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Among the drivers of inequality, income distribution between wages and profits at the level of individual industries plays a key role. The factors shaping the parallel evolution of wages and profits are investigated in this article building on Post-Keynesian and evolutionary perspectives. We develop a simultaneous model on wage and profit dynamics identifying as key determinants the capital-labour conflict, the expansion of value added per hour worked, different strategies of technological change and offshoring, and the relevance of trade unions. The empirical investigation includes an industry-level analysis on 38 manufacturing and service sectors for six major European countries from 1994 to 2014. Wage and profit dynamics are shown to be rooted in structural change and capital-labour conflict, with profits driven by product innovation and offshoring, and wages rising faster where new products are relevant and trade unions have a greater role.

PurposeDriven by the disruptive effects of the Covid-19 pandemic, the ongoing debate about the international location of firms' manufacturing activities has increasingly highlighted the specific benefits and costs of near-shoring versus far-shoring. However, the effects of near-shoring versus far-shoring on customer perceived quality and purchase intention have not been examined. Thus, this study aims to develop a conceptual model and provide new evidence to fill this gap. In particular, the study explores the roles of brand familiarity and corporate social responsibility (CSR) to explain the different levels of perceived quality and purchase intention in relation to near-shoring versus far-shoring.Design/methodology/approachThis study includes two analyses of data collected from a sample of Italian customers. The first analysis consists of a 2 (high/low brand familiarity) × 3 (domestic insourcing, near-shoring, far-shoring) factorial design, and data are assessed via analyses of variance (ANOVA). The second analysis evaluates the suggested model in the two scenarios (near-shoring and far-shoring) via partial least squares–structural equation modelling (PLS-SEM) multigroup analysis.FindingsResults showed that customer perceived quality and purchase intention were significantly higher for near-shoring than for far-shoring, but only when brand familiarity was low. No significant difference was found for participants with a high level of brand familiarity. In addition, the level of a brand's pre-offshoring perceived CSR was negatively related to perceived quality, and this was conceptually justified by the CSR-washing effect. Again, this effect was found only when brand familiarity was low.Research limitations/implicationsThe findings contribute to advancing the current understanding of the multiple effects of the offshoring decision and clarify that near-shoring and far-shoring have different effects for customers with low brand familiarity. The findings also emphasise that the far-shoring decision can elicit the perception of decoupling between the firm's CSR claims and CSR actions, thus decreasing perceived quality.Practical implicationsThis study provides managers with additional inputs to make more informed decisions regarding offshoring. While the post-pandemic scenario seems to favour near-reshoring over far-shoring due to agility considerations, this study also provides additional evidence of the superiority of near-reshoring from the customer's perspective.Originality/valueThis is the first study to examine and prove the differential effects of near-shoring versus far-shoring on the customer's perceptions and behaviours.

We reexamine the effects of offshoring in the US economy in the aftermath of the 2008 crisis. We use a matching model with endogenous adjustment of educational skills while distinguishing between o...

Using detailed Chinese manufacturing firm production and trade data from 2000 to 2006, this study finds that offshoring significantly increases firms’ average wages. First, using the quasi‐natural experiment of China's accession to the World Trade Organization, we investigate how a reduction in offshoring costs affects the manufacturing firm's wages and find that a productivity effect and a job‐relocation effect are two possible channels. Second, the dynamic decomposition of industry‐level wages indicates that the within‐firm effect is 0.547, accounting for 31.5 percent of the total variation. Finally, a Mincer‐type regression shows that offshoring also increases within‐firm skill premiums. Our findings have strong implications for the government related to framing appropriate industrial policies to raise wages and reduce income inequality.

Even during the current COVID-19 crisis, venture capital (VC) is booming in India. Indian-based VC funds grew from less than 10 at the start of the 1990s to more than 500 nowadays, with the amount of total investment continuously increasing since 2000. The aim of this paper is to contextualize the process of emergence, development, and boom of the Indian VC industry from the theoretical perspective of innovation and entrepreneurial systems, particularly incorporating contributions from Latin American and Indian authors. In doing so, we present a global, historical, and territorially grounded narrative of the Indian VC development stressing the relevance of: (a) the institutional and technological capabilities accumulated by the Indian National Innovation System (NIS) and the Indian Computer and Information Services Entrepreneurial Ecosystem (CISEE), particularly around Bangalore, (b) the role of the State (and the institutional entrepreneurs) and the timing of the STI policy oriented to the software industry, (c) the growing influence of global players such as the World Bank, the Indian American argonauts and multinational enterprises, and (d) the U.S. offshoring opportunities and the growing Indian domestic demand. We discuss these processes with a wider relevance for theoretical and policy advancement in Global South settings. © 2021 Wiley Periodicals LLC.

