Re-shoring & Offshoring Trends: Managing Engineering Multinationals - A comparison of offshoring and outsourcing strategies in UK and German multinational corporations

Abstract

UK and German headquartered engineering multinational corporations (MNCs) are compared with a focus on their outsourcing and offshoring initiatives. A novel conceptual framework is developed that uses differing varieties of capitalism (VoC) to compare and contrast a series of criteria. Underlying theory is taken from the resource based view (RBV) of the firm and global production networks (GPNs). The findings from a comparative case study were that in the UK, lower labour costs and reorganising the value chain were key reasons to outsource and offshore. The UK business was less risk adverse and seemed more flexible and agile in its sourcing policies. The German organisation was less inclined to outsource preferring to retain control of a wholly owned offshore business unit. A further difference was that management in Germany were reluctant to progress radical initiatives with the works council. There was little evidence of re-shoring