Offshore outsourcing as a source of international competitiveness for SMEs

Scholars typically view offshore outsourcing as a means of reducing the cost of manufacturing activities for large corporations, yet offshore outsourcing may entail administrative and technical services, and may include activities outsourced by small and medium-sized enterprises (SMEs). Drawing on research in international entrepreneurship and services, we hypothesize and find evidence that offshore outsourcing of administrative and technical services by SMEs is associated with greater extent and scope of internationalization of sales. Offshore outsourcing enhances international competitiveness by enabling SMEs to reduce costs, expand relational ties, serve customers more effectively, free up scarce resources, and leverage capabilities of foreign partners. Journal of International Business Studies (2009) 40, 969-988. doi:10.1057/jibs.2008.90