This article examines how the news media framed the allegations made in 2016 against Cristiano Ronaldo for evading taxes through offshores, and how audiences discussed this online, in Portugal, where he is originally from, and Spain, where he played football at the time. These countries were amidst an “austerity culture” justifying welfare cuts, promoting entrepreneurialism as “success”, and presenting neoliberal policies as “common sense”. Our analysis reveals Ronaldo portrayed as a member of the economic elite criticized for the high earnings of football players and celebrity tax privileges; as an ungrateful immigrant who does not contribute enough to society; and as “one like us” maneuvering to evade taxes. The comparative analysis shows audiences had double standards based on their feelings toward the celebrity, and they interpreted this case positively or negatively in relation to the inefficiency of the fiscal and justice systems in Southern Europe.

How does globalization affect politics? One of the most controversial aspects of globalization is offshoring, when manufacturing operations and business functions move abroad. Although voters generally dislike offshoring, it remains unclear how moving jobs abroad impacts democratic elections. Using a difference-in-differences estimation strategy, the author finds that incumbent government parties lose more votes in municipalities where a local plant moved production abroad between elections than in municipalities that did not experience such an event. The result holds across various time periods, different incumbent parties and diverse types of elections. In both national and regional elections, voters punish incumbent government parties when a local firm moves production abroad. Incumbent parties' vote shares fall as the number of jobs lost due to offshoring increases. In multiparty governments, voters disproportionately punish the largest coalition party for offshoring. The results of an original survey administered in Spain verify the importance of offshoring for voters' retrospective evaluations of incumbents.

This paper studies the relationship between immigration and offshoring by examining whether an influx of foreign workers reduces the need for firms to relocate jobs abroad. Using a Danish natural experiment and their employer-employee matched data set covering the universe of workers and firms (1995–2011), our findings show that an exogenous influx of immigrants into a municipality reduces firm-level offshoring at both the extensive and intensive margins. While the multilateral relationship is negative, a subsequent bilateral analysis shows that immigrants have connections in their country of origin that increase the likelihood that firms offshore to that particular foreign country.

The fierce debate about the reality of spirits and the “Invisible World” which flared up in the 1690’s helped define the early Enlightenment. All sides in this debate—from Spinoza and Balthasar Bekker to John Beaumont and Cotton Mather—refashioned familiar metaphors of light and darkness and connected them with the world beyond Europe in surprising new ways. This article shows how this key controversy of the early Enlightenment was built upon references to darkness, light, and the benighted pagan peoples of the world. As new street lighting and improved domestic lighting nocturnalized daily life in the Netherlands, London, and Paris, the old denizens of the night - ghosts, spirits, and witches—were increasingly relegated to the extra-European world and used to articulate new categories of human difference based on civility, reason, and skin color. These new categories of human difference—new ways of seeing and ordering the world—were essential to the formation of early modern whiteness and the Enlightenment.

After almost two decades of dealing with asymmetric threats, America's strategic focus on technological superiority carefully honed during the Cold War, began to fracture, eroding its military and economic advantage. But China's recent emergence as a credible geopolitical rival has reinvigorated US efforts to sustain high-tech leadership as the basis of its military primacy. At the center of these efforts are the defense and defense-related agencies of the national security state (NSS) whose mission is to dominate the new technological frontiers of military power and achieve future competitive advantage. Alongside the quest for breakthroughs in foundational technologies, NSS agencies are seeking to correct long neglected deficiencies in advanced manufacturing, by rebuilding the industrial ecosystem's supply chains depleted after decades of offshoring. With this suite of initiatives, the US is following a course of action more consistent with the exercise of (economic) statecraft than industrial policy. However, unlike its authoritarian rival, the US faces the challenge of having to balance security imperatives with commercial interests and, not least, having to contend with a dysfunctional and maladapted presidency.

Large swaths of homo economicus americanus today confront chronic unemployment or under-employment in a period of tremendous offshoring of the production of goods and services, high consumer debt, ...

This paper develops a multi-country, multi-sector, and multi-factor model of two-sided matching between heterogeneous workers and entrepreneurs in which agents in different countries can form cross-country teams. Sorting, matching, and sharing problems are all considered in a unified framework. Equilibrium is characterized by endogenous sharing rules, which break away from competitive marginal productivity theories of factor returns. I illustrate that a bilateral economic integration agreement can affect the welfare of agents in an unrelated third country, and that a reduction in the cost of sector-specific matching can increase welfare for all agents without conflicts of interest.

Offshoring, either as FDI or offshore outsourcing, is a phenomenon of increasing importance that has been widely studied in the economics literature. Studies analysing the impact of offshoring on the labour market report divergent results. In this paper we develop a meta-analysis of the empirical literature that estimates the effect of offshoring on wages. We find that, after correcting for the presence of publication bias, the average effect is not significantly different from zero in either the origin or the destination countries. We also find that the wage impact of offshoring depends on methodological characteristics of the primary studies, such as the way offshoring is measured, the nature of goods/services that are offshored, the workers’ skill level, the unit of analysis, the structure of the data, and the estimation technique.

