International management: A conceptual framework for comparison of offshoring and outsourcing strategies by UK and German multinational corporations

Abstract

This paper outlines research by a doctoral candidate exploring differences in approach to outsourcing and offshoring by multinational corporations. In particular, a comparison is drawn between German and UK headquartered organizations in the airline / transport and also the engineering sectors. A novel conceptual framework is developed that uses differing varieties of capitalism (VoC) to compare and contrast a series of criteria. Underlying theory that is drawn from the resource based view (RBV) of the firm and global production networks (GPNs) are also considered. The initial findings from two case studies are that German organizations are less inclined to outsource (in both sectors) preferring to retain control as a wholly owned business offshore. The UK businesses were less risk adverse and seemed to be more flexible and agile in their sourcing policies being prepared to outsource, offshore and partner or acquire as appropriate, even using competitors when there is a sound business case. The relationships’ with trade unions / works council was also found to be very different, with reluctance by management in Germany to progress radical initiatives. A favorable economy in Germany has also created an environment in which overseas expansion could take place without a significant loss of jobs at home. Further research is required to better understand when the driving force to restructure and grow is to lower labour or total costs, seek market entry to support customer needs or a combination