAIB 2013 Annual Meeting
    Nummer55
    LokationSabancı University, Koç University, and Özyeğin University
    LandTyrkiet
    ByIstanbul
    Periode03/07/201306/07/2013
    Internetadresse
    NavnAcademy of International Business. Annual Meeting. Proceedings
    Vol/bind55
    ISSN2078-4430

    Citer dette

    Larsen, M. M. (2013). Hidden Costs and the Role of Modularity: A Study on Offshoring Process Performance. I P. McDougall-Covin, & T. Kiyak (red.), Proceedings of the 55th Annual Meeting of the Academy of International Business (s. 234-235). East Lansing, MI: Academy of International Business. Academy of International Business. Annual Meeting. Proceedings, Bind. 55
    Larsen, Marcus M./ Hidden Costs and the Role of Modularity : A Study on Offshoring Process Performance. Proceedings of the 55th Annual Meeting of the Academy of International Business. red. / Patricia McDougall-Covin ; Tunga Kiyak. East Lansing, MI : Academy of International Business, 2013. s. 234-235 (Academy of International Business. Annual Meeting. Proceedings, ???volume??? 55).
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    Larsen, MM 2013, Hidden Costs and the Role of Modularity: A Study on Offshoring Process Performance. i P McDougall-Covin & T Kiyak (red), Proceedings of the 55th Annual Meeting of the Academy of International Business. Academy of International Business, East Lansing, MI, Academy of International Business. Annual Meeting. Proceedings, bind 55, s. 234-235, AIB 2013 Annual Meeting , Istanbul, Tyrkiet, 03/07/2013.

    Hidden Costs and the Role of Modularity : A Study on Offshoring Process Performance. / Larsen, Marcus M.

    Proceedings of the 55th Annual Meeting of the Academy of International Business. red. / Patricia McDougall-Covin; Tunga Kiyak. East Lansing, MI : Academy of International Business, 2013. s. 234-235.

    Publikation: Kapitel i bog/rapport/konferenceprocesKonferenceabstrakt i proceedingsForskningpeer review

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    N2 - This paper addresses estimation errors in strategic decision-making processes due to hidden costs. While previous research has investigated the antecedents of hidden costs, this paper investigates performance consequences. Using unique data on 221 offshoring implementations, it is argued that the inability to effectively estimate the costs of implementing an activity in a foreign location has a negative impact on the process performance of that activity. Performance is deterred as operations are likely to be disrupted by opportunity costs and managerial responses. However, this relationship is mitigated by the degree of modularity in the activity as it reduces the need for costly coordination in offshoring. This paper contributes to research on offshoring and strategic decision-making by emphasizing the importance of organizational design and of estimating the costs of internal organizational change.

    AB - This paper addresses estimation errors in strategic decision-making processes due to hidden costs. While previous research has investigated the antecedents of hidden costs, this paper investigates performance consequences. Using unique data on 221 offshoring implementations, it is argued that the inability to effectively estimate the costs of implementing an activity in a foreign location has a negative impact on the process performance of that activity. Performance is deterred as operations are likely to be disrupted by opportunity costs and managerial responses. However, this relationship is mitigated by the degree of modularity in the activity as it reduces the need for costly coordination in offshoring. This paper contributes to research on offshoring and strategic decision-making by emphasizing the importance of organizational design and of estimating the costs of internal organizational change.

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    Larsen MM. Hidden Costs and the Role of Modularity: A Study on Offshoring Process Performance. I McDougall-Covin P, Kiyak T, red., Proceedings of the 55th Annual Meeting of the Academy of International Business. East Lansing, MI: Academy of International Business. 2013. s. 234-235. (Academy of International Business. Annual Meeting. Proceedings, Bind 55).