PurposeIT outsourcing (ITO) has developed into an established practice for organizations but the interorganizational and oftentimes international collaboration it involves comes at a price: Reports from academia and practice suggest that more than 25% of all ITO projects fail, many because of cultural differences between client and provider organizations. Against this background, this paper analyzes the complex nature of cultural distance and its multi-faceted effect on ITO success.Design/methodology/approachThis paper builds upon extant literature on culture on the national, organizational and team level, conceptualizes its effect on relationship quality and ITO success, and hypothesizes a model on potential moderators and management techniques to offset culture-induced challenges. It then evaluates and refines the model by means of an interpretive qualitative research design for an in-depth single-case study of ProSiebenSat.1 Media SE (P7S1), a leading European media company that reconfigured its IT sourcing model three times in 10 years.FindingsThe results from interviews with top managers from client and provider organizations represent one of the first integrated views on the critical importance of cultural compatibility on multiple levels, provide manifold examples for its complex effect on ITO success, as well as moderators and potential management techniques to promote ITO success.Research limitations/implicationsThis paper contributes relevant empirical insights to the growing body of literature on culture and its underestimated role in ITO success. It builds on tentative theory that is confirmed and refined.Practical implicationsThe paper helps in substantiating the complex and intangible nature of culture and demonstrates means for its effective management.Originality/valueThe results from interviews with top managers from client and provider organizations represent one of the first integrated views on the critical importance of cultural compatibility on multiple levels, provide manifold examples for its complex effect on ITO success, as well as moderators and potential management techniques to promote ITO success.

Staffing software projects with engineers from inexpensive locations has become commonplace. However, distributed development remains practically challenging because of recurring problems, e.g., decreased productivity, low quality, and high, unforeseen costs. Although it is often overlooked, one of the main underlying reasons for these challenges is high employee turnover. This might be especially noticeable in developing countries with strong economic growth such as India. This article examines turnover of Indian software engineers and introduces strategies to address it.

Past research focuses on the location effects in explaining consumers’ responses to service offshoring while the role of service offshoring partners (OSPs)’ characteristics has not yet been addressed. Adapting from information integration and inference theories, this paper develops “service offshoring fit” which is influenced by OSPs’ characteristics and explains the differential responses to service offshoring. Both qualitative and quantitative studies explore the concept of fit and the characteristics of OSPs. The results confirm that corporate reputation of the OSPs and advanced technology owned by the OSPs are the important characteristics that influence service offshoring fit, which in turn affects consumers’ responses to service offshoring. Results also indicate not all the OSPs’ characteristics equally contribute to service offshoring fit but rather be contingent on service types. This study contributes to the current literature as it looks beyond the location effect and explains the differential responses by introducing the concept of fit.

In this paper, we study the relationship between occupational vulnerability and attitudes toward immigration in Western Europe. We measure occupational vulnerability as the risk of unemployment due to routine-biased technological change and offshoring of jobs to other countries. Previous empirical studies in political economy have shown that individuals’ policy preferences echo their economic risks and prospects. Workers in low routine occupations are most worried about their job market prospects, most likely to demand social protection and least likely to support free trade. We find that attitudes toward immigration become considerably more negative as occupational task routineness increases. We do not find a similar association between occupational offshorability and immigration attitudes. Direct exposure to global competition is not associated with increased worries about immigration. However, offshorability seems to be associated with the polarization of attitudes toward immigration between routine and nonroutine workers.

Supply chain disruptions, which have become commonplace, are often associated with globalization and trade. Little is known about optimal policy in the face of insecure supply chains. Should governments promote resilience by subsidizing backup sources of input supply? Should they encourage firms to source from closer and presumably safer domestic suppliers? We address these questions in a very simple model of production with a single critical input and with exogenous risks of relationship-specific and country-wide supply disturbances. We follow Matsuyama and Ushchev (2020) in positing a class of preferences that are homothetic with a single aggregator and that obey Marshall's Second Law of Demand. The familiar case of CES preferences is a member of the class, but it imposes restrictions that are important for policy conclusions.We find that, in the CES case, a subsidy for diversification achieves the constrained social optimum and dominates a policy that promotes reshoring or offshoring. When the demand elasticity rises with price, two policy instruments generally are needed to achieve efficient supply chains, private investments in resilience may be socially excessive, and policy that alter incentives to invest at home versus abroad may achieve greater welfare than ones that encourage or discourage diversification.

