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Type: Journal article
Title: Captive offshoring of new product development in Brazil: how does arbitrage influence local, collaborative relationships?
Author: Boehe, D.
Citation: Management International Review, 2010; 50(6):747-773
Publisher: Springer Verlag
Issue Date: 2010
ISSN: 0938-8249
Statement of
Dirk M. Boehe
Abstract: This paper focuses on captive offshoring of new product development (NPD), i.e., relocating projects or project phases to foreign-based, wholly-owned, multinational corporation (MNC) subsidiaries (captive offshore units) to benefit from cost and efficiency advantages and/or from access to complementary technological resources and capabilities. Adopting a host country perspective, we theorize why different forms of local collaboration may complement or conflict with efficiency-seeking or arbitrage strategies and may thus influence why captive offshore units receive new product development orders from other MNC units located abroad. Using a sample from Brazil and applying structural equation modeling with partial least squares (PLS), we find that local NPD outsourcing constitutes a complementary relationship, while local cooperation with clients creates a trade-off relationship with captive offshoring. That these relationships are moderated by the captive offshore unit’s cost position within the MNC suggests that arbitrage effects transcend the headquarter-subsidiary relationship into the sphere of MNC subsidiaries’ local collaborations. Our findings imply that arbitrage in multinational contexts affects the interdependence between resources and transaction costs.
Keywords: Multinational corporations; Subsidiaries; Emerging economies; Offshoring; Outsourcing; Arbitrage; Brazil
Rights: © Gabler Verlag 2010
RMID: 0020126872
DOI: 10.1007/s11575-010-0054-z
Appears in Collections:Business School publications

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