Offshoring experience and performance: the role of realized drivers and risk management

Abstract

PurposeMany factors have been identified that may drive a firm’s decision to offshore production activities. The actual performance effects of offshoring, however, depend on the extent to which these drivers are realized. Furthermore, the question is how risk management helps mitigating the risk involved in offshoring ventures, thus leading to better performance outcomes. The purpose of this study is to investigate the extent to which realized offshoring drivers and risk management mediate the relationship between offshoring experience and firm performance.Design/methodology/approachData from the Global Operations Networks project, a cross-sectional survey administered in Denmark and Sweden, are used to test two hypotheses on the mediating role of realized offshoring drivers and risk management in the relationship between offshoring experience and firm performance. AMOS version 23 is used to perform the analyses.FindingsThe results demonstrate that realized offshoring drivers fully mediate the relationship between offshoring experience and firm performance. However, risk management does not mediate the relationship between offshoring experience and firm performance.Originality/valueThis study develops new theory on, and managerial insight into, the mediating role of realized offshoring drivers and risk management in the relationship between offshoring experience and firm performance.