The Covid-19 pandemic has introduced huge numbers of employers and employees to remote work. How many of these newly remote jobs will go overseas? We offer a rough quantification based on two observations: 1) offshore work is trade in services, and 2) the number of telemigrants is the volume of this trade divided by the average wage. Combining these with gravity-model estimates, we can roughly predict the number of new telemigrants that would arise from lower barriers to trade in services. Telemigration seems unlikely to be transformative when it comes to the development paths of most emerging economies. The baseline service trade flows are modest, and the standard gravity model restricts modest changes to have modest impacts. There are no tipping points in structural gravity models. Finally, we propose a simple model of telemigration in which small changes can have large consequences. The key is to assume that latent comparative advantage takes a different shape than typically assumed in quantitative trade models. Given this, small changes in trade costs can generate large and asymmetric increases in the exports of service tasks from low-wage nations.

We consider a two‐country, two‐sector model in which a firm’s offshoring decision depends on labor market rigidities that impose additional costs on the firm. Firms endogenously choose their organizational form considering their productivity level and organizational costs. The costs generated by labor market frictions play a key role in determining the benefits of each organizational structure, and thus helps determine the conditions under which a firm decides to offshore. There are three different types of equilibria depending on the relative levels of the domestic and foreign labor market costs and the price of the intermediate input. In all equilibria, a relative rise in the domestic labor market cost increases the share of firms that offshore, while decreasing domestic integration. Furthermore, an economy with offshoring has a higher welfare level and a lower unemployment rate than it would under autarky.

This article explores the convergence of debt, deportation, and digital labour in Mexico by describing the making of a labour force working on the frontlines of transnational debt collection, performing what we call digital debt labour. Drawing on dozens of interviews in Tijuana and Mexico City conducted between 2016 and 2019, we relate the growth of a debt collection labour force in Mexico. To theorise the intersection between debt, migration, and digital labour, this article explores three overlapping, converging, and expanding forms of migration: debt migration, or the circulation of consumer credit through markets for, or processes of, debt collection; virtual migration or the outsourcing of call centre work to offshore locations and the return migration of call centre workers in the labour process; and forced migration, or the deportation of undocumented migrants. Our core argument is that this case study demonstrates the manner in which a highly financialised and digital variant of capitalism is evolving to develop a multi-faceted and opportunistic relationship with the growing trends of migration and deportation.

Successful offshoring engagements of Indian software vendors is increasingly dependent upon the quality of the projects delivered rather than cost considerations. However, delivering quality software is reliant on effective management of various organizational, technological and people aspects. This research is to identify and evaluate the determinants of quality on software projects delivered by vendors through offshoring. Data related to recently completed projects were collected through a survey of 440 project managers from Indian vendors. Based on structural equation modeling, the authors analyze the influence determinants on specific product quality attributes. It is found that, out of six determinants, technical infrastructure and process maturity have significant influence on most of the attributes of quality in offshored IS projects from India. The authors provide a set of implications for practice and directions for further research.

Purpose – This article attempts to identify and assess trade exchange between the European Union and India, including an indication of the main determinants of the process. Research method – Descriptive analysis based on numerical data from various statistical sources together with a review of specialist literature. Results – Trade exchange between the EU and India is particularly important for India. Exports to the EU account for around 17-20% of Indian exports in total. On the other hand, the EU’s share in Indian imports amounts to 10-12% of all imported goods. Trade with India looks different from the EU side. India’s share in both exports and imports presents a margin for EU trade in goods of 2-3%. The share of services in the trade between the EU and India is high. It accounts for 25-30% of mutual turnover. These are usually modern services based on the offshoring principles, such as IT, business, transport, consulting, science, and tourism. Among the European Union Member States, India’s main trading partners in goods are Germany, the United Kingdom, Belgium, France, the Netherlands, and Italy. These six countries account for ca. 85% of the EU-India trade exchange. In 2007, negotiations started to create an EU-India Free Trade Area. Due to the large differences in the positions of both parties, these discussions were not finalised and were subsequently suspended in 2013. However, after the reactivation of talks in 2016, there is still a possibility for the creation of an EU-India Free Trade Area of 1.8 billion people. Originality /value / implications /recommendations – At the beginning of the 21 st century, in terms of GDP (according to PPP), the European Union (understood as one economic entity) became the second largest economic power globally (after China), while India advanced to fourth position (after China, the EU and the USA). An analysis of trade exchange between these two economic powers allows for a clearer understanding of the modern global economy, as well as the processes and mechanisms of its functioning. Article received on 29 March 2020, accepted on 29 May 2020.

The aim of this contribution is twofold. First, it seeks to identify the main elements of the European policies of offshoring and outsourcing migration control and to describe the threats that these policies pose to the guarantees inherent to the Rule of Law. Second, given the serious risk of evasion of democratic controls that these policies entail, it attemptsto find in the case law of European courts, specially the European Court of Human Rights, the elements that would make it possible to rebuild the eluded system of checks and balances.

