Global offshoring - knowledge journeys of three SMEs

Journal article, 2012

This paper analyses three small and medium sized enterprises (SMEs) in the textile industry involved in manufacturing, design sales and procurement offshoring. Adopting the knowledge-based theory of the firm and the theory of knowledge integration leads to identification of ‘direction’ and ‘organisational routines’, which are important for the integration of knowledge between entities dispersed in time and space. The companies were followed over a period of four years, with annual interviews that show that, to differing degrees, offshoring of manufacturing becomes a journey for the companies involved to take back outsourced activities when it proves difficult to create the appropriate managerial direction and organisational routines. Travelling experts, virtual interaction through IT, and training of employees abroad are three central elements encountered. Changes in the globalised upstream setups challenge the companies’ manufacturing and innovative capabilities, since innovation,knowledge and activities prove less transferable and robust, leading to a need for re-integration in the restructured upstream sourcing setups.