The Organizational Design of Offshoring

The general research question guiding this thesis is: What are the organizational consequences of offshoring? Increasingly firms are becoming caught up by the “harsh realities of offshoring” (Aron and Singh, 2005: 135). Many firms have begun to realize that managing an increasingly globally dispersed organization is more difficult and costly than initially expected (Dibbern et al., 2008; Stringfellow et al., 2008). In particular, decision makers often fail to accurately estimate the costs of offshoring and are therefore surprised by unexpected costs of implementing offshoring decisions. Accordingly, the overall purpose of this thesis is to investigate why some firms fail when offshoring and others do not. To accomplish this, offshoring is conceptualized as an organizational reconfiguration which requires firms to coordinate and integrate geographically dispersed activities across distances. In this respect, a number of questions arise. For example, how does the added distance between the organizational activities signified by offshoring impact task interdependencies and performance? How do bounded rational decision makers account for and plan the organizational change from co-location to international dispersion? How do firms accumulate architectural knowledge so that efficient design decisions can be taken when relocating certain activities to foreign locations?