American consumers are routinely reminded of the fact that the products sold by American companies are often manufactured abroad. We use a survey‐based priming experiment to explore whether and when those reminders depress Americans’ enthusiasm for free trade. We consider in particular that offshoring's effects on policy preferences may be linked to negative perceptions of the offshoring firm, such that portraying the offshoring firm in a positive light might mitigate that effect. We also consider that offshoring's effect may be exaggerated among individuals whose position in the labor market makes them especially sensitive to trade‐related labor market disruption. Our experiment suggests support for both propositions.

This paper investigates the impact of offshore outsourcing across 5746 European service multinational enterprises (MNEs) on employment at home. We estimate labour demand equations and specifically isolate the global financial crisis (GFC) by undertaking analysis through our longitudinal 19-year panel data, separately for the pre- (1997–2007) and crisis period (2008–2016). We distinguish between offshoring to high and low income countries, as well as between service industry groups. We show that there is some evidence that offshoring by location intensive service firms is associated with employment growth at home during the crisis period, while offshoring in information intensive industries in high income countries is associated with a reduction in employment at home, as firms offshore to be nearer to the client. Overall, our findings suggest that the crisis period has lessened the impact of offshoring service FDI on employment at home.

Offshoring strategies raise a critical question to defining the country images of brands, as offshoring results in discrepancies between the country-of-brand origin (COB) and the country-of-manufac...

Using German establishment data, we provide evidence for selection of larger, more productive producers into offshoring. However, the selection is not sharp, and offshoring and nonoffshoring producers coexist over a wide range of the revenue distribution. To explain this overlap, we set up a model of offshoring, in which we decouple offshoring status from revenues through heterogeneity in two technology parameters. In an empirical analysis, we employ German establishment data to estimate key parameters of the model and show that disregarding the overlap has large quantitative effects. It lowers the estimated gains from offshoring by almost 50% and, at the same time, exaggerates the role of the extensive margin for explaining the evolution of German offshoring since the 1990s.

Using a North–South framework, this study proposes a theoretical general equilibrium model with multiple Northern firms offshoring innovative R&D to the South. Northern firms vary in their ability to manage Southern researchers, and Southern researchers vary in quality. Southern researchers of higher quality are more productive but also more likely to leave the firm and start a competing firm through imitation of the product. A strengthening of Southern IPR‐protection increases offshoring, global welfare, and innovation while eliminating employment opportunities for skilled Southern researchers. Therefore, stronger Southern IPR‐protection has the potential to contribute to the emigration of highly qualified researchers. The model then predicts the effects of changes to the Northern country as a result of this increased emigration. Increases in Northern technology increase offshoring and innovation while decreasing the amount of technology transferred. The effect of an increase in Northern researcher quality depends on the degree of the increase in productivity as a result of the higher quality workers.

In this paper, the location patterns of Multinational Enterprises are modeled by an evolutionary two-country model in which producing in a developed economy offers strong cost-reducing externalities of within-country spillovers and opting for a developing economy entails cheap labor but also extra operational costs due to the undersupply of public goods. The offshoring process, that is, manufacturing activity outsourced in the developing economy, increases the bargaining power of its workers and, with it, its labor cost. The investigation underlines that an increasing labor-productivity remuneration in the developing economy may spark a reshoring process that depends on the agglomeration and endowment drivers characterizing an industry. The reshoring process can be narrowed by a flexible labor remuneration scheme, with wages indexed to the domestic concentration of manufacturing activity. The presence of sub-optimal location patterns points out the existence of a trade-off between stability and efficiency, which underlines that policy measures designed to make a country a more efficient location are neither sufficient nor necessary for preventing offshoring or ensuring reshoring.

This paper examines the consequences of offshoring and outsourcing on domestic wages and wage inequality. I highlight the role of labor market frictions in impacting firms’ outsourcing and offshoring decisions; specifically, how differential costs of matching with workers affect the location of production (onshore or offshore) and how differential costs of assessing worker quality affect the ownership of intermediate production (intra‐firm or inter‐firm). I demonstrate how firm sourcing decisions can depend crucially on the industry skill intensity, which reflects the importance of worker–firm match quality, and as a result, the effect of offshoring on domestic labor depends on occupation and industry characteristics, as well as the ownership regime of trade. Bringing the theory to the data I rely on plausibly exogenous variation in the cost of inter‐ and intra‐firm offshoring to identify the effects of a change in each type of offshoring on domestic wages. I find strong evidence that the effect of offshoring on domestic wages—both on the average and on the wage distribution—is governed by the type of offshoring (inter‐ vs. intra‐firm), the skill intensity of the industry, and the offshorability of the occupation.

The current escalating global tariff war reflects public concern with offshoring associated with perceived loss of jobs and reduced national competitiveness. Accordingly, offshoring represents a crucial yet complex topic in business education as existing literature emphasizes how managers struggle to make objective offshoring decisions. With limited available pedagogical research however, educators are not fully aware of how students perceive offshoring and process offshoring decisions. This study subsequently applies realistic conflict theory (RCT) to provide an empirical assessment of student offshoring perceptions via survey data at one U.S. university. The results do not support RCT as positive perceptions of offshoring benefits are insufficient to overcome the effects of career concerns. Rather, offshoring benefits directly conflict with career concerns to influence offshoring resentment, which in turn, impacts offshoring decisions. Such results suggest that students are unduly biased in their offshoring perceptions, thereby elevating the importance and difficulty of effective offshoring education. As such, we offer a pedagogical framework and associated exercises from extant literature to help students critically assess offshoring.

An analysis of the competitive priorities that may lead backshoring companies to adopt new technologies is developed and tested using secondary data from 495 relocation initiatives to Europe. Findings suggest that backshoring is associated with the adoption of Industry 4.0 when the firm’s priorities are high quality and the reduction of costs tied to non-conformance. Backshoring initiatives prioritizing the reduction of direct costs or responsiveness are not significantly tied to Industry 4.0 adoption. The analysis further highlights that the adoption of new technology by firms that compete on quality is more likely when they are involved in product innovation.

Fuelled by open markets and globalisation, offshoring has become a common business practice for firms in industrialised countries. However, consumer research investigating offshoring in a larger ma...

Because of changes in tax regulations and increased political pressure, firms are reconsidering their practices of shifting manufacturing operations offshore to lower wage countries. Although outsourcing has been well researched, few studies examine managerial practices that influence offshore operations. We investigate the effects of choices regarding labor, suppliers, and outsourcing that influence firm longevity in the maquiladora industry in Mexico. We argue that firms are exposed to labor frictions, supply-chain constraints, and compliance and regulatory risks that if left unresolved can lead to plant closure attributable to labor or regulatory frictions and rising costs. We consider specific actions pursued by managers at maquiladora plants to mitigate the underlying constraints and then analyze factors that affect the likelihood of continuing operations, that is, the longevity of the plants. We find a positive relation between the likelihood of longevity in operations and the following plant characteristics: hourly wages, workforce stability, skill, and the decision to outsource regulatory compliance functions. We document a negative relation between longevity and total labor cost as a percent of total costs as well as using suppliers based in Mexico. We also find that high-tech plants have higher stability, pay higher wages, and experience greater longevity than low-tech plants. Overall, we identify key managerial choices that are related to longevity in offshoring production.

Recent literature indicates that offshoring can effectively increase firm productivity and improve product quality. Therefore, global value chains have increased in importance. In this paper, we investigate the impact of export growth on firm-level offshoring. Removal of the quota on textile and clothing products in importing countries boosts China's exports of quota-restricted products. This removal offers a quasi-natural experiment. Using a difference-in-differences approach, we find that export growth induced by the quota removal increases the extensive and intensive margins of firm-level offshoring. The impact is more pronounced on domestic firms and firms that are engaged in ordinary trade. Our findings suggest additional gains from trade liberalization: trade liberalization not only boosts exports, but also enhances firm productivity and product quality through encouraging firm-level offshoring.

This note investigates how the effect of offshoring on unemployment is influenced by the wage setting process. We assume staggered wage contracts in an otherwise standard search and matching model. In this setup, the contract wage depends also on expected future conditions. We show that more flexibility in the wage contracting process induces greater offshoring, a decrease in the worker’s job-finding probability and higher worker’s wage within job spells. Notably, less stickiness leads to a fall in the rents that firms can extract by producing domestically.

We document that between 50% and 70% of changes in the US wage structure over the last four decades are accounted for by the relative wage declines of worker groups specialized in routine tasks in industries experiencing rapid automation. We develop a conceptual framework where tasks across a number of industries are allocated to different types of labor and capital. Automation technologies expand the set of tasks performed by capital, displacing certain worker groups from employment opportunities for which they have comparative advantage. This framework yields a simple equation linking wage changes of a demographic group to the task displacement it experiences. We report robust evidence in favor of this relationship and show that regression models incorporating task displacement explain much of the changes in education differentials between 1980 and 2016. Our task displacement variable captures the effects of automation technologies (and to a lesser degree offshoring) rather than those of rising market power, markups or deunionization, which themselves do not appear to play a major role in US wage inequality. We also propose a methodology for evaluating the full general equilibrium effects of task displacement (which include induced changes in industry composition and ripple effects as tasks are reallocated across different groups). Our quantitative evaluation based on this methodology explains how major changes in wage inequality can go hand-in-hand with modest productivity gains. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

PurposeThis study investigates the impact of geopolitical disruptions on the manufacturing supply chain (SC) location decision of managers in UK multinational firms. The context of study is the UK manufacturing sector and its response to the UK's decision to leave the European Union (EU), or Brexit.Design/methodology/approachThe study adopts an abductive, theory elaboration approach and expands on Dunning's eclectic paradigm of international production. A Delphi study over four iterative rounds is conducted to gather and assess insights into manufacturing SC location issues related to Brexit. The panel consisted of 30 experts and managers from a range of key industries, consultancies, governmental organisations, and academia. The Delphi findings are triangulated using a focus group with 38 participants.FindingsThe findings indicate that the majority of companies planned or have relocated production facilities from the UK to the EU, and distribution centres (DCs) from the EU to the UK. This was because of market-seeking advantages (being close to major centres of demand, ease of access to local and international markets) and efficiency-seeking advantages (costs related to expected delays at ports, tariff and non-tariff barriers). Ownership and internalisation advantages, also suggested by the eclectic paradigm, did not play a role in the location decision.Originality/valueThe study elaborates on the OLI framework by showing that policy-related uncertainty is a primary influencing factor in the manufacturing location decision, outweighing the importance of uncertainty as an influencer of governance mode choices. The authors find that during geopolitical disruptions managers make location decisions in tight time-frames with incomplete and imperfect information, in situations of high perceived uncertainty. The study elaborates on the eclectic paradigm by explaining how managerial cognition and bounded rationality influence the manufacturing location decision-making process.

Disasters like the Rana Plaza collapse and the Tazreen Fashions and Ali Enterprises fires painfully demonstrate the limits of conventional models of labour regulation in global supply chains. Buyer-driven markets characterised by outsourcing, subcontracting and offshoring, and the price pressure that results from them, undermines both the regulatory role of the state and the potential for collective bargaining. As a result, poor and unsafe working conditions prevail in transnational corporate supply chains in the garment industry. The aforementioned disasters offer a textbook example of the challenges facing the current clothing industry and the limits of the dominant “Corporate Social Responsibility” (CSR) model used to address labour rights abuses.Yet, the responses to these disasters also provide fertile ground for alternative “worker-driven” strategies, where worker organisations enter into negotiated supply chain agreements with transnational corporations and hold the latter to account. The Bangladesh Accord and Rana Plaza Arrangement, as well as the corollary Tazreen Compensation Agreement and Ali Enterprises Compensation Agreement attempt to develop a counter-hegemonic alternative to dominant CSR practices and offer new strategies for social justice within global supply chains. This chapter describes and contextualises these agreements in a broader trajectory of labour organisations bargaining and negotiating such agreements with lead firms, highlighting how the post-Rana Plaza momentum made significant strides possible in terms of the depth, scope and enforceability of these negotiated agreements. The chapter identifies the strengths of these developments, but also identifies room for improvement for future negotiated enforceable agreements with apparel brands.

This paper investigates the effects of automation and offshoring on the dynamics of the occupational distribution of employment with a focus on Western Europe between 2000 and 2016. I use a general equilibrium model with three regions, three types of workers, ICT capital, trade in final goods and endogenous offshoring. Fed with exogenous measures of ICT-capital prices and trade costs, the model replicates key features of the data. It matches the observed dynamics of offshoring to Eastern Europe and Asian countries. It also reproduces accurately the observed polarization of the labor market: abstract and manual labor increase while routine labor falls. A counterfactual experiment reveals that automation is the main driver of polarization. Since it is also the only factor that drives individuals to become abstract (highskill) workers, it is welfare enhancing. The effects of falling trade costs on labor polarization are smaller, but imply welfare gains.

This paper uses a two-country dynamic general equilibrium model to consider how, following a trade cost shock, multinational firms’ offshoring decision and the countries’ different factor endowments affect wage inequality between high- and low-skilled workers in the home country. Highlighting task-offshoring, heterogenous firms, and factor proportions, the study sheds light on how offshoring shapes wage inequality along different time horizons. While the paper’s focus is the relationship between the U.S. (home country) and China (foreign country), its findings are more broadly relevant. The three main findings are these: First, both intensive and extensive margins contribute to the widening wage gap, with the latter playing a more important role in the short- to medium- term than it does in the initial stage after the trade cost shock. Second, endogenous firm entry raises wage for both low-skilled and high-skilled workers while also widening the wage gap between the two groups over time. Third, whether firms offshore to a foreign country like Mexico, where the supply of low-skilled laborers is moderately larger than in the home country, or to a country like China, where the supply of low-skilled laborers is vastly larger, makes scant difference to wage inequality in the long term.

PurposeAdvances in information technology coupled with the need to build resilience against disruptions by pandemics like COVID-19 continue to emphasize offshoring services in the software industry. Service-level agreements (SLAs) have served as a key mechanism for safeguarding against risk in offshore service arrangements. Yet, variations in service cost and quality persist. This study aims to open up the blackbox linking SLAs to offshore project outcomes by examining (1) how the provisions in these contracts affect the ability of project teams – the work unit primarily in charge of producing the offshored service – to achieve their objectives and fulfill client requirements and (2) how differences in contextual factors shape the effects of these provisions.Design/methodology/approachThe authors incorporate the role of organizational work practice differences to understand the challenges that 270 offshore project teams faced in coordinating and integrating technical and business domain knowledge across organizational boundaries in offshore arrangements. The examined offshore IT projects were managed by a leading software vendor in India and several of its US-based clients over a three-year period.FindingsThe authors demonstrate that organizational work practice differences represent a barrier to offshore project success, and that project team transition processes are an important mechanism for overcoming these barriers. Moreover, the authors find that transition processes represent key mediating mechanisms through which SLA provisions affect offshore project outcomes.Originality/valueThe study findings shed light on how SLAs shape software project teams' balance between activities aimed at meeting client needs and those aimed at containing costs.

After years of economic stagnation, Japan is currently experiencing what may be its longest period of economic expansion in the post war era. However, the impact of this economic growth is unlike that of previous periods. Despite record corporate profits and dividend payments, the level of average wage income has not grown, and increasing taxes and prices have caused household buying power to decline. Faced with corporations offshoring jobs to save costs, a polarization in living standards, and a mood of anxiety regarding the future, the role, responsibility and social expectations of business has become the subject of heated debate. This chapter will examine three concepts—responsibility, accountability and resilience—that are being reconceptualized in the course of this debate, and four major initiatives undertaken by government and industrial associations that characterize efforts being made to reframe the social expectation of firms and redefine what it means to be a responsible business in Japan.

This chapter examines the influence of right wing think tanks in the promotion of mediated political discourse and in doing this, highlights some of the ways in which the distinction between the legitimate and criminal is eroded. It argues that the deliberately opaque sources of funding for right wing think tanks provide opportunities for wealthy individuals and corporations to exert opaque, unaccountable ‘off shore’ influence, not only in the acknowledged right wing press but also in the spheres of public service broadcasting. These processes can include the infringement of media regulation, electoral and charitable law.

PURPOSE: The purpose of the research was to determine the dynamics of the development of information technology outsourcing (ITO) in large organizations in Poland. The development of onshoring and offshoring was examined, the types and forms of services most commonly outsourced, the recipients of services within the organization, multisourcing, contract duration, method of payment, the impact of the Covid-19 pandemic on ITO, and the organization’s plans for ITO., DESIGN/METHODOLOGY/APPROACH: Longitudinal methods (extracting over time, mapping, visualization) were used. A diagnostic survey was used to collect data on ITO, the research tool was a survey questionnaire. Data was collected using the CATI (Computer Added Telephone Interview) method in the periods January-February 2016 and January-February 2021. Each time, 200 large organizations in Poland participated in the research. The research problem concerned the dynamics of ITO development in Poland. The research questions included the determination of the dynamics of ITO development assessed from the client's side, the types and forms of services that are developing most dynamically, changes in the features of outsourcing contracts, the exchange of enterprises regarding ITO and the impact of the pandemic on ITO activities., FINDINGS: The use of IT outsourcing in large organizations in Poland is growing, the rate of development dynamics by a big percent, especially in relation to offshoring. Outsourcing of more complex and business-critical activities and the use of cloud services are growing. Specialization and multi-sourcing are on the rise. Outsourcing contracts tend to be signed for a short period of time or the duration of the contract depends on the specifics of the project. However, there is a tendency to extend cooperation in outsourcing. The most common form of payment for services is a fixed price, although there is a trend towards other forms of payment. The COVID-19 pandemic had a weak but rather positive effect on the use of outsourcing. Companies plan to maintain the current relationship between internal and external services or expand ITO. These trends are expected to continue., PRACTICAL IMPLICATIONS: ITO suppliers may be advised to specialize their services and offer a wider range. Customers – prudent supplier selection and multi-sourcing., ORIGINALITY/VALUE: The trends in the development of IT outsourcing in large organizations in Poland and changes occurring in outsourcing contacts were determined., peer-reviewed

International audience; Using administrative employee-firm-level data on the entire private sector from 1994 to 2007, we show that the labor market in France has polarized: employment shares of high and low wage occupations grew, while middle wage occupations shrank. At the same time, the share of technology-related occupations (“techies”) grew substantially. Aggregate polarization was driven mostly by changes in the composition of firms within industries. Within-firm adjustments and changes in industry composition were much less important. Polarization occured mostly within urban areas, with roughly equal contributions of men and women. We study the role of technology adoption in shaping firm-level outcomes using a new measure of the propensity of a firm to adopt new technology: its employment share of techies. We find that techies were an important force driving aggregate polarization in France, as firms with more techies grew faster.

The US has been a global leader in regulating local air pollution and a global laggard in regulating greenhouse gases (GHGs). For decades, critics of US policy have expressed fears that stringent US regulations on local air pollution would lead to pollution havens overseas. Prior research suggests that has not happened. But what about the converse fear? Are the less stringent US climate regulations causing the US to become a pollution haven for other countries’ GHG-intensive industries? We provide a decomposition of US manufacturing GHG emissions and find no evidence of offshoring either to or from the United States since 1990.